Exam 21: Cost-Volume-Profit Analysis

Young Company has provided the following information: What is the amount of sales in dollars required for Young to break even?

The only difference between absorption costing and variable costing in the determination of product costs is the way fixed manufacturing overhead costs are treated.

Purely Pizza Company sells pizzas in two different sizes-medium and large. The number of medium pizzas sold is twice the number of large pizzas sold. The contribution margin of a medium pizza is $10 and the contribution margin of a large pizza is $16. The weighted average contribution margin is $15.

For the next year, Hall Company predicts the sale of 15,000 units of a product with a contribution margin of $6 per unit and 30,000 units of another product with a contribution margin of $9 per unit. The weighted-average contribution margin per unit is $8.

Mist Company sells two products-A and B. Mist predicts that it will sell 2,500 units of A and 1,500 units of B during the next period. The unit contribution margins are $3.50 and $4.80, respectively. What is the weighted-average unit contribution margin?

If the variable cost per unit decreases, the total number of units required to breakeven will increase.

Allston Products sells a special kind of effects pedal for musical performers. Each unit sells for $20.00. Additional data for the month of April, 2011, are as follows: Using variable costing, how much is the net operating income for April?

The type of information provided by managerial accounting differs from the information provided by financial accounting.

Which of the following costs is considered a period cost under variable costing?

Higher fixed costs increase the total number of units required to break even.

Divine Foods produces a gourmet condiment which sells for $16 per unit. Variable costs are $6 per unit, and fixed costs are $5,000 per month. If Divine expects to sell 1,500 units, compute the margin of safety in units.

Venus Inc. has fixed costs of $300,000. Total costs, both fixed and variable, are $450,000 when 30,000 units are produced. Calculate the total costs if the volume increases to 60,000 units.

Young Company has provided the following information: What is the contribution margin ratio?

Which of the following costs remains the same irrespective of the changes in production?

The phone bill for an accounting firm consists of both fixed and variable costs. Refer to the 4-month data below and apply the high-low method to answer the question. What is the variable cost per minute?

Dorothy Products sells its products for $20 per unit. Additional data for the month of April, 2014, are as follows: Using variable costing, calculate the product cost per unit produced.

Colin was a professional classical guitar player until his motorcycle accident that left him disabled. After long months of therapy, he hired an experienced luthier (maker of stringed instruments)and started a small shop to make and sell Spanish guitars. The guitars sell for $700 and the fixed monthly operating costs are as follows: Colin's accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales, $0.60 went to cover his fixed costs, and that anything past that point was pure profit. How many guitars does Colin have to sell each month to break even?

Jezebel Company incurred fixed costs of $300,000. Total costs, both fixed and variable, are $450,000 when 50,000 units are produced. It sold 35,000 units during the year. Calculate the variable cost per unit.

The margin of safety can be used to evaluate a company's plans for the future.

Colin was a professional classical guitar player until his motorcycle accident that left him disabled. After long months of therapy, he hired an experienced luthier (maker of stringed instruments)and started a small shop to make and sell Spanish guitars. The guitars sell for $700 and the fixed monthly operating costs are as follows: Colin's accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales, $0.75 went to cover his fixed costs, and that anything past that point was pure profit. Colin wishes to earn $5,100 of operating profit each month. Calculate the amount of sales revenue required to achieve the target profit.