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Exam 20: Cost-Volume-Profit Analysis

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Question 121

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

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

E) B) and C)
F) All of the above

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Question 122

Multiple Choice

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Cost behavior refers to the manner in which a cost

A) changes as the related activity changes
B) is allocated to products
C) is used in setting selling prices
D) is estimated

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

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Question 123

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Klein Company reports the following data: Determine Klein Company's operating leverage. Round your answer to two decimal places.

The contribution margin ratio is the

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

Unit variable cost does not change as the number of units of activity changes.

Match each of the following costs of producing T-shirts with the appropriate classification (a-c). -Accounting salaries A)Variable cost B)Fixed cost C)Mixed cost

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

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

If fixed costs are $561,000 and the unit contribution margin is $8.00, the break-even point in units if variable costs are decreased by $0.50 per unit is

A business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a break-even point of $960,000, and operating income of $60,000 for the current year. Compute the current year's sales.

Strait Co. manufactures office furniture. During the most productive month of the year, 3,000 desks were manufactured at a total cost of $59,000. In the month of lowest production, the company made 1,125 desks at a cost of $38,000. Using the high-low method of cost estimation, total fixed costs are

Match each of the following costs with the graph (a-e) that best portrays its cost behavior as the number of units produced and sold increases. -Total employer pension costs of $0.35 per direct labor hour A)Graph 1 B)Graph 2 C)Graph 3 D)Graph 4 E)Graph 5

The break-even point is not as relevant in a service company as it is in a manufacturing company.

Kaden Company's fixed costs are $46,800, the unit selling price is $42, and the unit variable costs are $24. The break-even sales (units) is

Given the following: Variable cost as a percentage of sales = 60% Unit variable cost = $30 Fixed costs = $200,000 What is the break-even point in units?

With respect to cost-volume-profit analysis for service companies, a cost may be defined as fixed or variable, depending on the unit of analysis.

Match each of the following costs of producing T-shirts with the appropriate classification (a-c). -Salaries of internal pattern designers A)Variable cost B)Fixed cost C)Mixed cost

In a cost-volume-profit chart, the

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: Complete the preceding cost schedule, identifying each cost by the appropriate letter (a) through (o).