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Exam 5: Cost Volume Profit Analysis

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Question 21

Multiple Choice

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If sales are $820,000, variable costs are 55% of sales, and operating income is $260,000, what is the contribution margin ratio?

A) 45%
B) 55%
C) 62%
D) 32%

E) A) and B)
F) A) and C)

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Question 22

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Variable costs are costs that remain constant on a per-unit basis as the level of activity changes.

A) True
B) False

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Question 23

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Which of the following costs is a mixed cost?

Given the following cost and activity observations for Bounty Company's utilities, use the high-low method to calculate Bounty' variable utilities costs per machine hour. Round your answer to the nearest cent.

O'Boyle Co.'s fixed costs are $256,000, the unit selling price is $36, and the unit variable costs are $20, what is the break-even sales (units) ?

The reliability of cost-volume-profit analysis does not depend on the assumption that costs can be accurately divided into fixed and variable components.

If direct materials cost per unit increases, the break-even point will increase.

If fixed costs are $500,000, the unit selling price is $55, and the unit variable costs are $30, what is the break-even sales (units) if fixed costs are increased by $80,000?

Which of the following is an example of a cost that varies in total as the number of units produced changes?

The contribution margin ratio is

For the current year ending April 30, Hal Company expects fixed costs of $60,000, a unit variable cost of $70, and anticipated break-even of 1,715 sales units. (a) Compute the unit sales price. (b) Compute the sales (units) required to realize an operating profit of $8,000. Round your answer to the nearest whole number.

Given the following cost and activity observations for George Company's utilities, use the high-low method to calculate George's variable utilities costs per machine hour.

The Rocky Company reports the following data: Rocky Company's operating leverage is

Which of the following conditions would cause the break-even point to increase?

Which of the following conditions would cause the break-even point to increase?

If fixed costs are $46,800, the unit selling price is $42, and the unit variable costs are $24, what is the break-even sales (units) if the variable costs are decreased by $2?

If direct materials cost per unit increases, the break-even point will decrease.

Global Publishers has collected the following data for recent months: Month                         Issues published             Total cost March                                 20,500                       $20,960 April                                   21,800                         22,464 May                                    17,750                         18,495 June                                    21,200                         21,395 Required: (a) Using the high-low method, find variable cost per unit, total fixed costs, and the total cost equation. (b) What is the estimated cost for a month in which 19,000 issues are published?

If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break-even sales (units) ?

A production supervisor's salary that does not vary with the number of units produced is an example of a fixed cost.