Question 1

For purposes of analysis, mixed costs are generally:

Accepted Answer

A)   classified as fixed costs
B)   classified as variable costs
C)   classified as period costs
D)   separated into their variable and fixed cost componentsE) A) and B)
F) A) and D) D

Question 2

The manufacturing cost of Carrie Industries for the first three months of the year are provided below:
  Using the high-low method, determine the (a) variable cost per unit, and (b) the total fixed cost.

Accepted Answer

a. $30 per unit = ($...

Question 3

If fixed costs are $500,000 and variable costs are 60% of break-even sales, profit is zero when sales revenue is $930,000.

Accepted Answer

A) True 
 B)False

Question 4

The three most common cost behavior classifications are:

Accepted Answer

A)   variable costs, product costs, and sunk costs
B)   fixed costs, variable costs, and mixed costs
C)   variable costs, period costs, and differential costs
D)   variable costs, sunk costs, and opportunity costsE) A) and C)
F) C) and D) B

Question 5

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 .

Accepted Answer

a.

b. $8 per unit...

Question 6

Knowing how costs behave is useful to management for all the following reasons except for

Accepted Answer

A)   predicting customer demand.
B)   predicting profits as sales and production volumes change.
C)   estimating costs.
D)   changing an existing product production.E) C) and D)
F) A) and D)

Question 7

Currently, the unit selling price is $50, the variable cost, $34, and the total fixed costs, $108,000. A proposal is being evaluated to increase the selling price to $54.

Accepted Answer

The answer of Currently, the unit selling price is $50,...

Question 8

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

Accepted Answer

A)   fixed costs
B)   mixed costs
C)   product costs
D)   variable costsE) C) and D)
F) B) and C)

Question 9

The range of activity over which changes in cost are of interest to management is called the relevant range.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

If sales are $400,000, variable costs are 75% of sales, and operating income is $50,000, what is the operating leverage?

Accepted Answer

A)   2.5
B)   7.5
C)   2.0
D)   0E) None of the above
F) A) and B)

Question 12

The Keith Company reports the following data.
  Determine Keith Company's operating leverage.

Accepted Answer

8.0 = ($900,000 - $5...

Question 13

Direct materials and direct labor costs are examples of variable costs of production.

Accepted Answer

A) True 
 B)False

Question 14

Blane Company has the following data:
  What will operating income be if units sold double to 100,000 units?

Accepted Answer

The answer of Blane Company has the following data:
 ...

Question 15

Companies with large amounts of fixed costs will generally have a high operating leverage.

Accepted Answer

A) True 
 B)False

Question 16

The contribution margin ratio is the same as the profit-volume ratio.

Accepted Answer

A) True 
 B)False

Question 17

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:  What was Rusty Co.'s weighted average unit variable cost?

Accepted Answer

A)   $52.50
B)   $70.00
C)   $120.00
D)   $50.00E) All of the above
F) A) and D)

Question 18

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars) ?

Accepted Answer

A)   $2,125,000
B)   $ 340,000
C)   $3,400,000
D)   $1,416,666E) None of the above
F) A) and B)

Question 19

If fixed costs are $500,000, the unit selling price is $55, and the unit variable costs are $30, what is the break-even sales (units)  if fixed costs are increased by $80,000?

Accepted Answer

A)   10,545 units
B)   19,333 units
C)   23,200 units
D)   25,000 unitsE) A) and B)
F) C) and D)

Question 20

Which of the following costs is a mixed cost?

Accepted Answer

A)   Salary of a factory supervisor
B)   Electricity costs of $3 per kilowatt-hour
C)   Rental costs of $10,000 per month plus $.30 per machine hour of use
D)   Straight-line depreciation on factory equipmentE) C) and D)
F) None of the above

Exam 19: Cost Behavior and Cost-Volume-Profit Analysis

For purposes of analysis, mixed costs are generally:

Correct AnswerverifiedD

The manufacturing cost of Carrie Industries for the first three months of the year are provided below: Using the high-low method, determine the (a) variable cost per unit, and (b) the total fixed cost.

Correct Answerverifieda. $30 per unit = ($...View AnswerShow Answer

If fixed costs are $500,000 and variable costs are 60% of break-even sales, profit is zero when sales revenue is $930,000.

Correct AnswerverifiedShow Answer

The three most common cost behavior classifications are:

Correct AnswerverifiedB

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 .

Correct Answerverifieda. b. $8 per unit...View AnswerShow Answer

Knowing how costs behave is useful to management for all the following reasons except for

Correct AnswerverifiedShow Answer

Currently, the unit selling price is $50, the variable cost, $34, and the total fixed costs, $108,000. A proposal is being evaluated to increase the selling price to $54.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The range of activity over which changes in cost are of interest to management is called the relevant range.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If sales are $400,000, variable costs are 75% of sales, and operating income is $50,000, what is the operating leverage?

Correct AnswerverifiedShow Answer

The Keith Company reports the following data. Determine Keith Company's operating leverage.

Correct Answerverified8.0 = ($900,000 - $5...View AnswerShow Answer

Direct materials and direct labor costs are examples of variable costs of production.

Correct AnswerverifiedShow Answer

Blane Company has the following data: What will operating income be if units sold double to 100,000 units?

Correct Answerverified11ea8de9_2d25_0a55_b636_93d0c697d1a3_TB2083_00

Companies with large amounts of fixed costs will generally have a high operating leverage.

Correct AnswerverifiedShow Answer

The contribution margin ratio is the same as the profit-volume ratio.

Correct AnswerverifiedShow Answer

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: What was Rusty Co.'s weighted average unit variable cost?

Correct AnswerverifiedShow Answer

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars) ?

Correct AnswerverifiedShow Answer

If fixed costs are $500,000, the unit selling price is $55, and the unit variable costs are $30, what is the break-even sales (units) if fixed costs are increased by $80,000?

Correct AnswerverifiedShow Answer

Which of the following costs is a mixed cost?

Correct AnswerverifiedShow Answer

Correct Answer
verified
D

Correct Answer
verified
a. $30 per unit = ($...
View Answer

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified
a.

b. $8 per unit...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
8.0 = ($900,000 - $5...
View Answer

Correct Answer
verified

Correct Answer
verified
11ea8de9_2d25_0a55_b636_93d0c697d1a3_TB2083_00

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified