Exam 22: Cost-Volume-Profit Analysis

Camden Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Unit price and cost data are: Total fixed costs are $340,000. The break-even point in sales dollars for the current sales mix is (round to the nearest thousand):

Baker Company's sales mix is 3 units of A, 2 units of B, and 1 unit of C. Selling prices for each product are $20, $30, and $40, respectively. Variable costs per unit are $12, $18, and $24, respectively. Fixed costs are $320,000. What is the break-even point in composite units?

A break-even point can be calculated either in units or in dollars.

There are only two methods to derive an estimated line of cost behavior; the high-low method and the scatter diagram.

Which one of the following statements is not ?

Total contribution margin in dollars divided by pretax income is the:

The extent, or relative size, of fixed costs in the total cost structure is known as operating leverage.

A cost-volume-profit chart is also known as a(n)

Hartman Co. has fixed costs of $36,000 and a contribution margin ratio of 24%. If expected sales are $200,000, what is the margin of safety as a percent of sales?

Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300. Annual fixed costs are $990,000. Current sales volume is $4,200,000. Compute the contribution margin per unit.

To determine the slope of the variable cost from a scatter diagram, divide the change in volume by the change in cost.

Ivan Company has a goal of earning $70,000 after-tax income. Ivan would need to pay $20,000 of income taxes at the target level of income. The contribution margin ratio is 30%. What amount of dollar sales must be achieved to reach the goal if fixed costs are $36,000?

A line on a scatter diagram that is intended to reflect the past relation between cost and volume is the:

A product sells for $200 per unit, and its variable costs per unit are $130. The fixed costs are $420,000. What is the break-even point in dollar sales?

Scatter diagrams plot volume on the vertical axis and cost on the horizontal axis.

Ginger Company's product has a contribution margin per unit of $11.25 and a contribution margin ratio of 22.5%. What is the selling price of the product?

Cost-volume-profit analysis cannot be used when a firm produces and sells more than one product.

Hess Co. manufactures a product that sells for $12 per unit. Total fixed costs are $96,000 and variable costs are $7 per unit. Hess can buy a newer production machine that will increase total fixed costs by $22,800 but variable costs will be decreased by $0.40 per unit. What effect would the purchase of the new machine have on Hess's break-even point in units?

The break-even point is the sales level at which a company neither earns a profit nor incurs a loss.

The unit contribution margin divided by the selling price per unit is the ___________________.