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Exam 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool

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Question 21

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Match each item with the correct statement below. a.horizontal-axis of CVP graph b.vertical-axis of CVP graph c.slope of revenue line d.slope of cost line e.point where the total revenue line and the total cost line intersect -variable cost per unit

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Question 22

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Melody Company sells a product for $14, variable costs are $10 per unit, and total fixed costs are $5,040. What is the per unit contribution margin?

A) $14
B) $10
C) $24
D) $10.
E) $4

F) A) and C)
G) All of the above

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Question 23

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The break-even point is where total sales revenue equals total cost.

Which of the following is not an assumption used to prepare a cost-volume-profit graph?

If a multi-product company simply wants to know the overall break-even point, it is easiest to use the break-even in sales revenue approach.

Which statement is true about cost-volume profit (CVP) analysis?

Figure 4-2. Pauley Company provides home health care. Pauley charges $35/hour for professional care. Variable costs are $21/hour and fixed costs are $78,000. Next year, Pauley expects to charge out 12,000 hours of home health care. -Refer to Figure 4-2. What is the budgeted operating income?

Most firms would like to earn operating income equal to the break-even point.

The Lauren Company manufactures two products. Information about the two product lines for the year is as follows: The company expects fixed costs to be $144,000. The firm expects 60% of its sales (in units) to be Product X. Required: Determine the break-even point in units for both Product X and Product Y.

If one increases variable costs per unit, the break-even point will decrease.

If the break-even volume for a company is 600 units and the company is currently selling 1,000 units than the 400 units would represent the company's ____________________.

Figure 4-7. A company provided the following data: -Refer to Figure 4-7. How many units must be sold to earn a profit of $40,000?

The linear equation for revenue is price multiplied by fixed cost.

Figure 4-3. Paney Company makes calendars. Information on cost per unit is as follows: Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. -Refer to Figure 4-3. What is the break-even point in units?

Match each item with the correct statement below. a.horizontal-axis of CVP graph b.vertical-axis of CVP graph c.slope of revenue line d.slope of cost line e.point where the total revenue line and the total cost line intersect -break-even point

Match each item with the correct statement below. a.horizontal-axis of CVP graph b.vertical-axis of CVP graph c.slope of revenue line d.slope of cost line e.point where the total revenue line and the total cost line intersect -the selling price per unit

Which of the following can be considered a measure of risk in cost-volume-profit analysis?

Figure 4-1. Foster Company makes power tools. The budgeted sales are $420,000, budgeted variable costs are $147,000, and budgeted fixed costs are $227,500. -Refer to Figure 4-1. What is the break-even point in sales dollars?

The cost-volume profit graph depicts the relationships among cost, volume, and profits, by plotting the total revenue line and the total cost line on the graph.

Dirth Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60% of sales and fixed expenses are $30,000. Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales. What is the sales dollars level required to break even at the old price of $7.50?