Exam 5: Cost-Volume-Profit

Hayduke Corporation reported the following results from the sale of 5,000 units in May: sales $300,000, variable costs $180,000, fixed costs $90,000, and net income $30,000. Assume that Hayduke increases the selling price by 5% on June 1. How many units will have to be sold in June to maintain the same level of net income?

Danny's Lawn Equipment has actual sales of $800,000 and a break-even point of $520,000. How much is its margin of safety ratio?

If the activity level increases 10%, total variable costs will

A company has total fixed costs of $240,000 and a contribution margin ratio of 20%. The total sales necessary to break even are

Costs will not change in total within the relevant range of activity.

If the unit contribution margin is $1 and unit sales are 10,000 units above the break-even volume, then net income will be $10,000.

Contribution margin is

Sales are $500,000 and variable costs are $330,000. What is the contribution margin ratio?

Which of the following is not true about the graph of a mixed cost?

Cost-volume-profit analysis includes all of the following assumptions except

Pascal, Inc. is planning to sell 900,000 units for $1.50 per unit. The contribution margin ratio is 20%. If Pascal will break even at this level of sales, what are the fixed costs?

The break-even point cannot be determined by

At the high level of activity in November, 7,000 machine hours were run and power costs were $18,000. In April, a month of low activity, 2,000 machine hours were run and power costs amounted to $9,000. Using the high-low method, the estimated fixed cost element of power costs is

Bolton Industries had actual sales of $1,000,000 when break-even sales were $600,000. What is the margin of safety ratio?

Cost behavior analysis applies to

Which is the true statement?

Dunbar Manufacturing's variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $55,000. If sales are expected to increase $100,000, by how much will the company's net income increase?

The break-even point is where

Chung, Inc. sells 100,000 wrenches for $24 per unit. Fixed costs are $700,000 and net income is $500,000. What should be reported as variable expenses in the CVP income statement?

In CVP analysis, the term "cost" includes manufacturing costs, and selling and administrative expenses.