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Exam 22: Cost-Volume-Profit Analysis

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Question 61

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Select cost information for Winfrey Enterprises is as follows: Based on this information:

A) Both direct materials and rent expense are variable costs.
B) Utilities expense is a mixed cost and rent expense is a variable cost.
C) Utilities expense is a mixed cost and rent expense is a fixed cost.
D) Direct materials is a fixed cost and utilities expense is a mixed cost.
E) Both direct materials and utilities expense are mixed costs.

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

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Question 62

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A firm sells two products, A and

A) 31,000 of A and 31,000 of B
B) 31,000 of A and 62,000 of B.
C) 10,333 of A and 20,667 of B.
D) 36,167 of A and 72,333 of B.
E) 62,000 of A and 31,000 of B.

F) B) and C)
G) B) and D)

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Question 63

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A firm sells two products, A andB. For every unit of A the firm sells, two units of B are sold. The firm's total fixed costs are $1,612,000. Selling prices and cost information for both products follow. The contribution margin per composite unit is:

Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300. Annual fixed costs are $990,000. Current sales volume is $4,200,000. Compute the current margin of safety in dollars for Dunkin Company.

A company manufactures and sells spotlights. Each spotlight sells for $145. The variable cost per unit is $98, and the company's total fixed costs are $235,000. Predicted sales are 15,000 units. What is the contribution margin per unit?

Boston Co. is considering the production and sale of a new product with the following sales and cost data: unit sales price, $300; unit variable costs, $180; total fixed costs, $270,000; and projected sales, $900,000. What is the margin of safety: (a) In dollar sales? (b) As a percent of sales?

If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is:

A graphic depiction of the break-even point is known as a cost-volume-profit (CVP) chart.

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

A graphic presentation of cost-volume-profit data is known as a __________________ graph (or chart); this presentation is also sometimes called a ______________ chart.

A method that estimates cost behavior by connecting the costs linked to the highest and lowest volume is called the:

What is operating leverage? How can the degree of operating leverage be used in analyzing changes in sales?

The sales level at which a company neither earns a profit nor incurs a loss is the:

Winthrop Manufacturing produces a product that sells for $50.00. Fixed costs are $260,000 and variable costs are $24.00 per unit. Winthrop 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 break-even point in units if the new machine is purchased.

Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300. Annual fixed costs are $990,000. Current sales volume is $4,200,000. Compute the break-even point in dollars.

Break-even analysis is a special case of cost-volume-profit analysis.

Yamaguchi Company's break even point in units is 1,000. The sales price per unit is $10 and variable cost per unit is $7. If the company sells 2,500 units, what will net income be?

During a recent fiscal year, Dawson Company reported pretax income of $125,000, a contribution margin ratio of 25% and total contribution margin of $400,000. Total variable costs must have been:

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

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: