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Exam 4: Cost Behavior and Cost-Volume-Profit Analysis

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Question 101

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The Keith Company reports the following data.

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Determine Keith Company's oper...

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Question 102

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Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000?

A) $8,000 increase
B) $8,000 decrease
C) $30,000 decrease
D) $30,000 increase

E) B) and D)
F) None of the above

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Question 103

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Which of the following describes the behavior of the variable cost per unit?

The graph of a variable cost when plotted against its related activity base appears as a:

Variable costs are costs that vary in total in direct proportion to changes in the activity level.

Douglas Company has a contribution margin ratio of 30%. If Douglas has $336,420 in fixed costs, what amount of sales will need to be generated in order for the company to break even?

The Dean Company has sales of $500,000, and the break-even point in sales dollars of $300,000. Determine the company's margin of safety percentage.

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:

The following data are available from the accounting records of Suwanee Co. for the month ended May 31, 2012. 17,000 units were manufactured and sold during the accounting period at a price of $60 per unit. There was no beginning inventories and all units were completed (no work in process).

The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed the contribution margin ratio.

If yearly insurance premiums are increased, this change in fixed costs will result in an increase in the break-even point.

Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are: Assuming that last year's fixed costs totaled $960,000, what was Carter Co.'s break-even point in units?

Global Publishers has collected the following data for recent months: Required: a. Using the high-low method, find variable cost per unit, total fixed costs, and the total cost equation. b. What is the estimated cost for a month in which 19,000 issues are published?

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.

Which of the following activity bases would be the most appropriate for food costs of a hospital?

Given the following cost and activity observations for Taco Company's utilities, use the high-low method to calculate Taco's variable utilities costs per machine hour.

If the property tax rates are increased, this change in fixed costs will result in a decrease in the break-even point.

The manufacturing cost of Mocha Industries for three months of the year are provided below:

Given the following cost data, what type of cost is shown?

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