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Exam 18: Cost Behavior and Cost-Volume-Profit Analysis

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Question 71

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A manufacturer reports the following costs to produce 10,000 units in its first year of operations: Direct materials,$10 per unit,Direct labor,$6 per unit,Variable overhead,$70,000,and Fixed overhead,$120,000. -The total product cost per unit under variable costing is:

A) $16 per unit.
B) $23 per unit.
C) $35 per unit.
D) $28 per unit.
E) $17 per unit.

F) B) and C)
G) B) and E)

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Question 72

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Solving problems to determine the relationship of cost,volume,and profit often starts with measuring the ________ point.Further analysis emphasizing profitability may be accomplished by measuring the ________ and ________.

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break-even; margin o...

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Question 73

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A cost-volume-profit chart is also known as a(n)

The contribution margin per unit expressed as a percentage of the product's selling price is the:

Management anticipates fixed costs of $72,500 and variable costs equal to 40% of sales.What will pretax income equal if sales are $325,000?

One aid in measuring cost behavior involves creating a display of the data about past costs in graphical form.Such a visual display is called a ________.

A company's product sells at $12 per unit and has a $5 per unit variable cost.The company's total fixed costs are $98,000.The break-even point in units is:

Degree of operating leverage (DOL)is defined as total contribution margin in dollars divided by pretax income.

A firm expects to sell 25,000 units of its product at $11 per unit.Pretax income is predicted to be $60,000.If the variable costs per unit are $5,total fixed costs must be:

The sales level at which a company neither earns a profit nor incurs a loss is the:

A company has fixed costs of $90,000.Its contribution margin ratio is 30% and the product sells for $75 per unit.What is the company's break-even point in dollar sales?

Carver Packing Company reports total contribution margin of $72,000 and pretax net income of $24,000 for the current month.In the next month,the company expects sales volume to increase by 8%.The degree of operating leverage and the expected percent change in income,respectively,are:

A company's product sells at $12 per unit and has a $5 per unit variable cost.The company's total fixed costs are $98,000.The contribution margin per unit is:

What are the unit contribution margin and the contribution margin ratio? What do these measures reveal about a company's cost structure?

Johnston Co.anticipates total fixed costs of $120,000 and variable costs equal to 40% of sales.What is the pretax income if sales are $650,000?

A statistical method for identifying cost behavior is the:

Wang Co.manufactures and sells a single product that sells for $450 per unit; variable costs are $270 per unit.Annual fixed costs are $800,000.Current sales volume is $4,200,000.Management targets an annual pre-tax income of $1,125,000. -Compute the dollar sales to earn the target pre-tax net income.

A firm sells two products,Regular and Ultra.For every unit of Regular sold,two units of Ultra are sold.The firm's total fixed costs are $1,612,000.Selling prices and cost information for both products follow.What is the firm's break-even point in units of Regular and Ultra?

Total variable costs change in proportion to changes in volume of activity.

Forrester Company is considering buying new equipment that would increase monthly fixed costs from $120,000 to $150,000 and would decrease the current variable costs of $70 by $10 per unit.The selling price of $100 is not expected to change.Forrester's current break-even sales are $400,000 and current break-even units are 4,000.If Forrester purchases this new equipment,the revised break-even point in dollars would be: