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Exam 19: Cost-Volume-Profit Analysis

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Question 131

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A firm operated at 80% of capacity for the past year,during which fixed costs were $330,000,variable costs were 70% of sales,and sales were $1,000,000.Operating profit (loss) was

A) $140,000
B) $(30,000)
C) $370,000
D) $670,000

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

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Question 132

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Costs that vary in total in direct proportion to changes in an activity level are called

A) fixed costs
B) sunk costs
C) variable costs
D) differential costs

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

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Question 133

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

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

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?

Strait Co.manufactures office furniture.During the most productive month of the year,3,000 desks were manufactured at a total cost of $59,000.In the month of lowest production the company made 1,125 desks at a cost of $38,000.Using the high-low method of cost estimation,total fixed costs are

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?

The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed the contribution margin ratio.

Total variable costs change as the level of activity changes.

What was Carter Co.'s unit contribution margin of E?

The data required for determining the break-even point for a business are the total estimated fixed costs for a period,stated as a percentage of net sales.

Assuming no other changes,operating income will be the same under both the variable and absorption costing methods when the number of units manufactured equals the number of units sold.

For the current year ending April 30,Hal Company expects fixed costs of $60,000,a unit variable cost of $70,and anticipated break-even of 1,715 sales units. Round your answer to the nearest whole number.

A company has a margin of safety of 25%,a contribution margin ratio of 30%,and sales of $1,000,000.

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

The cost graphs in the illustration below shows various types of cost behaviors. For each of the following costs,identify the cost graph that best describes its cost behavior as the number of units produced and sold increases:

Direct materials and direct labor costs are examples of variable costs of production.

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

The relevant activity base for a cost depends upon which base is most closely associated with the cost and the decision-making needs of management.

If sales are $400,000,variable costs are 80% of sales,and operating income is $40,000,what is the operating leverage?