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Exam 11: Cost-Volume-Profit Analysis

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Question 31

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The contribution margin ratio is the same as the variable cost ratio.

A) True
B) False

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Question 32

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Kennedy Co.sells two products, Arks and Bins.Last year, Kennedy sold 32,000 units of Arks and 18,000 units of Bins.Related data are: ?? $\begin{array}{cccc} & \text { Unit } & \text { Unit } & \text { Unit } \\& \text { Selling Variable } & \text { Contribution } \\\text { Product } & \text { Price } & \text { Cost } & \text { Margin } \\\hline\text { Arks } & \$ 80 & \$ 20 & \$ 60 \\\text { Bins } & 120 & 40 & 80\end{array}$ ? What was Kennedy's overall product's unit variable cost?

A) $32.00
B) $30.00
C) $28.80
D) $27.20

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

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Question 33

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If direct materials cost per unit decreases, the break-even point will increase.

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

The point where the sales line and the total costs line intersect on the cost-volume-profit graph represents:

The point where the profit line intersects the left vertical axis on the profit-volume graph represents:

_____ is the excess of sales over variable costs.

Tucker Co.manufactures office furniture.During the most productive month of the year, 3,600 desks were manufactured at a total cost of $192,000.In its slowest month, the company made 1,200 desks at a cost of $72,000.Using the high-low method of cost estimation, total fixed costs per month are:

If the unit selling price is $40, the volume of sales is $3,000,000, sales at the break-even point amount to $2,500,000, and the maximum possible sales are $3,300,000, the margin of safety will be 12,500 units.

The _____ indicates the percentage of each sales dollar available to cover fixed costs and to provide operating income.

Snower Corporation sells product G for $150 per unit, the variable cost per unit is $105, and the fixed costs are $720,000.What is the sales (in dollars) required to realize operating income of $40,000?

Which of the following statements is true regarding fixed and variable costs?

Variable costs are costs that vary on a per-unit basis as the level of manufacturing activity changes.

Kennedy Co.sells two products, Arks and Bins.Last year, Kennedy sold 32,000 units of Arks and 18,000 units of Bins.Related data are: ? $\begin{array}{cccc} & \text { Unit } & \text { Unit } & \text { Unit } \\& \text { Selling Variable } & \text { Contribution } \\\text { Product } & \text { Price } & \text { Cost } & \text { Margin } \\\hline\text { Arks } & \$ 80 & \$ 20 & \$ 60 \\\text { Bins } & 120 & 40 & 80\end{array}$ ? What was Kennedy's overall product's unit selling price?

Assume that Bisque Co.sold 12,000 units of Product A and 18,000 units of Product B in the last year.The unit contribution margins for Products A and B are $10 and $20 respectively.Bisque has fixed costs of $420,000.The break-even point in units is:

Clinton Co.has an operating leverage of 4.Sales are expected to increase by 8% next year.Operating income is:

Only a single line, which represents the difference between total sales revenues and total costs, is plotted on the cost-volume-profit graph.

If sales total $1,000,000, fixed costs total $200,000, and variable costs are 55% of the sales, the contribution margin ratio is 55%.

Cost-volume-profit analysis cannot be used if which of the following occurs?

The following is a list of various costs of producing sweatshirts.Classify each cost as either a variable, fixed, or mixed cost for units produced and sold. (a)Electricity costs of $0.025 per kilowatt-hour (b)Warehouse rent of $6,000 per month plus $0.50 per square foot of storage used (c)Thread (d)Zip used in sweatshirts (e)Janitorial costs of $2,000 per month (f)Advertising costs of $10,000 per month (g)Plant manager salary (h)Color dyes for producing different colors of sweatshirts (i)Salary of the production supervisor (j)Straight-line depreciation on sewing machines (k)Patterns for different designs.Patterns typically last many years before being replaced (l)Maintenance costs for the company's sewing machine.The cost is $2,000 per year plus $0.001 for each machine hour of use (m)Property taxes on factory, building, and equipment (n)Cotton and polyester cloth (o)Hourly wages of sewing machine operators