Exam 21: Cost-Volume-Profit Analysis

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?

Share and Care International is trying to determine how many clients must be serviced in order to cover its monthly service overhead.Using the high-low method,it has determined that the variable cost per client is $800 and that the monthly fixed overhead is $28,000. -Assuming an average fee of $1,400 per client and a targeted profit of $26,000,the number of clients to be serviced is

Which of the following is not an assumption underlying cost-volume-profit analysis?

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 breakeven point is the level of activity at which only variable costs are recovered.

Which of the following is the realistic measure of what an organization is likely to produce,not what it can produce?

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.

Within the relevant range,total fixed cost and variable cost per unit remain constant.

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?

Native American Pottery expects to earn a profit of $95,000 in 2014.The company manufactures ornamental ceramic tiles.Each lot of 100 blocks requires variable costs of $5.00 for direct materials,$3.50 for direct labor,and $4.50 for overhead.Total variable costs are thus $13 per lot.Fixed costs for 2014 are expected to be $130,000.Each hundred-block lot will sell for $33. a.Determine how many lots of ceramic tiles 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.

For every unit that a company produces and sells above the breakeven point,its profitability is improved (ignoring taxes)by the unit's

The salary of a retail organization's sales personnel consist of a base amount plus a commission of 5 percent on each sale.Which of the following would properly classify the cost of sales salaries?

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?

When fixed costs are $18,000 and the contribution margin per unit is $4,the breakeven point is

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. -If 6,000 pizzas are sold in a given month and fixed costs increase by $5,000,the overall profit is

Which of the following statements most accurately explains the behavior of costs?

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 units per month is

How many total dollars of sales must Windblow Company sell to break even,if the selling price per unit is $10,variable costs are $5.00 per unit,and fixed costs are $10,000?

If Johnson Inc.sells 400 widgets at $180 per widget and has variable costs of $80 per widget and fixed costs of $30,000,what is the projected profit?

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