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Exam 20: Cost-Volume-Profit Analysis

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Question 31

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Flying Cloud Co. has the following operating data for its manufacturing operations: Unit selling price $ 250 Unit variable cost 100 Total fixed costs 840,000 The company has decided to increase the wages of hourly workers which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be

A) increased by 640 units
B) increased by 400 units
C) decreased by 640 units
D) increased by 800 units

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

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Question 32

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If fixed costs are $450,000 and the unit contribution margin is $50, the sales necessary to earn an operating income of $50,000 are 10,000 units.

A) True
B) False

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Question 33

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Rusty Co. sells two products: X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows: ​ -Rusty Co.'s sales mix last year was

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

A production supervisor's salary that does not vary with the number of units produced is an example of a fixed cost.

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 14,500 units.

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

Bobby Company has fixed costs of $160,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. The sales mix for Products X and Y is 60% and 40%, respectively. Determine the break-even point in units of X and Y.

Match each of the following costs with the graph (a-e) that best portrays its cost behavior as the number of units produced and sold increases. -Per-unit cost of direct labor A)Graph 1 B)Graph 2 C)Graph 3 D)Graph 4 E)Graph 5

Match each of the following descriptions with the appropriate term (a-e). -Contribution margin divided by operating income A)Profit-volume chart B)Cost-volume-profit chart C)Sales mix D)Operating leverage E)Margin of safety

Piper Technology's fixed costs are $1,500,000, the unit selling price is $250, and the unit variable costs are $130. The amount of sales required to realize an operating income of $200,000 is

Match each of the following costs of producing T-shirts with the appropriate classification (a-c). -Salary of the production supervisor A)Variable cost B)Fixed cost C)Mixed cost

If fixed costs are $400,000 and the unit contribution margin is $20, the amount of units that must be sold in order to have a zero profit is

For the coming year, River Company estimates fixed costs at $109,000, the unit variable cost at $21, and the unit selling price at $85. Determine (a) the break-even point in units of sales, (b) the unit sales required to realize operating income of $150,000, and (c) the probable operating income if sales total $500,000.​ Round units to the nearest whole number and percentage to one decimal place.

Figure 1 ​ -Which of the following graphs in Figure 1 illustrates the behavior of a total fixed cost?

Currently, the unit selling price is $50, the variable cost is $34, and the total fixed costs are $108,000. A proposal is being evaluated to increase the selling price to $54.​ a. Compute the current break-even sales (units). b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant.

Match each of the following costs with the graph (a-e) that best portrays its cost behavior as the number of units produced and sold increases. -Salary of the night-time security guard of $3,800 per month A)Graph 1 B)Graph 2 C)Graph 3 D)Graph 4 E)Graph 5

Given the following cost and activity observations for Smithson Company's utilities, use the high-low method to determine Smithson's fixed costs per month. Do not round your intermediate calculations.

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

As production increases, variable costs per unit