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Exam 11: Cost Behavior and Cost-Volume-Profit Analysis

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Question 21

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Given the following costs and activity observations for Pike Company's utilities,use the high­low method to calculate Pike Company's variable utilities costs per machine hour.

A) $0.10
B) $0.19
C) $0.21
D) $0.27

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

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Question 22

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Variable costs are costs that remain constant in total with changes in the activity level.

A) True
B) False

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Question 23

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

Which of the following describes the behavior of the fixed cost per unit?

If fixed costs are $850,000 and the unit contribution margin is $50,profit is zero when 15,000 units are sold.

If fixed costs are $790,000 and the unit contribution margin is $60,what amount of units must be sold in order to have a zero profit?

Given below are the two independent situations: (a) If Henry Company's budgeted sales are $800,000, fixed costs are $350,000, and variable costs are $600,000, what is the budgeted contribution margin ratio? (b) If the contribution margin ratio is 30% for Gray Company, sales are $900,000, and fixed costs are $180,000, what is the operating profit?

The following cost graphs illustrate various types of cost behaviors.

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

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

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

Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service such as UPS?

The difference between the current sales revenue and the sales at the break-even point is called the:

The graph of a variable cost per unit when plotted against its related activity base appears as a:

For the past year,LaPrade Company had fixed costs of $70,000,a unit variable costs of $32,and a unit selling price of $40.For the coming year,no changes are expected in revenues and costs except that property taxes are expected to increase by $10,000.Determine the break-even sales (in units)for (a)the past year and (b)the coming year.

Compute the break-even point(in dollars) if fixed costs are $540,000 and variable cost are 70% of sales.

A company has a margin of safety of 25%,a contribution margin ratio of 30%,and sales of $1,000,000.

Tops Company sells Products D and E and has made the following estimates for the coming year:

The variable cost per unit remains constant with changes in the level of activity.

Refer to the information provided for Kennedy Co.What was Kennedy's overall product's unit contribution margin?