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Exam 19: Cost-Volume-Profit Analysis

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Question 181

True/False

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Assuming no other changes,operating income will be the same under both the variable and absorption costing methods when the number of units manufactured equals the number of units sold.

A) True
B) False

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Question 182

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Contribution margin is

A) the excess of sales revenue over variable cost
B) another term for volume in the "cost-volume-profit" analysis
C) profit
D) the same as sales revenue

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

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Question 183

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

Total fixed costs change as the level of activity changes.

Louis Company sells a single product at a price of $65 per unit.Variable costs per unit are $45 and total fixed costs are $625,500.Louis is considering the purchase of a new piece of equipment that would increase the fixed costs to $800,000,but decrease the variable costs per unit to $42. Required: If Louis Company expects to sell 44,000 units next year,should they purchase this new equipment?

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 14,500 units.

The following is a list of various costs of producing T-shirts.Classify each cost as either a variable,fixed,or mixed cost for units produced and sold.

If fixed costs are $250,000,the unit selling price is $125,and the unit variable costs are $73,what is the break-even sales (units) ?

Given the following cost data,what type of cost is shown? ​ ​

What was Rusty Co.'s sales mix last year?

If a business had a capacity of $10,000,000 of sales,actual sales of $6,000,000,break-even sales of $4,200,000,fixed costs of $1,800,000,and variable costs of 60% of sales,what is the margin of safety expressed as a percentage of sales?

Which of the following costs is 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.

If variable costs per unit decreased because of a decrease in utility rates,the break-even point would

Direct materials cost that varies with the number of units produced is an example of a fixed cost of production.

Zeke Company sells 25,000 units at $21 per unit.Variable costs are $10 per unit,and fixed costs are $75,000.The contribution margin ratio and the unit contribution margin are

Blane Company has the following data: ​ What will operating income be if units sold double to 100,000 units?

When units manufactured exceed units sold:

The contribution margin ratio is

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