Exam 19: Cost-Volume-Profit Analysis

Suppose a company rents a building for $225,000 a year for the purpose of manufacturing between 100,000 and 180,000 units (the relevant range of activity).The rental cost per unit of production will __________ with increase in production level.

The contribution margin income statement divides costs into variable and fixed costs.

The breakeven formula adjusted for profits may be stated as

The point at which the total cost line intersects with the total revenue line is the breakeven point.

The sales mix is the proportion of each product's unit sales relative to the company's total unit sales.

Walton reported sales of $640,000,fixed costs of $314,000,and a profit of $92,000.If the contribution margin is $8 per unit,how many units did Walton sell?

The breakeven point is the point at which

Explain what cost-volume-profit analysis is and how managers use it.

Pixel Inc.is a manufacturer of video cameras and is preparing production and sales forecasts for the coming fiscal year.The company needs to determine the point at which the projected sales revenue will equal the total of all fixed and variable costs.Fixed costs are estimated to be $259,000,and variable costs are expected to be maintained at $125 per camera.Each camera will sell for $300. Compute (a)the breakeven point in sales units and (b)the breakeven point in sales dollars.

The delivery trucks of Italiana's Pizzeria incurred maintenance costs of $2,400 during its busiest month of 2014,in which 8,000 miles were driven collectively.During its slowest month,the trucks were driven for only 5,000 miles,for a maintenance cost of $1,800.Using the high-low method,calculate the expected maintenance cost for a month in which trucks are driven for 5,350 miles?

Breakeven is when total fixed costs equal total revenues.

If a company wants to know how many units of a certain product it must sell to make a desired level of profit,it should add the amount of profit to the numerator in the breakeven analysis.

Unit fixed costs will be the same regardless of how many units are produced.

Which of the following equations represents a breakeven point?

How many units must BAC Company sell to break even if the selling price per unit is $8.50,variable costs are $4.00 per unit,and fixed costs are $9,000?

CVP analysis can also be applied by a company selling multiple products.

A project breaks even when total revenues less variable costs equals fixed costs.

Edward Cheezer's Inc.makes and sells frozen four-cheese pizzas,New York-style.The expected selling price is $10 per pizza.The projected variable cost per pizza is $6.The estimated fixed costs per month are $10,000. The number of pizzas that must be sold to obtain a monthly profit of $20,000 is

The breakeven point is

Contribution margin equals fixed costs plus