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Exam 18: Cost Behavior and Cost-Volume-Profit Analysis

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Question 41

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Three methods to separate costs into fixed and variable are the ________,________,and ________ methods.

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scatter diagram; hig...

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Question 42

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Crookshank Manufacturing has total fixed costs of $460,000.A unit of product sells for $20 and variable costs per unit are $11. Prepare a contribution margin income statement showing predicted net income (loss)if Crookshank sells 100,000 units for the year ended December 31.

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Question 43

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A product sells for $200 per unit,and its variable costs are 65% of sales.The fixed costs are $420,000.What is the break-even point in sales dollars?

A company is looking into two alternative methods of producing its product.The following information about the two alternatives is available.If the company's expected sales volume is 35,000 units,which alternative should be selected?Prepare forecasted contribution margin income statements and compute the degree of operating leverage to assess the alternatives.

A cost that includes both fixed and variable cost components is called a:

In cost-volume-profit analysis,the unit contribution margin is:

To determine the slope of the variable cost from a scatter diagram,divide the change in units by the change in cost.

Discuss how CVP analysis can be useful in planning.

Forrester Company is considering buying new equipment that would increase monthly fixed costs from $120,000 to $150,000 and would decrease the current variable costs of $70 by $10 per unit.The selling price of $100 is not expected to change.Forrester's current break-even sales are $400,000 and current break-even units are 4,000.If Forrester purchases this new equipment,the revised break-even point in units would:

A firm provides the following sales data: Required: (a)Calculate the break-even point in dollar sales. (b)Calculate the margin of safety in dollar sales.

The following data relate to a product sold by Hallstone Company: (a)Calculate the number of units expected to be sold. (b)Calculate the expected total dollar sales.

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

A cost with a flat cost line within a relevant range that shifts to another level when volume significantly changes is a(n) :

Use the following information to determine the contribution margin ratio:

The proportion of sales volumes for various products in a multiproduct company is known as the composite mix.

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

During its most recent fiscal year,Dover,Inc.had total sales of $3,200,000.Contribution margin amounted to $1,500,000 and pretax income was $400,000.What amount should have been reported as variable costs in the company's contribution margin income statement for the year?

While the total amount of fixed cost changes with the level of production,fixed cost per unit remains constant as volume changes.

Use the following information to determine the break-even point in units (rounded to the nearest whole unit) :

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