Exam 21: Cost-Volume-Profit Analysis

If fixed costs are $180,000,variable costs are $38 per unit,and the product sells for $70,the breakeven point in sales dollars is $5,625.

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?

In a breakeven scatter diagram,the loss area continues till the total costs line is below total revenues line.

Using or not using the contribution margin for cost-volume-profit computations will not change the resulting amount of breakeven units in a given situation.

If targeted sales are 12,000 units,the sales price per unit is $70,fixed costs are $130,000,and variable costs are $40 per unit,then planned profit must be $360,000.

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?

Using the contribution margin approach,find the breakeven point in units if the selling price per unit is $10,the variable cost per unit is $6,and the fixed costs are $9,000.

Contribution margin equals fixed costs plus

Electric power charges are an example of a mixed cost.

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

The contribution margin equals zero at the breakeven point.

Operating income is determined by deducting all fixed costs related to production,selling,and administration from contribution margin.

a.Provide two different ways of computing breakeven units: one with the contribution margin in the computation and one without the contribution margin. b.Compare and contrast the two different methods of computing breakeven units.Does the use of the contribution margin alter the resulting number of breakeven units? Why or why not? c.Comment on how the contribution margin affects the computation of breakeven units.Would an increase in the contribution margin increase or decrease the number of breakeven units required?

The graph below depicts two different types of costs.Questions related to the graph should be answered in the spaces provided. a.The line H-B represents what type of cost? ______________________ b.Total variable costs for production at point J would be ___________ than at point L. c.Fixed costs per unit at point J would be _________ than at point L. d.What is a possible reason that line G-A increases at point A to a new horizontal line? e.What kind of cost is depicted by the line from point G to point A?

Costs that change,in total,in direct proportion to changes in productive output,or activity,are called variable costs.

Listed below are selected costs of a sports car manufacturer at a production level of 4,000 cars.(a)Identify three fixed costs.(b)Support your answer by illustrating the cost behavior pattern per unit and in total as the annual volume of cars produced increases from 4,000 cars to 8,000 cars,for one fixed cost.(Note: The production increase is within the relevant range. )

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

Unit fixed costs vary inversely with activity or volume.

Depreciation calculated using the straight-line method is an example of a fixed cost.

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.