Exam 19: Cost-Volume-Profit Analysis

Retleb Manufacturing Company noticed that,during its busiest month of 2014,maintenance costs totaled $15,400,resulting from the production of 32,000 units.During its slowest month,$12,600 in maintenance costs were incurred,resulting from the production of 24,000 units.Use the high-low method to estimate the maintenance cost that the company will incur if it produces 20,000 units?

Projected cost information for a new product to be produced by Kolier Manufacturing is as follows: The product is to be sold for $49. a.Compute the number of units that must be sold to earn a profit of $80,000. b.Compute the number of units that must be sold if advertising costs rise by $12,000 and a targeted profit of $120,000 is to be obtained. c.Use the original information and sales of 10,000 units to compute the new selling price that the company must use to obtain a profit of $200,000. d.The most in annual sales that could be projected is 20,000 units.Determine the added amount that could be spent on fixed advertising costs if the highest possible selling price that management believes can be charged is $50 and if there is a targeted profit of $225,000.

Speed Zone Inc. ,dealers in automobiles,pays its employees a commission of 5 percent on each sale.What is the proper classification of the cost of sales commissions?

Loren Inc.sold 30,000 units of its product last year with the following results: The company expects variable costs to increase by $4.00 per unit this year. a.Assuming the unit sale price remains constant,compute the unit contribution margin and the contribution margin ratio for this year.(Round percentage value to one decimal place. ) b.Given the expected change in variable costs,how many units will have to be sold this year to earn the same operating income as last year? c.Assuming the company is willing to raise the unit sales price but wants the contribution margin to be the same as last year,determine the unit sales price the company must charge to cover the expected increase in variable costs.(Round your answers to two decimal places. )

Which of the following costs is a variable manufacturing cost?

Linear approximation is a method of converting nonlinear variable costs into linear fixed costs.

Hike Sports Corporation's income statement data for last year is as follows: What is Hike's breakeven point in dollars?

Manix Company has gathered the following data: Fixed costs are $233,280.Calculate the weighted-average breakeven point for Manix.(Do not round your intermediate calculations. )

The engineering method of separating costs is sometimes called a regression analysis.

Fusion Inc.sells a single product which has a contribution margin of $125 per unit.The fixed cost of Fusion is $195,000.If the company wants to earn $55,000 as operating income,it should sell:

The new Corina watch has an expected selling price per watch of $42,the projected variable cost per unit is $24,and estimated fixed costs per month are $24,120. The expected breakeven point in sales dollars is

Cost can only be classified as either variable or fixed.

Which of the following statements is true of fixed and variable costs?

Cost-volume-profit analysis assumes a constant sales mix.

Using the high-low method and the information below,compute the variable cost per telephone hour for PSA Corporation.

Which of the following decreases with increase in number of units sold?

Breakeven sales in dollars can be obtained without knowing the dollar value of contribution margin per unit.

An increase in the unit sales price will increase unit variable price.

Neverlate is world famous for its precision pocket watches.The company has estimated that variable manufacturing costs and variable selling costs per watch will be $72 and $43,respectively,for 2014.Also during 2014,the company is expecting fixed manufacturing costs to total $291,600 and fixed general and administrative expenses to amount to $253,175.The anticipated selling price of each watch is $500.Compute (a)the breakeven point in sales units and (b)the breakeven point in sales dollars.

A digitized music tuner has been a staple in Smooth Sounds' product line for several years.Annual fixed costs of production and administration related to this product in the past have been $643,500.Variable costs of production and sales have been $17 per unit.The selling price in the past has been $28 per unit.Based on the appearance of competing products on the market,management has asked you to do the following: a.Compute the breakeven point in units and sales dollars for the present product. b.Compute the breakeven point in units and sales dollars if the variable costs increased by $3 per unit and the fixed costs increased by $14,375 per month. c.Using the information from (b),an expected additional monthly advertising charge of $10,000,and a monthly sales rate of 15,000 units,compute the competitive selling price that the company must obtain in order to have a profit of $32,000 per month.(Round answers to two decimal places. )