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

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Question 41

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When units manufactured exceed units sold:

A) variable costing income equals absorption costing income
B) variable costing income is less than absorption costing income
C) variable costing income is greater than absorption costing income
D) variable costing income is greater by the number of units produced multiplied by the variable cost ratio.

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

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Question 42

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If sales are $400,000, variable costs are 80% of sales, and operating income is $40,000, what is the operating leverage?

A) 0
B) 7.500
C) 2.0
D) 1.333

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

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Question 43

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The Rocky Company reports the following data. Rocky Company's operating leverage is:

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: What was Carter Co.'s weighted average unit contribution margin?

Forde Co. has an operating leverage of 4. Sales are expected to increase by 12% next year. Operating income is:

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

If the volume of sales is $7,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 45.8%.

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

Harold Corporation just started business in January 2012. They had no beginning inventories. During 2012 they manufactured 12,000 units of product, and sold 10,000 units. The selling price of each unit was $20. Variable manufacturing costs were $4 per unit, and variable selling and administrative costs were $2 per unit. Fixed manufacturing costs were $24,000 and fixed selling and administrative costs were $6,000. What would be the Harold Corporations Net income for 2012 using variable costing?

With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. This is called:

The Grant Company has sales of $300,000, and the break-even point in sales dollars if $225,000. Determine the company's margin of safety percentage.

A production supervisor's salary that does not vary with the number of units produced is an example of a fixed cost.

Break-even analysis is one type of cost-volume-profit analysis.

If sales are $820,000, variable costs are 45% of sales, and operating income is $260,000, what is the contribution margin ratio?

If fixed costs are $850,000 and the unit contribution margin is $50, profit is zero when 15,000 units are sold.

Silver River Company sells Products S and T and has made the following estimates for the coming year:

Flying Cloud Co. has the following operating data for its manufacturing operations: The company has decided to increase the wages of hourly workers which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be:

If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?

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 selling price?

For the current year ending April 30, Hal Company expects fixed costs of $60,000, a unit variable cost of $70, and anticipated break-even of 1,715 sales units.