FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

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

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

A cost that can be separated into fixed and variable components is called a:

A) Mixed cost.
B) Step-variable cost.
C) Composite cost.
D) Curvilinear cost.
E) Differential cost.

F) B) and D)
G) C) and E)

Correct Answer

verified

Show Answer

Question 62

True/False

Review LaterAdd Note

Review Later

The contribution margin per unit is the price at which a unit must be sold in order for the company to break even.

A) True
B) False

Correct Answer

verified

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

Jet Company's break-even point is 5,000 units. The company's fixed costs are $240,000, and its total variable costs are $85,000. The unit sales price is:

Discuss how CVP analysis can be useful in planning.

During the past year a company had total fixed costs of $700,000. Its product sold for $93 per unit. Variable costs during this time equaled $45 per unit. Next year the company is anticipating a 10% increase in total fixed costs and a $3 per unit decrease in variable costs, but would like to maintain its current selling price per unit. How many units must the company sell next year to earn $1,000,000? (Round answer to complete units.)

If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety (in dollars) is:

A company sells a single product that has a contribution margin ratio of 24%. If the company's total fixed costs are $84,000, what is the break-even point in dollar sales?

The following information describes a product expected to be produced and sold by Hadley Company: $\begin{array}{ll}\text { Selling price } & \$ 80 \text { per unit } \\\text { Variable costs } & \$ 32 \text { per unit } \\\text { Total fixed costs } & \$ 630,000\end{array}$ Required: (a) Calculate the contribution margin ratio. (b) Calculate the break-even point in dollar sales. (c) What dollar amount of sales would be necessary to achieve a pretax income of $120,000?

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

A cost that changes with volume, but not at a constant rate, is called a:

Management of a company is evaluating two potential orders. Due to limited capacity only one of these orders can be accepted. Incremental fixed costs are the same for either option. Based on the information in the table below which of the following statements is true?

Solving problems to determine the relationship of cost, volume, and profit often commences with the measurement of the _____________ point. Further analysis emphasizing profitability may be accomplished by measuring the _______________ and _________________.

A cost that changes in total proportionately to changes in volume of activity is a(n) :

The excess of expected sales over the sales level at the break-even point is known as the:

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 ______________________.

Legacy Company is considering the production and sale of a new product with the following sales and cost data: unit sales price $18; unit variable costs $8.10; and total fixed costs of $8,250. Legacy is subject to a 25% tax rate. Determine the dollar sales needed to generate an after-tax income of $33,000.

A company has total fixed costs of $200,000. Its product sells for $25 per unit and variable costs amount to $15 per unit. The company wishes to earn an after-tax income of $35,000. Assume that the company has a 30% tax rate. How many units must be sold to achieve this after-tax income level?

Cost-volume-profit analysis is a precise tool for perfectly predicting the profit consequences of cost changes, price changes, and volume changes.

Tanner Inc. has incurred the following overhead costs over a 6 week period: -If Tanner expects to have 65 hours of machine time in a future week, what overhead costs could they expect to incur?

The following data relate to a product sold by Nelson Company: $\begin{array}{lr}\text { Total Variable costs } & \$ 90,000 \\\text { Total fixed costs } & 27,000 \\\text { Predicted after-tax income }(30 \% \text { tax }) & 12,600 \\\text { Contribution margin per unit } & 5\end{array}$ (a) Calculate the number of units expected to be sold. (b) Calculate the expected total dollar sales.