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Exam 21: Cost-Volume-Profit Analysis

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Question 41

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

A) True
B) False

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Question 42

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The ratio (proportion)of the sales volumes of the various products sold by a company is called the ______________________________.

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Question 43

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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:

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

Examining strategies that impact several estimates in the CVP analysis is known as _______________________.

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

Scatter diagrams plot volume (units)on the vertical axis and cost on the horizontal axis.

The dollar amount of sales needed to achieve a target income is computed by dividing the sum of fixed costs plus the target income by the contribution margin ratio.

The high-low method can be used to estimate the cost equation using just two points.

The method most likely to produce the most precise line of cost behavior and require the least amount of judgment is the scatter diagram.

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

Carver Packing Company reports total contribution margin of $72,000 and pretax net income of $24,000 for the current month.In the next month,the company expects sales volume to increase by 8%.The degree of operating leverage and the expected percent change in income,respectively,are:

Henderson Co.has fixed costs of $36,000 and a contribution margin ratio of 24%.If expected sales are $200,000,what is the margin of safety as a percent of sales?

A firm expects to sell 25,000 units of its product at $11 per unit and to incur variable costs per unit of $6.Total fixed costs are $70,000.The total contribution margin is:

A break-even point can be calculated either in units or in dollars.

A company manufactures and sells a product for $120 per unit.The company's fixed costs are $68,760,and its variable costs are $90 per unit.The company's break-even point in units is:

Varigon Co.produces and sells three products-Household,Commercial,and Industrial,and has total fixed costs of $52,000.Sales and cost data follow: Calculate the break-even point in composite units.

Kent Manufacturing produces a product that sells for $50.00 and has variable costs of $24.00 per unit.Fixed costs are $260,000.Kent can buy a new production machine that will increase fixed costs by $11,400 per year,but will decrease variable costs by $3.50 per unit.Compute the revised break-even point in units if the new machine is purchased.

A cost that remains unchanged in total despite variations in volume of activity within a relevant range is a:

Use the following information to determine the contribution margin ratio: