Exam 19: Cost-Volume-Profit Analysis

Louis Company sells a single product at a price of $65 per unit.Variable costs per unit are $45 and total fixed costs are $625,500.Louis is considering the purchase of a new piece of equipment that would increase the fixed costs to $800,000,but decrease the variable costs per unit to $42. Required: If Louis Company expects to sell 44,000 units next year,should they purchase this new equipment?

A business had a margin of safety ratio of 20%,variable costs of 75% of sales,fixed costs of $240,000,a break-even point of $960,000,and operating income of $60,000 for the current year.Calculate the current year's sales.

Only a single line,which represents the difference between total sales revenues and total costs,is plotted on the profit-volume chart.

If fixed costs increased and variable costs per unit decreased,the break-even point would

The point in operations at which revenues and expenses are exactly equal is called the break-even point.

Given the following cost and activity observations for Bounty Company's utilities,use the high-low method to calculate Bounty' variable utilities costs per machine hour.Round your answer to the nearest cent. ​

For purposes of analysis,mixed costs can generally be separated into their variable and fixed components.

If fixed costs are $400,000 and the unit contribution margin is $20,what amount of units must be sold in order to have a zero profit?

If fixed costs are $1,200,000,the unit selling price is $240,and the unit variable costs are $110,what is the amount of sales required to realize an operating income of $200,000?

The contribution margin ratio is the same as the profit-volume ratio.

The systematic examination of the relationships among selling prices,volume of sales and production,costs,and profits is termed

In a cost-volume-profit chart,the

Which of the following describes the behavior of the fixed cost per unit?

Douglas Company has a contribution margin ratio of 30%.If Douglas has $336,420 in fixed costs,what amount of sales will need to be generated in order for the company to break even?

What would Timmer's net income be for the year using variable costing?

If fixed costs are $450,000 and the unit contribution margin is $50,the sales necessary to earn an operating income of $50,000 are 10,000 units.

If a business sells two products,it is not possible to estimate the break-even point.

Which of the following costs is a mixed cost?

Jacob Inc.has fixed costs of $240,000,the unit selling price is $32,and the unit variable costs are $20.What are the old and new break-even sales (units)if the unit selling price increases by $4?

For the coming year,River Company estimates fixed costs at $109,000,the unit variable cost at $21,and the unit selling price at $85.Determine (a)the break-even point in units of sales,(b)the unit sales required to realize operating income of $150,000 and (c)the probable operating income if sales total $500,000. ​ Round units to the nearest whole number and percentage to one decimal place.