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Exam 19: Cost Behavior and Cost-Volume-Profit Analysis

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Question 51

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Steven Company has fixed costs of $160,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. The sales mix for product X and Y is 60% and 40%, respectively. Determine the break-even point in units of X and Y.

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Unit selling price of sales mix = $148 $...

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Question 52

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Direct materials and direct labor costs are examples of variable costs of production.

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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

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

In a cost-volume-profit chart, the

If fixed costs are $450,000, the unit selling price is $75, and the unit variable costs are $50, what are the old and new break-even sales units) if the unit selling price increases by $10?

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

What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

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: $\begin{array} { l l l l } & \text { Unit Selling Price } & \text { Unit Variable } & \text { Unit Contribution } \\\text { Product } & \text { Price } & \text { Cost } & \text { Margin } \\\hline \mathrm { X } & \$ 110.00 & \$ 70.00 & \$ 40.00 \\\mathrm { Y } & 70.00 & 50.00 & 20.00\end{array}$ -What was Rusty Co.'s weighted average unit contribution margin?

Given the following cost data, what type of cost is shown? $\begin{array} { | l | l | } \hline { \text { Total Cost } } & \text { Number of Units } \\\hline \$ 8,000 & 1 \\\hline \$ 8,500 & 2 \\\hline \$ 9,000 & 3 \\\hline \$ 9,500 & 4 \\\hline\end{array}$

If fixed costs are $46,800, the unit selling price is $42, and the unit variable costs are $24, what is the break-even sale units) if the variable costs are decreased by $2?

Most operating decisions of management focus on a narrow range of activity called the

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

Flying Cloud Co. has the following operating data for its manufacturing operations: Unit selling price $250 Unit variable cost 100 Total fixed costs $840,000 The company has decided to increase the wages of hourly workers which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be

Douglas Company has a contribution margin ratio of 30%. If Douglas has $336,420 in fixed costs, what amount of sales will need to be generated in order for the company to break even?

Trail Bikes, Inc. sells three Deluxe bikes for every seven Standard bikes. The Deluxe bike sells for $1,800 and has variable costs of $1,200. The Standard bike sells for $600 and has variable costs of $200. Required a) If Trail Bikes has fixed costs that total $1,702,000, how many bikes must be sold in order for the company to break even? b) How many of these bikes will be Deluxe bikes and how many will be the Standard bikes?

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.

The following data are available from the accounting records of Willow Creek Co. for the month ended May 31. During the accounting period, 17,000 units were manufactured and sold at a price of $60 per unit. There were no beginning inventories, and all units were completed no work in process). Selling and administrative expenses: a) Prepare a variable costing income statement. b) Prepare an absorption costing income statement.

Cost-volume-profit analysis can be presented in both equation form and graphic form.

Figure 21-1 -Which of the graphs in Figure 21-1 illustrates the behavior of a total variable cost?