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

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Question 71

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Which of the following statements is TRUE regarding fixed and variable costs?

A) Both costs are constant when considered on a per-unit basis.
B) Both costs are constant when considered on a total basis.
C) Fixed costs are fixed in total,and variable costs are fixed per unit.
D) Variable costs are fixed in total,and fixed costs vary in total.

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

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Question 72

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If fixed costs are $810,000,the unit selling price is $60,and the unit variable costs are $48,what is the break-even sales (in units) if the variable costs are increased by $2?

A) 16,200 units
B) 57,875 units
C) 81,000 units
D) 67,500 units

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

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Question 73

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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

Clinton Co.has an operating leverage of 4.Sales are expected to increase by 8% next year.Operating income is

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

Snower Corporation sells product G for $150 per unit,the variable cost per unit is $105,the fixed costs are $720,000,and Snower is in the 25% corporate tax bracket.What are the sales (in dollars) required to earn a net income (after tax) of $40,000?

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

Kennedy Co.sells two products,Arks and Bins.Last year,Kennedy sold 32,000 units of Arks and 18,000 units of Bins.Related data are: -What was Kennedy Co.'s overall enterprise product's unit contribution margin?

If fixed costs are $450,000,the unit selling price is $75,and the unit variable costs are $50,what are the old and new break-even sales (in units) if the unit selling price increases by $5?

Monthly rent on a factory building that does NOT vary with the number of units produced is an example of a fixed cost.

If sales total $1,000,000,fixed costs total $400,000,and variable costs are 55% of sales,the contribution margin ratio is 45%.

If fixed costs are $220,000 and the unit contribution margin is $25,the sales necessary to earn an operating income of $30,000 are 10,000 units.

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 7,500 units.

Only a single line,which represents the difference between total sales revenues and total costs,is plotted on the profit-volume chart.

If fixed costs are $810,000,the unit selling price is $60,and the unit variable costs are $48,what is the break-even sales (in units) if fixed costs are reduced by $50,000?

Which of the following graphs illustrates the behavior of a total variable cost?

Winston Co.manufactures office furniture.During the most productive month of the year,3,500 desks were manufactured at a total cost of $84,400.In its slowest month,the company made 1,100 desks at a cost of $46,000.Using the high-low method of cost estimation,total fixed costs are

If direct materials cost per unit decreases,the amount of sales necessary to earn a desired amount of profit will decrease.

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