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Exam 5: Cost Volume Profit Analysis

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Question 101

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Costs that remain constant in total dollar amount as the level of activity changes are called

A) fixed costs
B) mixed costs
C) product costs
D) variable costs

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

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Question 102

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

A) $1,250,000
B) $450,000
C) $1,875,000
D) $300,000

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

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Question 103

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If a business had sales of $4,000,000 and a margin of safety of 25%, the break-even point was

Even if a business sells six products, it is possible to estimate the break-even point.

As production increases, variable costs per unit

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 is 11,500 units.

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

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

A cost that has characteristics of both a variable cost and a fixed cost is called a

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

A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost.

For the current year ending January 31, Harp Company expects fixed costs of $188,500 and a unit variable cost of $51.50. For the coming year, a new wage contract will increase the unit variable cost to $55.50. The selling price of $70.00 per unit is expected to remain the same. (a) Compute the break-even sales (units) for the current year. Round your answer to the nearest whole number. (b) Compute the anticipated break-even sales (units) for the coming year, assuming the new wage contract is signed.

If employees accept a wage contract that increases the unit contribution margin, the break-even point will decrease.

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.  Calculate the current year's sales.

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

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio?

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 unit selling price of E, with E representing one overall "enterprise" product?

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

Companies with large amounts of fixed costs will generally have a high operating leverage.