Exam 20: Cost-Volume-Profit Analysis

Which of the following activity bases would be the most appropriate for food costs of a hospital?

Garmo Co. has an operating leverage of 5. Next year's sales are expected to increase by 10%. The company's operating income will increase by 50%.

If fixed costs are $700,000 and the unit contribution margin is $17, the amount of units that must be sold in order to realize an operating income of $100,000 is

Match each of the following costs of producing T-shirts with the appropriate classification (a-c). -Straight-line depreciation on sewing machines A)Variable cost B)Fixed cost C)Mixed cost

Most operating decisions of management focus on a narrow range of activity called the ______ of production.

If a business sells four products, it is not possible to estimate the break-even point.

a. If Swannanoa Company's budgeted sales are $1,000,000, fixed costs are $350,000, and variable costs are $600,000, what is the budgeted contribution margin ratio? b. If the contribution margin ratio is 30%, sales are $900,000, and fixed costs are $200,000, what is the operating income?

Mia Enterprises sells a product for $90 per unit. The variable cost is $40 per unit, while fixed costs are $75,000. Determine the (a) break-even point in sales units and (b) break-even point in sales units if the selling price increased to $100 per unit.

Waterfall Company sells a product for $150 per unit. The variable cost is $80 per unit, and fixed costs are $270,000.​ Determine the (a) break-even point in sales units and (b) break-even point in sales units if the company desires a target profit of $36,000. Round your answer to the nearest whole number.

Payton Industries has fixed costs of $490,000, the unit selling price is $35, and the unit variable costs are $20. The break-even sales (units) if fixed costs are reduced by $40,000 is

Companies with large amounts of fixed costs will generally have a high operating leverage.

Which of the following conditions would cause the break-even point to decrease?

Trail Bikes, Inc. sells three Deluxe bikes for every seven Standard bikes. The Deluxe bike sells for $1,800 and has variable costs of $1,200. The Standard bike sells for $600 and has variable costs of $200.​ a. If Trail Bikes has fixed costs that total $1,702,000, how many bikes must be sold in order for the company to break even? b. How many of the bikes determined in (a) will be Deluxe bikes, and how many will be the Standard bikes?

A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost.

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: ​ -Xander Studios holds a sculpting class for which it charges students $250. The costs consist of the following: Variable costs per student: Sculpting supplies $ 100 Enrollment costs 50 Fixed costs for the course: Instructor's salary $1,000 Rental cost of the classroom 500 The break-even number of students is

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: ​ -For break-even analysis, the unit selling price of E was

Only a single line, which represents the difference between total sales revenues and total costs, is plotted on the cost-volume-profit chart.

If direct materials cost per unit increases, the break-even point will decrease.

Match each of the following costs of producing T-shirts with the appropriate classification (a-c). -Electricity costs of $0.038 per kilowatt-hour A)Variable cost B)Fixed cost C)Mixed cost

Variable costs are costs that remain constant on a per-unit basis as the level of activity changes.