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Exam 20: Cost-Volume-Profit Analysis

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Question 61

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

A) 0.0
B) 7.5
C) 2.0
D) 1.3

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

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Question 62

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Reynold's Company has a product with fixed costs of $350,000, a unit selling price of $29, and unit variable costs of $20. The break-even sales (units) if the variable costs are decreased by $4 is

A) 26,923 units
B) 12,069 units
C) 21,875 units
D) 38,889 units

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

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Question 63

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The manufacturing costs of Mocha Industries for three months of the year are as follows: Using the high-low method, determine the (a) variable cost per unit, and (b) the total fixed costs.

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 as follows: ​ -Carter Co.'s unit selling price of E, with E representing one overall "enterprise" product, was

The point in operations at which revenues and expenses are exactly equal is called the break-even point.

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?

The amount of dollars available from each unit of sales to cover fixed cost and profit is the unit variable cost.

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 as follows: ​ -Carter Co.'s sales mix last year was

Charlotte Co. has budgeted salary increases to factory supervisors totaling 9%. If selling prices and all other cost relationships are held constant, next year's break-even point

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

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

Connor Company has fixed costs of $400,000, the unit selling price is $25, and the unit variable costs are $15. The break-even sales (units) if the variable costs are increased by $2 is

Given the following information: Variable cost per unit = $5 July fixed cost per unit = $7 Units sold and produced in July = 28,000 What is the total estimated cost for August if 30,000 units are projected to be produced and sold?

Rusty Co. sells two products: X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows: ​ -For break-even analysis, the unit contribution margin of E was

The relevant activity base for a cost depends upon which base is most closely associated with the cost and the decision-making needs of management.

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. -Electricity costs of $5,000 per month plus $0.0004 per kilowatt-hour A)Graph 1 B)Graph 2 C)Graph 3 D)Graph 4 E)Graph 5

If fixed costs are $300,000, the unit selling price is $31, and the unit variable costs are $22, the break-even sales (units) if fixed costs are reduced by $30,000 is

Silver River Company sells Products S and T and has made the following estimates for the coming year: Fixed costs are estimated at $202,400. For the purposes of break-even analysis, determine the following: a. Break-even sales (units) for E b. Break-even sales (units) of S and T c. Sales units of E necessary to realize an operating income of $119,600 for the coming year

Penny Company sells 25,000 units at $59 per unit. Variable costs are $29 per unit, and operating loss is $(50,000). Determine the (a) unit contribution margin, (b) contribution margin ratio, and (c) fixed costs per unit at production of 25,000 units.

If direct materials cost per unit decreases, the amount of sales necessary to earn a desired amount of profit will decrease.