Exam 18: Cost Behavior and Cost-Volume-Profit Analysis

During its most recent fiscal year,Dover,Inc.had total sales of $3,200,000.Contribution margin amounted to $1,500,000 and pretax income was $400,000.What amount should have been reported as fixed costs in the company's contribution margin income statement for the year?

A visual line fit to points in a scatter diagram may be used to identify the approximate relation between past cost and unit data.

Variable costs per unit increase proportionately with increases in volume of activity.

During a recent fiscal year,Creek Company reported pretax income of $125,000,a contribution margin ratio of 25% and total contribution margin of $400,000.Total variable costs must have been:

Mullis Corp.manufactures DVDs that sell for $5.00.Fixed costs are $28,000 and variable costs are $3.60 per unit.Mullis can buy a newer production machine that will increase fixed costs by $8,000 per year,but will decrease variable costs by $0.40 per unit.What effect would the purchase of the new machine have on Mullis' break-even point in units?

The following information describes a product expected to be produced and sold by Quark Corporation: Required: (a)Calculate the contribution margin per unit. (b)Calculate the break-even point in units.

When using the high-low method for estimating cost behavior,the slope,or variable cost per unit,is calculated by ________.

Target income refers to:

The relevant range of operations is a range of volume neither close to zero nor at maximum capacity.

Scatter diagrams plot volume (units)on the vertical axis and cost on the horizontal axis.

An important assumption in multiproduct CVP analysis is a constant sales mix.

A company sells a single product that has a contribution margin ratio of 28%.If the company's total fixed costs are $84,000,what is the break-even point in dollar sales?

A cost-volume-profit (CVP)chart is a graph that plots number of units produced on the horizontal axis and dollars of costs and sales on the vertical axis.

Cost-volume-profit analysis is used to predict future costs to be incurred,volumes of activity,sales to be made,and profit to be earned.

A line on a scatter diagram that is intended to reflect the past relation between cost and unit volume is the:

A term describing a firm's normal range of operating activities is:

Describe and compare the three cost estimation methods used to develop a cost equation.

Under variable costing,only costs that change in total with changes in production levels are included in product costs.

Least-squares regression is a statistical method for identifying cost behavior.

Select cost information for Klondike Corporation is as follows: Based on this information: