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Exam 21: Cost Behavior and Cost-Volume-Profit Analysis

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Question 51

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If fixed costs are $300,000, the unit selling price is $31, and the unit variable costs are $22, what is the break-even sales (units) if fixed costs are reduced by $30,000?

A) 30,000 units
B) 8,710 units
C) 12,273 units
D) 20,000 units

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Question 52

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If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 40%.

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Question 53

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A company with a break-even point at $900,000 in sales revenue had fixed costs of $225,000. When actual sales were $1,000,000 variable costs were $750,000. 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.

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

The relevant range is useful for analyzing cost behavior for management decision-making purposes.

Variable costs are costs that remain constant in total dollar amount as the level of activity changes.

When the fixed costs are $120,000 and the contribution margin is $30, the break-even point is

Total variable costs change as the level of activity changes.

Rusty Co. sells two products, X and Y. Last year Rusty sold 5,000 units of X's and 35,000 units of Y's. Related data are: What was Rusty Co.'s sales mix last year?

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

If fixed costs are $400,000, the unit selling price is $25, and the unit variable costs are $15, what is the break-even sales (units) if the variable costs are increased by $2?

Steven Company has fixed costs of $160,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. The sales mix for product X and Y is 60% and 40% respectively. Determine the break-even point in units of X and Y.

Given the following cost data, what type of cost is shown?

If fixed costs increased and variable costs per unit decreased, the break-even point would:

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 $450,000 and the unit contribution margin is $50, the sales necessary to earn an operating income of $50,000 are 10,000 units.

Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000?

If fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, what is the amount of sales required to realize an operating income of $200,000?

Given the following cost data, what type of cost is shown?

Spice Inc.'s unit selling price is $60, the unit variable costs are $35, fixed costs are $125,000, and current sales are 10,000 units. How much will operating income change if sales increase by 8,000 units?