Exam 21: Cost-Volume-Profit Analysis

When the variable cost per unit increases, the total number of units required to breakeven also increases.

Which of the following appears as a line item in a contribution margin income statement?

Jenna Manufacturers produces flooring material. The monthly fixed costs are $10,000 per month. The unit selling price is $75 and variable cost per unit is $35. If Jenna's managers create a CVP graph from volume levels of zero to 500 units, at what sales level (in units)will the revenue and total cost lines intersect?

Higher fixed costs decrease the total contribution margin required to break even.

The margin of safety focuses on how much operating income is left over from sales revenue after covering all variable and fixed costs.

Becky's Bakery sells three large muffins for every two small ones. A small muffin sells for $3.00, with a variable cost of $2.00. A large muffin sells for $5.00 with a variable cost of $2.50. What is the weighted-average contribution margin? (Round your intermediate calculations to one decimal place)

Pep Soda, a 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. The weighted average contribution margin is: (Round your intermediate calculations and final answer to two decimal places)

Anthony Company has fixed costs of $30,000 per month. Highest production volume during the year was in January when 100,000 units were produced, 75,000 units were sold, and total costs of $630,000 were incurred. In June, the company produced only 55,000 units. What was the total cost incurred in June?

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

Which of the following statements is true of the behavior of total fixed costs, within the relevant range?

In the graph below, the area between the lines AC and OB after point 'E' represents:

Porterhouse Company incurs both fixed and variable production costs. Assuming the production is within the relevant range, if volume goes up by 20%, then the total costs would:

Divine Foods produces a gourmet condiment which sells for $16.00 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 dollars.

Antique Works is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen, and collectors. He is currently producing 40 flintlock muskets per month. Cost data are as follows: If Antique expects to sell 40 units per month, how much is his margin of safety expressed in sales revenue?

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: Which of the following statements is true?

Nancy was reviewing the water bill for her dog day care and spa and determined that her highest bill, $3,800, occurred in May when she washed 400 dogs and her lowest bill, $2,400, occurred in November when she washed 200 dogs. What was the fixed cost associated with Nancy's water bill?

Perfect Fit Company sells hand-sewn shirts for $40 per shirt. It incurs monthly fixed costs of $5,000. The contribution margin ratio is calculated to be 20%. What is the breakeven point in units?

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.

If the number of units sold is more than number of units produced, the income under both variable and absorption costing would be the same.

If the volume of activity doubles in the relevant range, total variable costs will also double.