Trish's Quilt Connection Is an On-Line Company Specializing in High-Quality

question 5

Multiple Choice

Trish's Quilt Connection is an on-line company specializing in high-quality quilt frames and accessories.Trish does not charge customers shipping charges for quilt frame orders.She has provided the following information; $\begin{array}{lcr}\text { Month } & \text { Quilt Frames Sold } & \text { Shipping Costs } \\\text { January } & 1,075 & \$ 8,800 \\\text { February } & 780 & \$ 8,000 \\\text { March } & 1,150 & \$ 9,000 \\\text { April } & 1,280 & \$ 10,000\end{array}$ Using the high-low method, estimate Trish's total variable and fixed costs are at if she sells 1,280 frames:

• A)Total variable cost=$5,120; Total Fixed Cost $4,880
• B)Total variable cost=$320; Total Fixed Cost $9,680
• C)Total variable cost=$10,000; Total Fixed Cost $0
• D)Total variable cost=$2,000; Total Fixed Cost $8,000
• E)Total variable cost=$7,500; Total Fixed Cost $500

Determine the break-even point in units and dollars.

Recognize the impact of changes in cost structures and sales on the break-even point and profitability.

Understand the concept of operating leverage and its effects on profitability.

Calculate the margin of safety and understand its importance in assessing business risk.

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Definitions:

Managerial Accounting

The practice of analyzing and communicating financial information to managers for the pursuit of an organization's goals.

Specific Needs

Requirements or preferences unique to an individual or group, often used in the context of designing products or services to meet those unique requirements.

Historical Data

Information from the past used for analysis, including trends, to inform decision-making processes or predict future outcomes.

Estimated Data

Projections or approximations used in accounting and financial analysis to anticipate future results or values.