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Exam 21: Cost-Volume-Profit Analysis

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Question 61

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The difference between sales price per unit and variable cost per unit is the:

A) Gross profit from sales.
B) Gross margin per unit.
C) Fixed cost per unit.
D) Margin of safety per unit.
E) Contribution margin per unit.

F) A) and C)
G) A) and E)

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Question 62

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To calculate the break-even point in units,one must know unit fixed cost,unit variable cost,and sales price.

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B) False

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Question 63

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Watson Company has monthly fixed costs of $83,000 and a 40% contribution margin ratio.If the company has set a target monthly income of $15,000,what dollar amount of sales must be made to produce the target income?

When using the high-low method for estimating cost behavior,the slope,or variable cost per unit,is calculated by ___________________________________.

A cost-volume-profit chart is also known as a(n)

The following information is available for a company's utility cost for operating its machines over the last four months. Using the high-low method,the estimated variable cost per unit for utilities is:

The relevant range of operations includes extremely high and low levels of production that are unlikely to occur.

Curvilinear costs increase as volume of activity increases,but at a nonconstant rate.

Flannigan Company manufactures and sells a single product that sells for $450 per unit;variable costs are $300.Annual fixed costs are $870,000.Current sales volume is $4,200,000.Flannigan Company management targets an annual pre-tax income of $1,125,000.Compute the unit sales to earn the target pre-tax net income.

McCoy Brothers manufactures and sells two products,A and Z in the ratio of 5:2.Product A sells for $75;Z sells for $95.Variable costs for product A are $35;for Z $40.Fixed costs are $418,500.Compute the number of units of Product A McCoy must sell to break even.

Which of the following costs are most likely to be classified as fixed?

Total variable costs change in proportion to changes in volume of activity.

The Goldfarb Company manufactures and sells toasters.Each toaster sells for $23.75 and the variable cost per unit is $16.25.Goldfarb's total fixed costs are $25,000,and budgeted sales are 8,000 units.What is the contribution margin per unit?

A product sells for $30 per unit and has variable costs of $18 per unit.The fixed costs are $720,000.If the variable costs per unit were to decrease to $15 per unit,fixed costs increase to $900,000,and the selling price does not change,break-even point in units would:

The least-squares regression method is:

A graphic depiction of the break-even point is known as a cost-volume-profit (CVP)chart.

Barclay Enterprises manufactures and sells three distinct styles of bicycles: the Youth model sells for $300 and has a unit contribution margin of $105;the Adult model sells for $850 and has a unit contribution margin of $450;and the Recreational model sells for $1,000 and has a unit contribution margin of $500.The company's sales mix includes: 5 Youth models;9 Adult models;and 6 Recreational models.If the firm's annual fixed costs total $6,500,000,calculate the firm's break-even point in sales dollars.

The contribution margin ratio is the percent of each sales dollar that remains after deducting the total unit variable cost.

A statistical method for identifying cost behavior is the:

As the volume increases,fixed cost per unit of output remains constant.