Exam 21: Cost-Volume-Profit Analysis

Peeler's Smoothie Company has provided the following information: Sales price per unit \ 5.50 Variable cost per unit \ 2.50 Fixed costs per month \ 1000 Calculate the contribution margin ratio.(Round your answer to two decimal places.)

When all of the units produced are sold,the operating income is the same under both the absorption and variable costing methods.Assume no beginning and ending inventories.Which of the following gives the correct reason for the above statement?

If variable costs increase by 5% without a corresponding increase in selling price,the number of units needed to breakeven will ________.

The traditional income statement format is prepared under absorption costing.

Anatase,Inc.reports the following information: Units produced 2,500 units Units sold 2,000 units Sales price \ 200 per unit Direct materials \ 40 per unit Direct labor \ 25 per unit Variable manufacturing overhead \ 20 per unit Fixed manufacturing overhead \ 90,000 per year Variable selling and administrative costs \ 15 per unit Fixed selling and administrative costs \ 75,000 per year Assume that the production costs and sales prices were the same in the previous year.Assume no beginning inventories. Requirements: a)Calculate unit product cost using absorption costing and variable costing. b)Calculate the operating income using absorption costing and variable costing.

An increase in contribution margin per unit can be created by an ________ in sales price per unit and a ________ in variable costs per unit.

When the total variable costs are deducted from total mixed costs,we obtain ________.

An increase in the contribution margin can be achieved by ________.

When the total fixed costs increase,the breakeven point ________.

Which of the following statements is TRUE of the behavior of total variable costs,within the relevant range?

Sutherland,Inc.reports the following information: Units produced 640 units Units sold 440 units Sales price \ 200 per unit Direct materials \ 29 per unit Direct labor \ 12 per unit Variable manufacturing overhead \ 18 per unit Fixed manufacturing overhead \ 18,500 per year Variable selling and administrative costs \ 4 per unit Fixed selling and administrative costs \ 13,500 per year There are no beginning inventories.What is the ending balance in Finished Goods Inventory using absorption costing? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

Which of the following statements is TRUE of absorption and variable costing methods?

Which of the following is a period cost?

Iagan,Inc.has collected the following data.(There are no beginning inventories.) Units produced 700 units Sales price \ 150 per unit Direct materials \ 30 per unit Direct labor \ 10 per unit Variable manufacturing overhead \ 10 per unit Fixed manufacturing overhead \ 17,300 per year Variable selling and administrative costs \ 6 per unit Fixed selling and administrative costs \ 17,200 per year What is the ending balance in Finished Goods Inventory using variable costing if 600 units are sold?

Which of the following is considered a period cost under variable costing but not under absorption costing?

Harmony Company sells hand-knit scarves.Each scarf sells for $40.The company pays $60 to rent vending space for one day.The variable costs are $15 per scarf.How many scarves should the company sell each day in order to break even? (Round your answer up to the nearest whole scarf.)

Yazzie,Inc.reports the following information for the year ended December 31: Units sold 590 units Sales price \ 170 per unit Direct materials \ 28 per unit Direct labor \ 12 per unit Variable manufacturing overhead \ 18 per unit Fixed manufacturing overhead \ 20 per unit Variable selling and administrative costs \ 4 per unit Fixed selling and administrative costs \ 12,200 per year The operating income calculated using variable costing and absorption costing amounted to $9800 and $11,000,respectively.There were no beginning inventories.Determine the total fixed manufacturing overhead that will be expensed under variable costing for the year 2016.

Village Arcade sells tickets at $25 per person as a one-day entrance fee.Variable costs are $11 per person,and fixed costs are $52,500 per month. Assume that Village increases variable costs from $11 to $14 per person.Compute the new breakeven point in tickets and in sales dollars.

Variable costing is used for external reporting purposes,and absorption costing is used for internal decision-making purposes.

Clay Earth Company sells ceramic pottery at a wholesale price of $5 per unit.The variable cost of manufacture is $2.50 per unit.The fixed costs are $6200 per month.It sold 5700 units during this month.Calculate Clay Earth's operating income (loss)for this month.