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

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Question 51

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For the current year ending January 31,Ringo Company expects fixed costs of $178,500 and a unit variable cost of $41.50.For the coming year,a new wage contract will increase the unit variable cost to $45.The selling price of $50 per unit is expected to remain the same.

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Question 52

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Vest Food Co.has the following operating data: The company is contemplating moving to another state where direct labor costs can be reduced,thereby reducing the unit variable cost by 10%.The state where the company currently operates has offered to reduce property taxes to encourage Vest to stay.The minimum amount of property tax savings necessary to keep the company,assuming no other changes,would be

A) $152,016.
B) $240,000.
C) $208,696.
D) $125,217.

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

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Question 53

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The point where the profit line intersects the left vertical axis on the profit-volume Chart represents

As production increases,what would you expect to happen to fixed costs per unit?

If the property tax rates are increased,this change in fixed costs will result in an increase in the break-even point.

If fixed costs are $600,000 and the unit contribution margin is $12,what amount of units must be sold in order to realize an operating income of $100,000?

If a business had a capacity of $10,000,000 of sales,actual sales of $6,000,000,break-even sales of $4,500,000,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?

Costs that remain constant on a per-unit level as the level of activity changes are called

If a business had sales of $4,000,000,fixed costs of $1,200,000,a margin of safety of 25%,and a contribution margin ratio of 40%,what was the break-even point?

A firm operated at 90% of capacity for the past year during which fixed costs were $320,000,variable costs were 60% of sales,and sales were $1,200,000.Operating profit was

Company M had fixed costs of $262,500,variable costs of $625,000,and actual sales of $1,000,000.If the company has a break-even point at $700,000 in sales revenue,determine (a)the margin of safety expressed in dollars, (b)the margin of safety expressed as a percentage of sales, (c)the contribution margin ratio,and (d)the operating income.

The range of activity over which changes in cost are of interest to management is called the relevant range.

If sales are $300,000,variable costs are 60% of sales,and operating income is $40,000,what is the operating leverage?

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

Which of the following costs is a mixed cost?

The relative distribution of sales among the various products sold by a business is termed the

The point where the profit line intersects the horizontal axis on the profit-volume chart represents

If fixed costs are $750,000 and variable costs are 55% of sales,what is the break-even point (in dollars) ?

If fixed costs are $500,000 and the unit contribution margin is $40,what is the break-even point in units if fixed costs are reduced by $80,000?

The contribution margin ratio is the same as the variable cost ratio.