Question
In: Accounting
In two companies making the same product and with the same total sales and total expenses,...
In two companies making the same product and with the same total sales and total expenses, the contribution margin ratio will be higher in the company with a higher proportion of fixed expenses in its cost structure.
True
False
Solutions
ekkarill92 answered 2 years agoRelated Solutions
If there are two companies making the same model of cellphones. Assuming the demand for the...
If there are two companies making the same model of cellphones.
Assuming the demand for the cellphones produced by Company 1 is D1,
and the demand for the cellphones produced by Comp nay 2 is D2, are
described by the following two functions:
D1=200-P1-(P1-P)
D2=170-P2-(P2-P)
where P is the average price over the prices of the two companies,
i.e., P=[P1+P2]/2. Each company has the cost of C1=C2=10 for
producing one cellphone. Suppose each company can only choose one
of the...
Suppose there are two firms making the same product. The demand curve for the product is...
Suppose there are two firms making the same product. The demand
curve for the product is Q = 500 - 5P. Suppose both firms have to
select how many items they make at the same time. Once they produce
they make the items, they take them to market and sell them for the
market clearing price. Assume both firms have the same cost
function C = 100 + 10q. What is the optimal output for each firm?
What is each...
1). Contribution Margin is: a). Sales - Total Variable expenses b). Sales - Total variable expenses...
1). Contribution Margin is:
a). Sales - Total Variable expenses b). Sales - Total variable
expenses - Total fixed expenses c). Sales revenue per unit x Sales
quantity d). Variable expense per unit x Sales quantity
2). When preparing segmented income statements fixed expense are
separated into the following categories:
a). Traceable and common b).Fixed and Variable c).Direct and
indirect d).Product and period
3).A Co. reported: Sales $125000; Contribution margin $62000;
Total fixed expenses $42000; Common fixed expenses $15000. How...
Companies HD and LD have the same sales, tax rate, interest rate on their debt, total...
Companies HD and LD have the same sales, tax rate, interest rate
on their debt, total assets, and basic earning power. Both firms
finance using only debt and common equity, and total assets equal
total invested capital. Both companies have positive net incomes.
Company HD has a higher total debt to total capital ratio and
therefore a higher interest expense. Which of the following
statements is CORRECT?
a. Company HD has a higher times-interest-earned (TIE)
ratio.
b. Company HD has...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total...
Menlo Company distributes a single product. The company’s sales
and expenses for last month follow:
Total
Per Unit
Sales
$
302,000
$
20
Variable expenses
211,400
14
Contribution margin
90,600
$
6
Fixed expenses
77,400
Net operating income
$
13,200
Required:
1. What is the monthly break-even point in unit sales and in
dollar sales?
2. Without resorting to computations, what is the total
contribution margin at the break-even point?
3-a. How many units would have to be sold each...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total...
Menlo Company distributes a single product. The company’s sales
and expenses for last month follow: Total Per Unit Sales $ 620,000
$ 40 Variable expenses 434,000 28 Contribution margin 186,000 $ 12
Fixed expenses 148,800 Net operating income $ 37,200
Required: 1. What is the monthly break-even point in unit sales
and in dollar sales?
2. Without resorting to computations, what is the total
contribution margin at the break-even point?
3-a. How many units would have to be sold each...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total...
Menlo Company distributes a single product. The company’s sales
and expenses for last month follow:
Total
Per Unit
Sales
$
612,000
$
40
Variable expenses
428,400
28
Contribution margin
183,600
$
12
Fixed expenses
147,600
Net operating income
$
36,000
Required:
1. What is the monthly break-even point in unit sales and in
dollar sales?
2. Without resorting to computations, what is the total
contribution margin at the break-even point?
3-a. How many units would have to be sold each...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total...
Menlo Company distributes a single product. The company’s sales
and expenses for last month follow: Total Per Unit Sales $ 624,000
$ 40 Variable expenses 436,800 28 Contribution margin 187,200 $ 12
Fixed expenses 154,800 Net operating income $ 32,400 Required: 1.
What is the monthly break-even point in unit sales and in dollar
sales? 2. Without resorting to computations, what is the total
contribution margin at the break-even point? 3-a. How many units
would have to be sold each...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total...
Menlo Company distributes a single product. The company’s sales
and expenses for last month follow:
Total
Per Unit
Sales
$
306,000
$
20
Variable expenses
214,200
14
Contribution margin
91,800
$
6
Fixed expenses
76,200
Net operating income
$
15,600
Required:
1. What is the monthly break-even point in unit sales and in
dollar sales?
2. Without resorting to computations, what is the total
contribution margin at the break-even point?
3-a. How many units would have to be sold each...
Menlo Company distributes a single product. The company’s sales and expenses for last month follow: Total...
Menlo Company distributes a single product. The company’s sales
and expenses for last month follow:
Total
Per Unit
Sales
$
608,000
$
40
Variable expenses
425,600
28
Contribution margin
182,400
$
12
Fixed expenses
151,200
Net operating income
$
31,200
Required:
1. What is the monthly break-even point in unit sales and in
dollar sales?
2. Without resorting to computations, what is the total
contribution margin at the break-even point?
3-a. How many units would have to be sold each...
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