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Exam 21: Cost-Volume-Profit Analysis

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Question 91

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Macleod Company's product has a contribution margin per unit of $62.50 and a contribution margin ratio of 25%.What is the per unit selling price of the product?

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Question 92

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A cost that can be separated into fixed and variable components is called a:

A) Mixed cost.
B) Step-variable cost.
C) Composite cost.
D) Curvilinear cost.
E) Differential cost.

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

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Question 93

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Duxbury Co.reports the following data for the current year: Units Sold ………………………………………..1,200 Unit Sales Price ………………………………………..$30 Unit Variable Cost ……………………………………….. $10 Total Fixed Cost……………………………………….. $18,000 Required: (a)Calculate Duxbury's pretax income. (b)Calculate Duxbury's degree of operating leverage.

A cost that changes in proportion to changes in volume of activity is a(n) :

There are only two methods to derive an estimated line of cost behavior; the high-low method and the scatter diagram.

Lee Company manufactures and sells widgets for $2.00 per unit.Its variable cost per unit is $1.70.Lee's total fixed costs are $10,500.How many widgets must Lee Company sell to break even?

Outback Products reports the following information: Total Contribution Margin…………………..$32,000 Total Fixed Costs…………………………….$28,000 Required: (a)Calculate Outback Products' degree of operating leverage (DOL). (b)Outback Products forecasts a 6% increase in sales.What is the expected effect in percent on pretax income?

Baines Brothers manufactures and sells two products,A and Z in the ratio of 4: 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 Z Baines must sell to break even.

A firm produces and sells a product with a contribution margin of $32 per unit.The firm is presently selling 90,000 units and earning $240,000 in after-tax income.Taxes are $80,000 at a 25% tax rate.If the firm desires to increase its after-tax income to $300,000,how many more units must it sell?

A line on a scatter diagram that is intended to reflect the past relation between cost and volume is the:

Bristol Company's contribution margin income statement is presented below.Sales for the current period consisted of 7,500 units.Compute the company's break-even point in (a)units,and (b)dollars.Compute the margin of safety in (c)dollars and (d)percent.

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

Least-squares regression is a statistical method for deriving an estimated line of cost behavior.

A target income refers to:

A _______________ cost is one that remains unchanged in amount when volume of activity varies from period to period within a relevant range.A ______________ cost is one that changes in proportion to changes in volume of activity.

Describe what happens to the net income of a company under each of the following assumptions: (a)Sales volume is less than break-even sales.(b)Sales volume is greater than break-even sales.(c)Sales volume is equal to the break-even point.

As the level of output activity increases,the variable cost per unit remains constant.

Narrows Co.is considering the production and sale of a new product line with the following sales and cost data: unit sales price $125; unit variable costs $75; and total fixed costs of $140,000.Calculate the break-even point in units and in dollar sales.

Joseph Co.has three products A,B,and C,and its fixed costs are $69,000.The sales mix for its products are 3 units of A,4 units of B,and 1 unit of C.Information about the three products follows: A B C (a) Calculate the company's break-even point in composite units and sales dollars.(b) Calculate the number of units of each individual product to be sold at the break-even point.

The ratio of the sales volume for the various products sold by a company is called the: