Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
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Question
Chapter 6, Problem 9MC
To determine
Concept introduction:
Cost Volume Profit (CVP) Analysis:
The Cost Volume Profit analysis is the analysis of the relation between cost, volume, and profit of a product. It analyzes the cost and profits at the different level of production, in order to determine the breakeven point and required the level of sales to earn the desired profit.
Contribution margin means the margin that is left with the company after recovering variable cost out of revenue earned by selling smart phones. The formula for contribution margin is as follows:
Contribution margin = Sales - Variable cost.
Similarly contribution margin ratio = Contribution/sales
To choose:
The correct option about a CVP graph
Expert Solution & Answer
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Check out a sample textbook solutionStudents have asked these similar questions
On a CVP graph, the total cost line intersects the vertical (dollars) axis at
a. the origin.
b. the level of the fixed costs.
c. the breakeven point.
d. the level of the variable costs.
Select the correct statement concerning the cost-volume-profit graph at right:
a. The point identified by "B" is the break-even point.
b. Line F is the variable cost line.
c. At point B, profits equal total costs.
d. Line E is the total cost line.
Line F
Line E
Line D
Select the correct statement concerning the cost-volume-profit graph at right:
At point B, profits equal total costs.
Line E is the total cost line.
Line F is the variable cost line.
The point identified by "B" is the break-even point.
Chapter 6 Solutions
Managerial Accounting
Ch. 6 - Identify and briefly describe the assumptions of...Ch. 6 - Why should managers create a CVT graph?Ch. 6 - When considering a CVP graph, how is the...Ch. 6 - Your supervisor has requested that you prepare a...Ch. 6 - Why is it important for a company to know its...Ch. 6 - Explain the difference between unit contribution...Ch. 6 - A Company’s Cost structure can have a high...Ch. 6 - Prob. 8QCh. 6 - Prob. 9QCh. 6 - Bert Company and Ernie Company are competitors in...
Ch. 6 - Prob. 11QCh. 6 - Explain margin of safety. Why is important for...Ch. 6 - Give an example of a company to which margin of...Ch. 6 - Explain how a decision to automate a manufacturing...Ch. 6 - Explain degree of operating leverage and how it...Ch. 6 - Prob. 16QCh. 6 - Why is sales mix important to multiproduct CVP...Ch. 6 - Prob. 18QCh. 6 - Prob. 19QCh. 6 - Prob. 20QCh. 6 - Prob. 21QCh. 6 - Prob. 22QCh. 6 - Which of the following is not an assumption of CVP...Ch. 6 - Prob. 2MCCh. 6 - Prob. 3MCCh. 6 - Prob. 4MCCh. 6 - Prob. 5MCCh. 6 - Prob. 6MCCh. 6 - Prob. 7MCCh. 6 - Prob. 8MCCh. 6 - Prob. 9MCCh. 6 - Prob. 10MCCh. 6 - Prob. 1MECh. 6 - Prob. 2MECh. 6 - Prob. 3MECh. 6 - Prob. 4MECh. 6 - Prob. 5MECh. 6 - Calculating Break-Even Point After Cost Structure...Ch. 6 - Prob. 7MECh. 6 - Prob. 8MECh. 6 - Prob. 9MECh. 6 - Prob. 10MECh. 6 - Prob. 11MECh. 6 - Prob. 12MECh. 6 - Prob. 13MECh. 6 - Prob. 14MECh. 6 - Prob. 15MECh. 6 - Analyzing Multiproduct CVP Refer to the...Ch. 6 - Prob. 17MECh. 6 - Prob. 18MECh. 6 - Prob. 19MECh. 6 - Prob. 2ECh. 6 - Determining Break-Even Point, target Profit....Ch. 6 - Analyzing Changes in Price, Cost Structure, Degree...Ch. 6 - Prob. 5ECh. 6 - Prob. 6ECh. 6 - Matching Terms to Definitions Match the...Ch. 6 - Analyzing Break-Even Point, Preparing CVP Graph,...Ch. 6 - Calculating Contribution Margin, Contribution...Ch. 6 - Prob. 10ECh. 6 - Calculating Target Profit, Margin of Safety,...Ch. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - Analyzing Multiproduct CVP Biscayne’s Rent-A-Ride...Ch. 6 - Prob. 17ECh. 6 - Prob. 18ECh. 6 - Prob. 19ECh. 6 - Prob. 20ECh. 6 - Prob. 21ECh. 6 - Prob. 22ECh. 6 - Prob. 1.1GAPCh. 6 - Prob. 1.2GAPCh. 6 - Prob. 1.3GAPCh. 6 - Prob. 1.4GAPCh. 6 - Prob. 2.1GAPCh. 6 - Prob. 2.2GAPCh. 6 - Prob. 2.3GAPCh. 6 - Prob. 2.4GAPCh. 6 - Prob. 3.1GAPCh. 6 - Prob. 3.2GAPCh. 6 - Prob. 3.3GAPCh. 6 - Prob. 3.4GAPCh. 6 - Prob. 3.5GAPCh. 6 - Calculating Contribution Margin, Contribution...Ch. 6 - Prob. 4.1GAPCh. 6 - Analyzing Break-Even Point, Target Profit, Degree...Ch. 6 - Prob. 4.3GAPCh. 6 - Prob. 4.4GAPCh. 6 - Prob. 4.5GAPCh. 6 - Prob. 4.6GAPCh. 6 - Prob. 4.7GAPCh. 6 - Prob. 4.8GAPCh. 6 - Analyzing Multiproduct CVP, Break-Even Point,...Ch. 6 - Prob. 5.2GAPCh. 6 - Prob. 5.3GAPCh. 6 - Prob. 5.4GAPCh. 6 - Prob. 6.1GAPCh. 6 - Prob. 6.2GAPCh. 6 - Prob. 6.3GAPCh. 6 - Prob. 6.4GAPCh. 6 - Prob. 6.5GAPCh. 6 - Prob. 6.6GAPCh. 6 - Prob. 7.1GAPCh. 6 - Prob. 7.2GAPCh. 6 - Prob. 7.3GAPCh. 6 - Prob. 1.1GBPCh. 6 - Prob. 1.2GBPCh. 6 - Prob. 1.3GBPCh. 6 - Prob. 1.4GBPCh. 6 - Prob. 2.1GBPCh. 6 - Prob. 2.2GBPCh. 6 - Prob. 2.3GBPCh. 6 - Prob. 2.4GBPCh. 6 - Prob. 3.1GBPCh. 6 - Prob. 3.2GBPCh. 6 - Prob. 3.3GBPCh. 6 - Prob. 3.4GBPCh. 6 - Prob. 3.5GBPCh. 6 - Prob. 3.6GBPCh. 6 - Prob. 4.1GBPCh. 6 - Prob. 4.2GBPCh. 6 - Prob. 4.3GBPCh. 6 - Prob. 4.4GBPCh. 6 - Prob. 4.5GBPCh. 6 - Prob. 4.6GBPCh. 6 - Prob. 4.7GBPCh. 6 - Prob. 4.8GBPCh. 6 - Prob. 5.1GBPCh. 6 - Prob. 5.2GBPCh. 6 - Prob. 5.3GBPCh. 6 - Prob. 5.4GBPCh. 6 - Prob. 6.1GBPCh. 6 - Prob. 6.2GBPCh. 6 - Prob. 6.3GBPCh. 6 - Prob. 6.4GBPCh. 6 - Prob. 6.5GBPCh. 6 - Prob. 6.6GBPCh. 6 - Prob. 7.1GBPCh. 6 - Prob. 7.2GBPCh. 6 - Prob. 7.3GBP
Knowledge Booster
Similar questions
- Which of the following statements related to CVP chart is not true? O a. To determine the variable cost per unit from a graph, the change in cost is divided by the change in units. O b. The scatter graph method is a way to estimate the cost behavior by graphically connecting the two cost amounts identified with the highest and lowest volume levels. O c. The slope of the total cost line determines the variable cost per unit. O d. To calculate the total fixed cost from a graph is by multiplying a level of volume by the variable cost per unit found out earlier and subtracting that from the total cost for that level of volume. e. The intercept between the total cost line on a graph and the y-axis determines the fixed cost. f. None of the given answers.arrow_forwardIn the cost-volume-profit graph,a. the break-even point is found where the total revenue curve crosses the x-axis.b. the area of profit is to the left of the break-even point.c. the area of loss cannot be determined.d. both the total revenue curve and the total cost curve appear.e. neither the total revenue curve nor the total cost curve appear.arrow_forwardAnswer the following: 1. The slope of line A is equal to the: a. fixed cost per unit. b. selling price per unit. c. profit per unit. d. semivariable cost per unit. e. unit contribution margin. 2. Line C represents the level of: a. fixed cost. b. variable cost. c. semivariable cost. d. total cost. e. mixed cost. 3. Line B represents the level of: a. fixed cost. b. variable cost. c. semivariable cost. d. total cost. e. mixed cost. 4. The slope of line B is equal to the: a. fixed cost per unit. b. selling price per unit. c. variable cost per unit. d. profit per unit. e. unit contribution margin. 5. Line A is the: a. total revenue line. b. Option 2 c. fixed cost line. d. variable cost line. e. total cost line. f. profit line.arrow_forward
- On a cost-volume-profit graph, when the Total Cost line is higher than the Total Revenue line, the difference represents Select one: O A. a positive return on the investment O B. a net loss O C. net income O D. not enough information is presentedarrow_forwardOn a CVP graph, the total cost line intersects the vertical (dollars) axis at the origin. the level of fixed costs. the breakeven point. the level of the variable costs.arrow_forwardOn a graph, if a horizontal axis represents units of production and the vertical axis represents total costs, the total variable costs line would be shown as a(n): Question 4 options: horizontal line. vertical line. upward sloping line. downward sloping line.arrow_forward
- Distinguish between ( a ) a variable cost, ( b ) a mixed cost, and ( c ) a step-variable cost. Plot thethree costs on a graph, with activity plotted horizontally and cost plotted verticallyarrow_forwardIn the cost behavior equation, b*X denotes the variable cost per unit. Select one: O True O Falsearrow_forwardThe contribution margin ratio can be calculated in all of the following ways except: a.1 − Variable cost ratio. b.Contribution margin per unit / Price. c.Total contribution margin / Total sales. d.Fixed costs / Contribution margin ratio. e.All of these choices are correct. Total contribution margin divided by total sales is the: a.contribution margin ratio. b.sales ratio. c.target income. d.margin of safety. e.indifference point.arrow_forward
- 9. The point where the sales line and the total expense line intersects represents the A. profit point. B. contribution point. C. breakeven point. D. margin point.arrow_forwardThe graph of a variable cost when plotted against its related activity base appears as a a.circle b.straight line c.rectangle d.curved linearrow_forwardWhich of the following are assumptions associated with the cost equation? Check all that apply. The cost equation is used to estimate costs at a variety of volume levels Cost estimates are valid within a discrete range of volumes Per unit variable costs represent the slope of a cost equation Cost equations are lineararrow_forward
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