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Exam 4: Cost Behavior and Cost-Volume-Profit Analysis

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Question 21

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The relative distribution of sales among the various products sold by a business is the

A) business's basket of goods
B) contribution margin mix
C) sales mix
D) product portfolio

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Question 22

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As production increases, variable costs per unit

A) stay the same
B) increase
C) decrease
D) either increase or decrease, depending on the fixed costs

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Question 23

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Direct materials cost that varies with the number of units produced is an example of a fixed cost of production.

Mia Enterprises sells a product for $90 per unit.The variable cost is $40 per unit, while fixed costs are $75,000.Determine the a break-even point in sales units, and b break-even point in sales units if the selling price increased to $100 per unit.

Thompson Company manufactures and sells cookware.Because of current trends, it expects to increase sales by 15% next year.If this expected level of production and sales occurs and plant expansion is not needed, how should this increase affect next year's total amounts for the following costs?

The following is a list of various costs of producing T-shirts.Classify each cost as either a variable, fixed, or mixed cost for units produced and sold. a Ink used for screen printing b Warehouse rent of $8,000 per month plus $0.50 per square foot of storage used c Thread d Electricity costs of $0.038 per kilowatt-hour e Janitorial costs of $4,000 per month f Advertising costs of $12,000 per month g Accounting salaries h Color dyes for producing different colors of T-shirts i Salary of the production supervisor j Straight-line depreciation on sewing machines k Salaries of internal pattern designers l Hourly wages of sewing machine operators m Property taxes on factory, building, and equipment n Cotton and polyester cloth o Maintenance costs with sewing machine company the cost is $2,000 per year plus $0.001 for each machine hour of use.

Total variable costs change as the level of activity changes.

Zeke Company sells 25,000 units at $21 per unit.Variable costs are $10 per unit, and fixed costs are $75,000.The contribution margin ratio and the unit contribution margin are

Payton Industries has fixed costs of $490,000, the unit selling price is $35, and the unit variable costs are $20.What is the break-even sale units if fixed costs are reduced by $40,000?

Explain how variable costing net income will be different than absorption costing net income under the following situations: 1 A company had no beginning or ending inventory.During the year, it produced and sold 10,000 units. 2 A company had no beginning inventory.During the year, it produced 10,000 units and sold 8,000 units. 3 A company had 2,000 units in beginning inventory.During the year, it produced 10,000 units and sold 12,000 units.

Gladstorm Enterprises sells a product for $60 per unit.The variable cost is $20 per unit, while fixed costs are $85,000.Determine the a break-even point in sales units, and b break-even point in sales units if the selling price increased to $80 per unit.Round your answer to the nearest whole number.

Match the following terms a-e with their definitions. -Plots only the difference between total sales and total costs

If fixed costs are $500,000 and the unit contribution margin is $20, what is the break-even point in units if fixed costs are reduced by $80,000?

For the current year ending January 31, Harp Company expects fixed costs of $188,500 and a unit variable cost of $51.50.For the coming year, a new wage contract will increase the unit variable cost to $55.50.The selling price of $70.00 per unit is expected to remain the same. a Compute the break-even sales units for the current year.Round your answer to the nearest whole number. b Compute the anticipated break-even sales units for the coming year, assuming the new wage contract is signed.

The contribution margin ratio is the same as the profit-volume ratio.

What was Rusty Co.'s weighted average unit contribution margin?

For the past year, Iris Company had fixed costs of $6,708,000, a unit variable cost of $444, and a unit selling price of $600.For the coming year, no changes are expected in revenues and costs, except that a new wage contract will increase variable costs by $6 per unit.Determine the break-even sales units for a the past year and b the coming year.

Silver River Company sells Products S and T and has made the following estimates for the coming year: Fixed costs are estimated at $202,400.Determine a the estimated sales in units of the overall product necessary to reach the break-even point for the coming year, b the estimated number of units of each product necessary to be sold to reach the break-even point for the coming year, and c the estimated sales in units of the overall product necessary to realize an operating income of $119,600 for the coming year.

A firm operated at 90% of capacity for the past year, during which fixed costs were $420,000, variable costs were 40% of sales, and sales were $1,000,000.Operating profit was

A business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a break- even point of $960,000, and operating income of $60,000 for the current year.Calculate the current year's sales.