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Exam 20: Cost-Volume-Profit Analysis

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Question 111

True/False

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If the property tax rates are increased, this change in fixed costs will result in a decrease in the break-even point.

A) True
B) False

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Question 112

Multiple Choice

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If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, the break-even sales (units) is

A) 3,425 units
B) 2,381 units
C) 2,000 units
D) 4,808 units

E) B) and D)
F) All of the above

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Question 113

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Match each of the following costs of producing T-shirts with the appropriate classification (a-c). -Janitorial costs of $4,000 per month A)Variable cost B)Fixed cost C)Mixed cost

If fixed costs are $750,000 and variable costs are 60% of sales, the break-even point in sales dollars is

If the volume of sales is $7,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 45.8%.

The relative distribution of sales among the various products sold by a business is the

Define operating leverage. Explain the relationship between a company's operating leverage and how a change in sales is expected to impact profits.

Cost-volume-profit relationships in a service company are measured with respect to customers and activities, rather than units of product.

For purposes of analysis, mixed costs are

Jacob Inc. has fixed costs of $240,000, the unit selling price is $32, and the unit variable costs are $20. The old and new break-even sales (units) , respectively, if the unit selling price increases by $4 is

Given the following cost and activity observations for Bounty Company's utilities, use the high-low method to determine Bounty's variable utilities cost per machine hour. Round your answer to the nearest cent.​

If fixed costs increased and variable costs per unit decreased, the break-even point

Perfect Stampers makes and sells aftermarket hub caps. The variable cost for each hub cap is $4.75, and the hub cap sells for $9.95. Perfect Stampers has fixed costs per month of $3,120. Compute the contribution margin per unit and the break-even sales in units and in dollars for the month.

Rusty Co. sells two products: X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows: ​ -Beemer's sales are $400,000, variable costs are 75% of sales, and operating income is $50,000. The operating leverage is

If fixed costs are $500,000 and the unit contribution margin is $20, the break-even point in units if fixed costs are reduced by $80,000 is

The relevant range is useful for analyzing cost behavior for management decision-making purposes.

If a business had sales of $4,000,000 and a margin of safety of 25%, the break-even point was

A mixed cost has characteristics of both a variable and a fixed cost.

Which of the following is not an assumption underlying cost-volume-profit analysis?

Variable costs are costs that vary on a per-unit basis with changes in the activity level.