Exam 19: Cost Behavior and Cost-Volume-Profit Analysis

Costs that vary in total in direct proportion to changes in an activity level are called:

(a) If Swannanoa Company's budgeted sales are $1,000,000, fixed costs are $350,000, and variable costs are $600,000, what is the budgeted contribution margin ratio? (b) If the contribution margin ratio is 30%, sales are $900,000 and fixed costs are $200,000, what is the operating profit?

Perfect Stampers makes and sells aftermarket hub caps. The variable cost for each hub cap is $4.75 and the hub cap sells for $9.95. Perfect Stampers has fixed costs per month of $3,120. Compute the contribution margin per unit and break-even sales in units and in dollars for the month.

The graph of a variable cost when plotted against its related activity base appears as a:

For the past year, Pedi Company had fixed costs of $70,000, unit variable costs of $32, and a unit selling price of $40. For the coming year, no changes are expected in revenues and costs, except that property taxes are expected to increase by $10,000. Determine the break-even sales (units) for (a) the past year and (b) the coming year.

Contribution margin is:

The Grant Company has sales of $300,000, and the break-even point in sales dollars if $225,000. Determine the company's margin of safety percentage.

Cool-It Company manufactures and sells commercial air conditioners. Because of current trends, it expects to increase sales by 10 percent next year. If this expected level of production and sales occurs and plant expansion is not needed, how should this increase affect next year's total amounts for the following costs. Variable Costs Fixed Costs Mixed Costs

Given the following: Variable cost as a percentage of sales = 60% Unit Variable cost = $30 Fixed costs = $200,000 What is the break-even point in units?

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

If fixed costs are $450,000 and the unit contribution margin is $50, the sales necessary to earn an operating income of $50,000 are 10,000 units.

If yearly insurance premiums are increased, this change in fixed costs will result in an increase in the break-even point.

Rusty Co. sells two products, X and Y. Last year Rusty sold 5,000 units of X's and 35,000 units of Y's. Related data are: What was Rusty Co.'s weighted average unit selling price?

Kissimmee Paint Co. reported the following data for the month of July. There were no beginning inventories and all units were completed (no work in process). In the month of July, 28,000 of the 30,000 units manufactured were sold at a price of $80 per unit.

Steven Company has fixed costs of $160,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. The sales mix for product X and Y is 60% and 40% respectively. Determine the break-even point in units of X and Y.

Which of the following conditions would cause the break-even point to increase?

For the current year ending April 30, Hal Company expects fixed costs of $60,000, a unit variable cost of $70, and anticipated break-even of 1,715 sales units. Round your answer to the nearest whole number.

Explain how variable costing net income will be different than absorption costing net income under the following situations: (1) A company had no beginning or ending inventory. During the year they produced and sold 10,000 units. (2) A company had no beginning inventory. During the year they produced 10,000 units and sold 8,000 units. (3) A company had 2,000 units in beginning inventory. During the year they produced 10,000 units and sold 12,000 units.

As production increases, what should happen to the variable costs per unit?