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Exam 2: Introduction to Cost Behavior and Cost-Volume Relationships

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Question 61

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The Eastman Family Restaurant is open 24 hours per day.Fixed costs are $24,000 per month.Variable costs are estimated at $9.60 per meal.The average revenue is $12 per meal. Required: A)Compute the break-even point in meals. B)Compute the break-even volume in dollars.

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A)$24,000/($12.00 - ...

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Question 62

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HugME Company produces dolls.Each doll sells for $20.00.Variable costs are $14.00 per unit.If the break-even volume in dollars is $1,446,000,then the total fixed costs for the period are ________.

A) $361,500
B) $433,800
C) $516,425
D) $1,446,000

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Question 63

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Manufacturers of industrial equipment have high contribution-margin percentages.

The CVP graph uses the assumption that expenses are linear over the relevant range.

Cost of goods sold is the cost of the merchandise that a company acquires or produces and then sells.

Total fixed costs increase when volume increases in the relevant range.

Fixed costs ________.

The sales mix is the relative proportions or combinations of quantities of different products that constitute total sales.

Only one cost driver may affect a cost at any given time.

Young Corporation has determined the contribution margin ratio is 35% and the income tax rate is 40%. Required: A)Assume break-even volume in dollars is $1,500,000.What are total fixed costs? B)Assume Young Corporation wants after-tax net income of $300,000.What volume of sales in dollars is necessary to achieve this net income?

Consider the following activity: The installation of seats by an airplane manufacturer in a commercial airplane.What is an appropriate cost driver for the salary of the supervisor in charge of this activity?

Operating leverage is the ratio of fixed costs to variable costs.

Berea Company expects to sell 19,000 units.Total fixed costs are $84,000 and the contribution margin per unit is $6.00.Berea's tax rate is 40%.What is the margin of safety in units?

Assume the sales price is $34 per unit and the variable cost is $19 per unit.The break-even point is 12,000 units.What are total fixed costs?

Company XX has the following information available: If variable costs increase to $65 per unit,what is the break-even point in units?

Assume ZZZ Company has the following information available: If fixed costs increase $200,000,what is the expected operating income?

MYC Company has the following information available: If MYC Company wants a targeted after-tax net income of $14,000,how many units must be sold?

The level of sales at which revenues equal expenses and net income is zero is called the ________.

An increase in the sales price per unit will cause a decrease in the break-even point.

If the total amount of fixed costs increases,what is the effect on the break-even point? (Assume no other changes.)