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

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Question 71

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If fixed costs are $600,000 and the unit contribution margin is $40, what is the break-even point if fixed costs are increased by $90,000?

A) 17,250
B) 15,000
C) 8,333
D) 9,667

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

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Question 72

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A business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a break-even point of $960,000, and operating income of $60,000 for the current year. Calculate the current year's sales.

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$960,000/....

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Question 73

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

Perfect Stampers makes and sells aftermarket hub caps. The variable cost for each hub cap is $4.75 and the hub cap sells for $9.95. Perfect Stampers has fixed costs per month of $3,120. Compute the contribution margin per unit and break-even sales in units and in dollars for the month.

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.

Variable costs are costs that remain constant on a per-unit basis as the level of activity changes.

Carmelita Company sells 40,000 units at $18 per unit. Fixed costs are $62,000 and income from operations is $258,000. Determine the (a) variable cost per unit, (b) unit contribution margin, and (c) contribution margin ratio .

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

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.

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

If fixed costs are $400,000, the unit selling price is $25, and the unit variable costs are $15, what is the break-even sales (units) if the variable costs are increased by $2?

Given the following information: Variable cost per unit = $5.00 July fixed cost per unit = $7.00 Units sold and produced in July 25,000 What is total estimated cost for August if 30,000 units are projected to be produced and sold?

Kissimmee Paint Co. reported the following data for the month of July. There were no beginning inventories and all units were completed (no work in process).

If fixed costs are $240,000, the unit selling price is $32, and the unit variable costs are $20, what are the old and new break-even sales (units) if the unit selling price increases by $4?

Rusty Co. sells two products, X and Y. Last year Rusty sold 5,000 units of X's and 35,000 units of Y's. Related data are: Assuming that last year's fixed costs totaled $675,000. What was Rusty Co.'s break-even point in units?

What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

In a cost-volume-profit chart, the

The point where the profit line intersects the horizontal axis on the profit-volume chart represents:

For the past year, Hornbostel Company had fixed costs of $6,552,000, a unit variable cost of $444, and a unit selling price of $600. For the coming year, no changes are expected in revenues and costs, except that a new wage contract will increase variable costs by $6 per unit. Determine the break-even sales (units) for (a) the past year and (b) the coming year.

A low operating leverage is normal for highly automated industries.