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Exam 18: Cost Behavior and Cost-Volume-Profit Analysis

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Question 71

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One aid in measuring cost behavior involves creating a display of the data about past costs in graphical form.Such a visual display is called a ________.

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Question 72

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Degree of operating leverage (DOL)is defined as total contribution margin in dollars divided by pretax income.

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Question 73

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A company's product sells at $12 per unit and has a $5 per unit variable cost.The company's total fixed costs are $98,000.The contribution margin per unit is:

A company has fixed costs of $90,000.Its contribution margin ratio is 30% and the product sells for $75 per unit.What is the company's break-even point in dollar sales?

A statistical method for identifying cost behavior is the:

A company's product sells at $12 per unit and has a $5 per unit variable cost.The company's total fixed costs are $98,000.The break-even point in units is:

A firm sells two products,Regular and Ultra.For every unit of Regular sold,two units of Ultra are sold.The firm's total fixed costs are $1,612,000.Selling prices and cost information for both products follow.What is the firm's break-even point in units of Regular and Ultra?

Carver Packing Company reports total contribution margin of $72,000 and pretax net income of $24,000 for the current month.In the next month,the company expects sales volume to increase by 8%.The degree of operating leverage and the expected percent change in income,respectively,are:

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

A firm expects to sell 25,000 units of its product at $11 per unit.Pretax income is predicted to be $60,000.If the variable costs per unit are $5,total fixed costs must be:

A manufacturer reports the following costs to produce 10,000 units in its first year of operations: Direct materials,$10 per unit,Direct labor,$6 per unit,Variable overhead,$70,000,and Fixed overhead,$120,000. -The total product cost per unit under variable costing is:

The contribution margin per unit expressed as a percentage of the product's selling price is the:

Management anticipates fixed costs of $72,500 and variable costs equal to 40% of sales.What will pretax income equal if sales are $325,000?

Wang Co.manufactures and sells a single product that sells for $450 per unit; variable costs are $270 per unit.Annual fixed costs are $800,000.Current sales volume is $4,200,000.Management targets an annual pre-tax income of $1,125,000. -Compute the dollar sales to earn the target pre-tax net income.

Forrester Company is considering buying new equipment that would increase monthly fixed costs from $120,000 to $150,000 and would decrease the current variable costs of $70 by $10 per unit.The selling price of $100 is not expected to change.Forrester's current break-even sales are $400,000 and current break-even units are 4,000.If Forrester purchases this new equipment,the revised break-even point in dollars would be:

The sales level at which a company neither earns a profit nor incurs a loss is the:

Johnston Co.anticipates total fixed costs of $120,000 and variable costs equal to 40% of sales.What is the pretax income if sales are $650,000?

Solving problems to determine the relationship of cost,volume,and profit often starts with measuring the ________ point.Further analysis emphasizing profitability may be accomplished by measuring the ________ and ________.

What are the unit contribution margin and the contribution margin ratio? What do these measures reveal about a company's cost structure?

Total variable costs change in proportion to changes in volume of activity.