Martin was a professional classical guitar player until a motorcycle accident left him disabled.After long months of therapy,he hired an experienced luthier and started a small shop to make and sell Spanish guitars.The guitars sell for $900,and the fixed monthly operating costs are as follows: \[\begin{array} { | l | r | } \hline \text { Rent and utilities } & \$ 800 \\ \hline \text { Wages and benefits to luthier } & 2000 \\ \hline \text { Other expenses } & 474 \\ \hline \end{array}\] Martin's accountant told him about contribution margin ratios,and Martin understood clearly that for every dollar of sales,$0.65 went to cover his fixed costs,and anything above that point was profit. Martin wishes to earn $4000 of operating profit each month.Calculate the number of guitars Martin will need to sell to achieve the target profit.(Round your answer up to the nearest whole guitar.)

A) 3 guitars B) 12 guitars C) 4 guitars D) 13 guitars A) 3 guitars B) 12 guitars C) 4 guitars D) 13 guitars

Titanic Roofing Company has estimated the following amounts for its next fiscal year: \[\begin{array} { | l | r | } \hline \text { Total fixed costs } & \$ 840,000 \\ \hline \text { Sale price per unit } & 80 \\ \hline \text { Variable cost per unit } & 30 \\ \hline \end{array}\] If the company spends an additional $35,000 on advertising,sales volume would increase by 2500 units.Before the change,the company's sales level exceeds the breakeven point.What effect will this decision have on the operating income of Titanic?

A) Operating income will decrease by $90,000. B) Operating income will increase by $90,000. C) Operating income will increase by $200,000. D) Operating income will increase by $125,000. A) Operating income will decrease by $90,000. B) Operating income will increase by $90,000. C) Operating income will increase by $200,000. D) Operating income will increase by $125,000.

Morwenna,Inc.reports the following information for August: \[\begin{array} { | l | r | } \hline \text { Sales Revenue } & \$ 800,000 \\ \hline \text { Variable Cost of Goods Sold } & 110,000 \\ \hline \text { Fixed Cost of Goods Sold } & 65,000 \\ \hline \text { Variable Selling and Administrative Costs } & 130,000 \\ \hline \text { Fixed Selling and Administrative Costs } & 65,000 \\ \hline \end{array}\] Calculate the operating income for August using absorption costing.

A) $430,000 B) $240,000 C) $995,000 D) $370,000 A) $430,000 B) $240,000 C) $995,000 D) $370,000

Llywelyn,Inc.reports the following information for July: \[\begin{array} { | l | r | } \hline \text { Sales Revenue } & \$ 950,000 \\ \hline \text { Variable Costs } & 150,000 \\ \hline \text { Operating Income } & 410,000 \\ \hline \end{array}\] What is the total fixed cost using variable costing?

A) $800,000 B) $390,000 C) $260,000 D) $560,000 A) $800,000 B) $390,000 C) $260,000 D) $560,000

Exam 21: Cost-Volume-Profit Analysis

Tranquility Care provides home healthcare services at an average price of $70 per hour and incurs variable costs of $45 per hour.Assume average fixed costs are $3,600 a month.(Round your answer to the nearest whole unit.) 1.What is the number of hours that must be billed to reach the breakeven point? 2.If the company desires to make a profit of $2,000,how many hours must be completed? 3.The company thinks it can reduce fixed costs to $3,400,but variable cost will increase to $48 per hour.The price per unit will not change.What is the new breakeven point in hours?

(Essay)

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(80)

Question 241

If Smart Touch Learning increases its production of tablet computers,what will be the effects on the variable and fixed costs per tablet?

(Multiple Choice)

4.8/5

(92)

Question 242

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

(True/False)

4.8/5

(72)

Question 243

Colossal Beverages Company sells two products,A and B.Mist predicts that it will sell 2500 units of A and 2000 units of B during the next period.The unit contribution margins are $4.00 and $4.80 for products A and B,respectively.What is the weighted-average unit contribution margin? (Round your answer to the nearest cent.)

(Multiple Choice)

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Question 244

Which of the following costing methods charges all the manufacturing costs to the products?

(Multiple Choice)

4.8/5

(74)

Question 245

Absorption costing considers fixed selling and administrative costs as product costs.

(True/False)

4.8/5

(81)

Question 246

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

(True/False)

4.7/5

(89)

Question 247

Martin was a professional classical guitar player until a motorcycle accident left him disabled.After long months of therapy,he hired an experienced luthier and started a small shop to make and sell Spanish guitars.The guitars sell for $900,and the fixed monthly operating costs are as follows: Rent and utilities \ 800 Wages and benefits to luthier 2000 Other expenses 474 Martin's accountant told him about contribution margin ratios,and Martin understood clearly that for every dollar of sales,$0.65 went to cover his fixed costs,and anything above that point was profit. Martin wishes to earn $4000 of operating profit each month.Calculate the number of guitars Martin will need to sell to achieve the target profit.(Round your answer up to the nearest whole guitar.)

(Multiple Choice)

4.7/5

(73)

Question 248

Awanita Enterprises sells computer flash drives for $3.16 per unit.Unit variable cost is $0.06.The breakeven point in units is 3600,and expected sales in units are 4300.What is the margin of safety in dollars?

(Multiple Choice)

4.8/5

(74)

Question 249

Titanic Roofing Company has estimated the following amounts for its next fiscal year: Total fixed costs \ 840,000 Sale price per unit 80 Variable cost per unit 30 If the company spends an additional $35,000 on advertising,sales volume would increase by 2500 units.Before the change,the company's sales level exceeds the breakeven point.What effect will this decision have on the operating income of Titanic?

(Multiple Choice)

4.7/5

(85)

Question 250

For the next year,Sullivan & Co.predicts sales 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 $10 per unit.The weighted-average contribution margin per unit is $8.67.

(True/False)

4.7/5

(78)

Question 251

The degree of operating leverage is the ratio that measures the effects that variable costs have on operating income when sales volume changes.

(True/False)

4.8/5

(79)

Question 252

The dollar amount that provides for covering fixed costs and then provides for operating income is called ________.

(Multiple Choice)

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Question 253

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

(True/False)

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(81)

Question 254

Absorption costing considers direct materials,direct labor,variable manufacturing overhead,and fixed manufacturing overhead as product costs.

(True/False)

4.8/5

(73)

Question 255

Operating leverage predicts the effects that fixed costs have on operating income when ________.

(Multiple Choice)

4.8/5

(80)

Question 256

Morwenna,Inc.reports the following information for August: Sales Revenue \ 800,000 Variable Cost of Goods Sold 110,000 Fixed Cost of Goods Sold 65,000 Variable Selling and Administrative Costs 130,000 Fixed Selling and Administrative Costs 65,000 Calculate the operating income for August using absorption costing.

(Multiple Choice)

4.9/5

(75)

Question 257

Llywelyn,Inc.reports the following information for July: Sales Revenue \ 950,000 Variable Costs 150,000 Operating Income 410,000 What is the total fixed cost using variable costing?

(Multiple Choice)

4.9/5

(81)

Question 258

Which of the following statements is TRUE of variable costing?

(Multiple Choice)

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(91)

Question 259

When there is no beginning Finished Goods Inventory and all the goods that are produced are sold,the operating income ________.

(Multiple Choice)

4.8/5

(93)

Question 260

Showing 241 - 260 of 295

Exam 21: Cost-Volume-Profit Analysis

If Smart Touch Learning increases its production of tablet computers,what will be the effects on the variable and fixed costs per tablet?

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

Which of the following costing methods charges all the manufacturing costs to the products?

Absorption costing considers fixed selling and administrative costs as product costs.

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

Awanita Enterprises sells computer flash drives for $3.16 per unit.Unit variable cost is $0.06.The breakeven point in units is 3600,and expected sales in units are 4300.What is the margin of safety in dollars?

For the next year,Sullivan & Co.predicts sales 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 $10 per unit.The weighted-average contribution margin per unit is $8.67.

The degree of operating leverage is the ratio that measures the effects that variable costs have on operating income when sales volume changes.

The dollar amount that provides for covering fixed costs and then provides for operating income is called ________.

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

Absorption costing considers direct materials,direct labor,variable manufacturing overhead,and fixed manufacturing overhead as product costs.

Operating leverage predicts the effects that fixed costs have on operating income when ________.

Llywelyn,Inc.reports the following information for July: Sales Revenue \ 950,000 Variable Costs 150,000 Operating Income 410,000 What is the total fixed cost using variable costing?

Which of the following statements is TRUE of variable costing?

When there is no beginning Finished Goods Inventory and all the goods that are produced are sold,the operating income ________.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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