Exam 2: Introduction to Cost Behavior and Cost-Volume Relationships

Only one cost driver may affect a cost at any given time.

The planned or desired net income

Which of the following is not a cost driver of customer services costs?

A fixed cost changes in direct proportion to changes in a cost driver.

Margin of safety = actual unit sales - planned unit sales.

If the sales price per unit is $100, the unit variable cost is $75, and total fixed costs are $150,000, then the break?even volume in dollar sales rounded to the nearest whole dollar is _____.

On Fire Company, a producer of salsa, has the following information: Income tax rate 30\% Selling price per unit \ 5.00 Variable cost per unit \ 3.00 Total fixed costs \ 90,000.00 The contribution-margin ratio is _____.

Suppose the Holiday Inn Hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel, average daily room rents of $50, and average variable costs of $10 for each room rented.It operates 365 days per year.The percent of occupancy for the year needed to breakeven is _____.

Strongsville Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000, and the contribution margin per unit is $6.00.Strongsville's tax rate is 40%.The number of units that must be sold to earn the targeted net income is _____.

Muy Mal Company, a producer of salsa, has the following information: Income tax rate 30\% Selling price per unit \ 5.00 Variable cost per unit \ 3.00 Total fixed costs \ 90,000.00 _____ must be sold to obtain a targeted after-tax income of $14,000.

Oak Corporation sells desks at $480 per desk.The costs associated with each desk are as follows: Direct materials \ 195 Direct labor 126 Variable factory overhead 51 Total fixed costs for the period are $456,840.The break-even point in desks is _____.

The CVP graph shows how costs behave over multiple relevant ranges.

The margin of safety _____.

The sales mix is the relative proportions or combinations of quantities of products that constitute total sales.

Cost behavior pertains to how costs affect the activities of an organization.

Total contribution margin / total sales = 100% - variable cost percentage.

An assumption of the CVP analysis is that changes in efficiency or productivity are expected.

The break-even point is located at the intersection of the total revenue line and the total expenses line on a cost-volume?profit graph.

_____ is all variable costs divided by sales.

_____ is how the activities of an organization affect its costs.