Exam 21: Cost-Volume-Profit Analysis

A ________ groups cost by behavior; costs are classified as either variable costs or fixed costs.

The phone bill for a corporation consists of both fixed and variable costs.Refer to the four-month data below and apply the high-low method to answer the question. Minutes Total Bill January 480 \ 4500 February 240 \ 2690 March 160 \ 2630 April 300 \ 2845 If the company uses 360 minutes in May,how much will the total bill be? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)

When more units are sold than produced,operating income is higher under absorption costing than variable costing.

Fixed manufacturing overhead is considered a product cost under variable costing.

Which of the following statements is TRUE if total fixed costs decrease while the sales price per unit and variable cost per unit remain constant?

Isabellas,Inc.,a local convenience store,sells soft drinks.It sells two large drinks for every small drink.A large drink sells for $3.00 with a variable cost of $0.80.A small drink sells for $1.00 with a variable cost of $0.50.The weighted average contribution margin is ________.(Round any intermediate calculations and your final answer to the nearest cent.)

When the variable cost per unit increases,the contribution margin on each unit decreases.

Alltech Inc.has collected the following data.(There are no beginning inventories.) Units produced 510 units Sales price \ 150 per unit Direct materials \ 16 per unit Direct labor \ 10 per unit Variable manufacturing overhead \ 10 per unit Fixed manufacturing overhead \ 16,000 per year Variable selling and administrative costs \ 9 per unit Fixed selling and administrative costs \ 10,500 per year What is the operating income using absorption costing if 500 units are sold? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

Ogawa Company incurs both fixed and variable production costs.Assuming that production is within the relevant range,if volume goes up by 28%,then the total fixed costs would ________.

List the cost-volume-profit (CVP)assumptions.

Hughes Company manufactures harmonicas which it sells for $31 each.Variable costs for each unit are $18 and total fixed costs are $3925.How many units must be sold to earn income of $5500?

Variable costing prepares the income statement using the traditional format.

Operating leverage predicts the effects fixed costs have on operating income when sales volume changes.

The asymmetrical change in costs when there is a decrease in the volume of activity is called ________.

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

Which of the following is TRUE of the traditional format of the income statement?

Variable cost per unit is constant throughout various relevant ranges.

Barnes Company sells two products,X and Y.For the coming year,Barnes predicts sales of 5,000 units of X and 10,000 units of Y.The contribution margins per unit of products X and Y are $5 and $4,respectively.The weighted-average contribution margin is $6.50 per unit.

Ceriweden,Inc.has provided the following financial data for the year: Units produced and sold 3,500 units Sales price \ 220 per unit Direct materials \ 25 per unit Direct labor \ 45 per unit Variable manufacturing overhead \ 30 per unit Variable selling and administrative costs \ 20 per unit Fixed manufacturing overhead \ 105,000 per year Fixed selling and administrative costs \ 140,000 per year There are no beginning inventories.Prepare an income statement for the year using the traditional format.

Explain the meaning of the operating loss and operating income areas on a cost-volume-profit (CVP)graph.