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Exam 4: Cost Behavior and Cost-Volume-Profit Analysis

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Question 51

True/False

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If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 40%.

A) True
B) False

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Question 52

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What was Rusty Co.'s unit variable cost of E?

A) $52.50
B) $70.00
C) $120.00
D) $50.00

E) All of the above
F) A) and B)

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Question 53

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

In order to choose the proper activity base for a cost, managerial accountants must be familiar with the operations of the entity.

If fixed costs are $400,000 and the unit contribution margin is $20, what amount of units must be sold in order to have a zero profit?

Variable costs are costs that vary on a per-unit basis with changes in the activity level.

What was Carter Co.'s sales mix last year?

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

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

If fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, what is the amount of sales required to realize an operating income of $200,000?

Unit variable cost does not change as the number of units of activity changes.

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

The three most common cost behavior classifications are

A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost.

If fixed costs are $850,000 and the unit contribution margin is $50, profit is zero when 15,000 units are sold.

A cost that has characteristics of both a variable cost and a fixed cost is called a

Which of the following describes the behavior of the fixed cost per unit?

Roller Paint Co.reported the following data for the month of September.There were no beginning inventories and all units were completed no work in process. In the month of September, 28,000 of the 30,000 units manufactured were sold at a price of $80 per unit. a Prepare a variable costing income statement. b Prepare an absorption costing income statement. c Briefly explain why there is a difference in income from operations between the two methods. a.Relevant range b.Break-even point c.Contribution margin d.Fixed costs e.Variable costs

The point in operations at which revenues and expenses are exactly equal is called the break-even point.

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.