Exam 21: Cost-Volume-Profit Analysis

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.

An organization's practical capacity is its theoretical or ideal capacity reduced by normal and anticipated work stoppages,such as machine breakdowns.

Cost behavior is defined as the manner in which costs respond to changes in volume or activity.

If direct materials costs are increased,the breakeven point will decrease.

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.

Product X sells for $20 per unit and has variable costs of $10 per unit.If the fixed costs amount to $45,000,the breakeven point will be:

The weighted-average contribution margin is computed by multiplying each product's unit contribution margin by the sales mix percentage of each product.

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

Given below are the costs and activity observations for Ncwin Company's maintenance costs. Using the high-low method,what is Ncwin's monthly fixed costs for maintenance?

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. )

Cost can only be classified as either variable or fixed.

A scatter diagram helps to determine if a linear relationship exists between a cost item and its related activity measure.

At production levels below the breakeven point,

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?

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?

When using the high-low method,the accountant assumes the fixed portion of mixed costs to be the lowest fixed amount incurred during the period under review.

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?

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.

The high-low method allows managers to differentiate between fixed and variable costs when dealing with mixed costs.