Exam 21: Cost Behavior and Cost-Volume-Profit Analysis

A firm operated at 80% of capacity for the past year, during which fixed costs were $210,000, variable costs were 70% of sales, and sales were $1,000,000. Operating profit was:

If fixed costs are $490,000, the unit selling price is $35, and the unit variable costs are $20, what is the break-even sales (units) if fixed costs are reduced by $40,000?

For purposes of analysis, mixed costs are generally:

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

With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. This is called:

The manufacturing cost of Prancer Industries for three months of the year are provided below: Using the high-low method, the variable cost per unit, and the total fixed costs are:

Which of the graphs in Figure 20-1 illustrates the behavior of a total variable cost?

If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 60%.

Currently, the unit selling price is $50, the variable cost, $34, and the total fixed costs, $108,000. A proposal is being evaluated to increase the selling price to $54.

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.

Rental charges of $40,000 per year plus $3 for each machine hour over 18,000 hours is an example of a fixed cost.

As production increases, what would you expect to happen to fixed cost per unit?

What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents:

Douglas Company has a contribution margin ratio of 30%. If Douglas has $336,420 in fixed costs, what amount of sales will need to be generated in order for the company to break even?