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Exam 11: Cost Behavior and Cost-Volume-Profit Analysis

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Question 41

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If the unit selling price is $50,the volume of sales is $450,000,sales at the break-even point amount to $375,000,and the maximum possible sales are $550,000,the margin of safety will be 2,000 units.

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B) False

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Question 42

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The point in operations at which revenues and expenses are exactly equal is called the break-even point.

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B) False

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Question 43

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Omega Inc.is expecting a reduction of $25,000 in fixed costs of $725,000.What will be the change in break-even sales( in units) ,if selling price per unit is $50 and the unit variable cost is $35?

The systematic examination of the relationships among selling prices,volume of sales and production,costs,expenses,and profits is termed as:

If the volume of sales is $6,000,000 and sales at the break-even point amount to $5,000,000,the margin of safety will be 20%.

Tucker Co.manufactures office furniture.During the most productive month of the year,3,600 desks were manufactured at a total cost of $192,000.In its slowest month,the company made 1,200 desks at a cost of $72,000.Using the high-low method of cost estimation,total fixed costs per month are:

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 will be 12,500 units.

Costs that remain constant on a per-unit level as the level of activity changes are called:

If the volume of sales is $4,000,000 and sales at the break-even point amount to $3,200,000,the margin of safety will be 20%.

A mixed cost has characteristics of both a variable cost and a fixed cost.

If sales amounted to $375,000,variable costs are 70% of sales,and operating income is $50,000,what is the operating leverage?

Even if a business sells six products,it is possible to estimate the break-even point.

Direct materials cost is an example of a fixed cost of production.

Which of the following is an example of a cost that varies in total as the number of units produced changes?

If variable costs per unit increased because of an increase in hourly wage rates,the break-even point would:

Which of the following conditions would cause the break-even point to increase?

The fixed cost per unit varies with changes in the level of activity.

If sales total $2,000,000,fixed costs total $600,000,and variable costs are 60% of the sales,the contribution margin ratio is 40%.

For the past year,Cline 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 (in units)for (a)the past year and (b)the coming year.

When a business sells more than one product at varying selling prices,the business's break-even point can be determined as long as the number of products does not exceed: