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Exam 19: Cost-Volume-Profit Analysis

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Question 101

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Which of the graphs in Figure 21-1 illustrates the behavior of a total variable cost?

A) Graph 2
B) Graph 3
C) Graph 4
D) Graph 1

E) A) and B)
F) A) and C)

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Question 102

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Given the following cost and activity observations for George Company's utilities,use the high-low method to calculate George's variable utilities costs per machine hour.

A) $100.00
B) $1.00
C) $10.00
D) $0.10

E) None of the above
F) A) and D)

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Question 103

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

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

Bryce Co.sales are $914,000,variable costs are $498,130,and operating income is $196,000.What is the contribution margin ratio?

Which of the following activity bases would be the most appropriate for food costs of a hospital?

Bryce Co.sales are $914,000,variable costs are $498,130,and operating income is $196,000.What is the contribution margin ratio?

For purposes of analysis,mixed costs are

Given the following cost and activity observations for George Company's utilities,use the high-low method to calculate George's variable utilities costs per machine hour.

Racer Industries has fixed costs of $900,000.Selling price per unit is $250,and variable cost per unit is $130. Required: (a)How many units must Racer sell in order to break even? (b)How many units must Racer sell in order to earn a profit of $480,000? (c)A new employee suggests that Racer Industries sponsor a 10K marathon as a form of advertising.The cost to sponsor the event is $7,200.How many more units must be sold to cover this cost?

Cost behavior refers to the methods used to estimate costs for use in managerial decision making.

Define operating leverage.Explain the relationship between a company's operating leverage and how a change in sales is expected to impact profits.

Break-even analysis is one type of cost-volume-profit analysis.

If fixed costs are $450,000,the unit selling price is $75,and the unit variable costs are $50,what are the old and new break-even sales (units) if the unit selling price increases by $10?

If the unit selling price is $40,the volume of sales is $3,000,000,sales at the break-even point amount to $2,500,000,and the maximum possible sales are $3,300,000,the margin of safety is 11,500 units.

Silver River Company sells Products S and T and has made the following estimates for the coming year: ​ 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.

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

The range of activity over which changes in cost are of interest to management is called the relevant range.

Payton Industries has fixed costs of $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?

Cost behavior refers to the manner in which