Exam 20: Cost-Volume-Profit Analysis

Which of the following is an example of a cost that varies in total as the number of units produced changes?

Match each of the following costs of producing T-shirts with the appropriate classification (a-c). -Color dyes for producing different colors of T-shirts A)Variable cost B)Fixed cost C)Mixed cost

Match each of the following costs with the graph (a-e) that best portrays its cost behavior as the number of units produced and sold increases. -Insurance costs of $2,500 per month A)Graph 1 B)Graph 2 C)Graph 3 D)Graph 4 E)Graph 5

Because variable costs are assumed to change in direct proportion to changes in the activity level, the graph of the variable costs when plotted against the activity level appears as a circle.

Match each of the following descriptions with the appropriate term (a-e). -The excess of sales revenues over variable costs A)Relevant range B)Break-even point C)Contribution margin D)Fixed costs E)Variable costs

The range of activity over which changes in cost are of interest to management is called the relevant range.

The manufacturing costs of Calico Industries for three months of the year are provided below. Using the high-low method, the variable cost per unit and the total fixed costs are

Match each of the following descriptions with the appropriate term (a-e). -Graphically shows costs, sales, and operating profit or loss at various levels of units sold A)Profit-volume chart B)Cost-volume-profit chart C)Sales mix D)Operating leverage E)Margin of safety

Assuming that last year's fixed costs totaled $960,000, Carter Co.'s break-even point in units was

A company with a break-even point at $900,000 in sales revenue had fixed costs of $225,000. When actual sales were $1,000,000, variable costs were $750,000. Determine (a) the margin of safety expressed in dollars, (b) the margin of safety expressed as a percentage of sales, (c) the contribution margin ratio, and (d) the operating income.

In cost-volume-profit analysis, all costs are classified into which of the following two categories?

The fixed cost per unit varies with changes in the level of activity.

Carter Co. sells two products: Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are as follows: ​ -Carter Co.'s variable cost of E was

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: ​ -Kaiser Air is considering a new flight between Atlanta and Tampa. The average fare per seat is $400. The fixed costs for the flight, which include crew salaries, operating costs, and aircraft depreciation, total $32,000. Variable costs per passenger total $75. The break-even number of passengers per flight is

If the unit selling price is $40, the volume of sales is $3,000,000, sales at the break-even point amount to $2,500,000, and the maximum possible sales are $3,300,000, the margin of safety is 11,500 units.

Steven Company has fixed costs of $160,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. The sales mix for Products X and Y is 60% and 40%, respectively. Determine the break-even point in units of X and Y.

For purposes of analysis, mixed costs can generally be separated into their variable and fixed components.

With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume, and can immediately see the effects of each change on the break-even point and profit. This is called

If variable costs per unit decreased because of a decrease in utility rates, the break-even point would

Match each of the following costs with the graph (a-e) that best portrays its cost behavior as the number of units produced and sold increases. -Per-unit cost of direct materials A)Graph 1 B)Graph 2 C)Graph 3 D)Graph 4 E)Graph 5