Exam 19: Cost-Volume-Profit Analysis

Becky's Bakery sells three large muffins for every two small ones. A small muffin sells for $3, with a variable cost of $2.00. A large muffin sells for $5 with a variable cost of $2.50. What is the weighted-average contribution margin?

America First Company provided the following manufacturing costs for the month of June. Direct materials cost \ 40,000 Janitor's salary \ 2,500 Property taxes \ 8,000 Direct labor cost \ 68,000 Packaging costs \ 9,400 Equipment depreciation (straight-line) \ 12,000 Factory insurance \ 9,500 Factory manager's salary \ 6,400 - How much of the above would normally be considered fixed costs?

Browning Company sells two products-X and Y. Product X sells for $25 per unit with variable costs of $15. Product Y sells for $30 with variable costs of $20. Total fixed costs for the company are $20,000. Browning Company typically sells three units of Product X for every unit of Product Y. What is the breakeven point in total units?

If variable costs go down, and all other factors remain the same, the margin of safety will become larger.

Fairfield Company management has budgeted the following amounts for its next fiscal year: Total fixed expenses \ 832,500 Sale price per unit \ 40 Varinble experses per urit \ 25 - If Fairfield Company spends an additional $30,000 on advertising, sales volume should increase by 2,500 units. What effect will this decision have on operating income?

Within the relevant range for production costs, the total fixed costs and the variable cost per unit remain the same.

A company's product sells for $240 per unit. Variable cost is $208 per unit. Fixed costs run at $150,400 per month. How many units need to be sold to break even?

Paula sells hand-knitted scarves at the flea market. Each scarf sells for $25. Paula pays $30 to rent a vending space for one day. Her variable costs are $15 per scarf. How many scarves does she need to sell to break even?

Which of the following statements is CORRECT if the variable cost per unit increases while the sale price per unit and total fixed costs remain constant?

Argyle sells steel beams to building contractors in two sizes:regular and heavy. Argyle sells 4 regular beams for every one heavy beam. Cost data are as follows: Regular Heavy Price per unit \ 20.00 \ 28.00 Variable cost per unit \ 16.00 \ 20.00 - Argyle's fixed costs are $2,880 per month. How much is the breakeven point for total sales revenues?

When a company produces more units than it sells, absorption costing income will exceed variable costing income.

Porterhouse Company has both fixed and variable production costs. If volume goes up by 20%, how would that affect the total of all costs? (Assume all volumes are within the relevant range.)

Jenny was reviewing the water bill for her doggy day spa and determined that her highest bill, $1,700, occurred in July when she washed 800 dogs and her lowest bill, $900, occurred in November when she washed 400 dogs. - What was the variable cost per dog associated with Jenny's water bill?

Which of the following statements is CORRECT with respect to variable cost per unit, within the relevant range?

A company's contribution margin is $9 per unit. Fixed costs are $14,850 per month. How many units must be sold to break even?

Jurassic Manufacturers produces flooring material. Fixed costs are $5,000 per month. Sales price for one unit of product is $50, and the variable cost per unit is $30. If Jurassic managers create a CVP graph from volume levels of zero to 400 units, where will the revenue and total cost lines intersect?

The variable cost per unit is assumed to be constant within a particular relevant range of activity.

Reevis Company sells hand-sewn shirts for $25 per unit, and has fixed costs of $7,500. Their contribution margin ratio is 20%. How many units do they have to sell to break even?

The local convenience store sells soft drinks. It sells two large drinks for every small drink. A large drink sells for $1.50, with a variable cost of $0.60. A small drink sells for $1.00 with a variable cost of $0.50. What is the weighted-average contribution margin? (Please round to the nearest cent.)

Arturo Company's model A generator sells for $456, and model B sells for $390. The variable cost of model A is $404 and of model B is $320. If Arturo sells more of model B than model A, it will generate lower revenues, but higher net income.