Exam 11: Cost Behavior and Cost-Volume-Profit Analysis

For the current year ending April 30, Philip Company expects fixed costs of $70,000, a unit variable cost of $45, and a unit selling price of $95. (a) Compute the anticipated break-even saless (in units). (b) Compute the sales (in units) required to realize an operating profit of $\$ 8,000$ .

If the volume of sales is $6,000,000 and sales at the break-even point amount to $5,000,000, the margin of safety will be 20%.

The following is a list of various costs of producing sweatshirts. Classify each cost as either a variable, fixed, or mixed cost for units produced and sold.

For the past year, Cline Company had fixed costs of $6,552,000, a unit variable cost of $444, and a unit selling price of $600. For the coming year, no changes are expected in revenues and costs except that a new wage contract will increase variable costs by $6 per unit. Determine the break-even sales (in units) for (a) the past year and (b) the coming year.

If fixed costs are $300,000 and variable costs are 70% of break-even sales, profit is zero when sales revenue is $1,000,000.

The graph of the variable costs when plotted against the activity level appears as a line parallel to horizontal axis.

Tops Company sells Products D and E and has made the following estimates for the coming year: Sales Mix Unit Variable Cost Unit SellingPrice Product 60\% \ 24 \ 30 40 56 70 Fixed costs are estimated at $202,400. Determine (a) the estimated sales in units of the overall product necessary to reach the break-even point for the coming year, (b) the estimated number of units of each product necessary to be sold to reach the break-even point for the coming year, and (c) the estimated sales in units of the overall product necessary to realize an operating income of $119,600 for the coming year.

The break-even point (in units) is calculated by dividing the total estimated fixed costs by the net sales of a period.

In cost-volume-profit analysis, all costs are classified into the following two categories:

The contribution margin ratio is:

Which of the following is an example of a cost that varies in total as the number of units produced changes?

Cost-volume-profit analysis cannot be used if which of the following occurs?

Which of the following is an example of a cost that varies in total as the number of units produced changes?

Tucker Co. manufactures office furniture. During the most productive month of the year, 3,600 desks were manufactured at a total cost of $192,000. In its slowest month, the company made 1,200 desks at a cost of $72,000. Using the high-low method of cost estimation, total fixed costs per month are:

If sales are $820,000, variable costs are 68% of sales, and operating income is $260,000, what is the contribution margin ratio?

If fixed costs are $850,000 and variable costs are 60% of the sales, what is the break-even point (in dollars)?

Only a single line, which represents the difference between total sales revenues and total costs, is plotted on the cost-volume-profit chart.

If the volume of sales is $6,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety will be 25%.

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

Kennedy Co. sells two products, Arks and Bins. Last year, Kennedy sold 32,000 units of Arks and 18,000 units of Bins. Related data are: Use the above given data to solve the following questions: Refer to the information provided for Kennedy Co. Assuming that last year's fixed costs totaled $910,000, what was Kennedy's break-even point in units?