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Exam 19: Cost-Volume-Profit Analysis

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Question 111

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Define operating leverage.Explain the relationship between a company's operating leverage and how a change in sales is expected to impact profits.

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Operating leverage is the relationship b...

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Question 112

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Absorption costing is required for financial reporting under generally accepted accounting principles.

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Question 113

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In a cost-volume-profit chart,the

If employees accept a wage contract that increases the unit contribution margin,the break-even point will decrease.

In cost-volume-profit analysis,all costs are classified into the following two categories:

The Klein Company reports the following data: ​ ​ Determine Klein Company's operating leverage.Round your answer to two decimal places.

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

Because variable costs are assumed to change in direct proportion to changes in the activity level,the graph of the variable costs when plotted against the activity level appears as a circle.

If sales total $2,000,000,fixed costs total $800,000,and variable costs are 60% of sales,the contribution margin ratio is 60%.

For the past year,Pedi Company had fixed costs of $70,000,unit variable costs of $32,and a unit selling price of $40.For the coming year,no changes are expected in revenues and costs,except that property taxes are expected to increase by $10,000.Determine the break-even sales (units)for (a)the past year and (b)the coming year.

Given the following: ​ Variable cost as a percentage of sales = 60% Unit variable cost = $30 Fixed costs = $200,000 ​ What is the break-even point in units?

Spice Inc.'s unit selling price is $60,the unit variable costs are $35,fixed costs are $125,000,and current sales are 10,000 units.How much will operating income change if sales increase by 8,000 units?

What was Rusty Co.'s weighted average unit selling price?

Variable costs are costs that remain constant in total dollar amount as the level of activity changes.

Reynold's Grocery has fixed costs of $350,000,the unit selling price is $29,and the unit variable costs are $20.What is the break-even sales (units) if the variable costs are decreased by $4?

Copper Hill Inc.manufactures laser printers within a relevant range of production of 70,000 to 100,000 printers per year.The following partially completed manufacturing cost schedule has been prepared: ​ ​ Complete the preceding cost schedule,identifying each cost by the appropriate letter (a)through (o).

Given the following information: ​ Variable cost per unit = $5.00 July fixed cost per unit = $7.00 Units sold and produced in July = 28,000 ​ What is total estimated cost for August if 30,000 units are projected to be produced and sold?

Safari Co.sells two products,Orks and Zins.Last year,Safari sold 21,000 units of Orks and 14,000 units of Zins.Related data are ​ ​ Calculate the following: a.Safari Co.'s sales mix b.Safari Co.'s unit selling price of E? c.Safari Co.'s unit contribution margin of E? d.Safari Co.'s break-even point assuming that last year's fixed costs were $160,000.

Direct materials cost that varies with the number of units produced is an example of a fixed cost of production.

Costs that remain constant in total dollar amount as the level of activity changes are called