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

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related 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...

Subjects