Exam 19: Cost-Volume-Profit Analysis

Excerpts from cost-volume-profit analysis of Nutshell Inc.indicate fixed costs of $85,000,a contribution margin per unit of $40,a selling price of $95,and a sales level of 4,000 units.What must be the targeted level of profit?

You have calculated,using the high-low method,a variable cost per machine hour of $0.80 for your production power costs.Power costs at 6,000 machine hours are $5,400;at 9,000 machine hours,they are $7,800.What are the total fixed costs that you would use to estimate production power costs for your company at any level within your relevant range?

The weighted-average breakeven point is the breakeven point for the entire company.

Campbell Inc.earned sales revenue of $150,000 in 2014.Campbell sells each unit of its product for $6.00 and has a 32 percent contribution margin.Campbell has fixed costs of $36,000. What is Cambell's breakeven point in sales dollars?

Lopez Inc.sells 400 watches at $59 per watch and has variable costs of $26 per watch and fixed costs of $4,000,what is the projected profit?

Cost-volume-profit analysis is not appropriate for service businesses,as they do not have any direct manufacturing costs.

Breakeven analysis helps in finding the level of activity at which sales revenue equals the sum of all variable and fixed costs.

Unit variable costs vary with changes in productive output,whereas total variable costs remain constant.

Campground Inc.is considering the production and sale of propane lamps.Annual fixed costs associated with the project are expected to total $60,000.In addition,each lamp would sell for $12 and would require $7 in variable costs.Calculate (a)the breakeven point in units, (b)the breakeven point in dollars, (c)the number of lamps that must be sold to earn a profit of $120,000,and (d)the operating income or loss at a sales volume of 16,000 lamps.

Fixed costs remain constant in a relevant range of activity.

In breakeven analysis adjusted for a profit factor,increasing the unit sales price will decrease the number of units needed to meet the targeted profit.

If fixed costs are increased,then a breakeven analysis with an adjustment for profit will yield an increase in targeted sales units.

Given the following cost and activity observations for Levo Enterprises' utilities,use the high-low method to calculate Levo's variable utilities cost per machine hour.Round your answer to two decimal places.

Field Legal Services is trying to determine the variable and fixed elements of its service overhead.The following data have been collected from recent activity: The formula for total service overhead costs is

Adding a desired profit level to breakeven computations will lower the number of units required to be sold.

J & C Stacy Enterprises is expecting to earn a profit of $180,000 in 2014.The company manufactures wrought iron lamps.Each lamp requires variable costs of $13 for direct materials,$9 for direct labor,and $12 for overhead.Total variable costs are thus $34 per lamp.Fixed costs for 2014 are expected to be $630,000.Each lamp will sell for $79. a.Determine how many lamps the company must sell to earn its targeted profit,and convert this amount to sales dollars. b.Compute breakeven sales in dollars. c.Explain the dollar difference between breakeven sales dollars and the sales dollars necessary to earn the targeted profit.Use the contribution margin as part of your explanation.

Repair bills for large machinery may include a flat fee for the visit to the company's premises plus additional labor charges per hour of repair work and various costs of replacement parts needed.What type of cost is the repair?

The relevant range of activity is the range in which actual operations of a company are likely to occur.

Using the high-low method and the information below,compute the monthly total fixed costs for Coral Corporation.

Cost behavior analysis is not useful to a service business.