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Exam 19: Cost Behavior and Cost-Volume-Profit Analysis

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Question 91

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What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

A) Margin of safety ratio
B) Contribution margin ratio
C) Costs and expenses ratio
D) Profit ratio

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

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Question 92

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

A) Total fixed costs increase
B) Unit selling price decreases
C) Unit variable cost decreases
D) Unit variable cost increases

E) All of the above
F) C) and D)

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Question 93

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The manufacturing cost of Mocha Industries for three months of the year are provided below: Using the high-low method, determine the (a) variable cost per unit, and (b) the total fixed costs.

The difference between the current sales revenue and the sales at the break-even point is called the:

For the past year, Hornbostel Company had fixed costs of $6,552,000, 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.

Only a single line, which represents the difference between total sales revenues and total costs, is plotted on the profit-volume chart.

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:

Forde Co. has an operating leverage of 4. Sales are expected to increase by 12% next year. Operating income is:

The point in operations at which revenues and expired costs are exactly equal is called the break-even point.

Which of the following describes the behavior of the fixed cost per unit?

When a business sells more than one product at varying selling prices, the business's break-even point can be determined as long as the number of products does not exceed:

Cost-volume-profit analysis can be presented in both equation form and graphic form.

If fixed costs are $561,000 and the unit contribution margin is $8.00, what is the break-even point in units if variable costs are decreased by $.50 a unit?

Given the following cost data, what type of cost is shown?

Harold Corporation just started business in January 2012. They had no beginning inventories. During 2012 they manufactured 12,000 units of product, and sold 10,000 units. The selling price of each unit was $20. Variable manufacturing costs were $4 per unit, and variable selling and administrative costs were $2 per unit. Fixed manufacturing costs were $24,000 and fixed selling and administrative costs were $6,000. What would be the Harold Corporations net income for 2012 using absorption costing?

In a cost-volume-profit chart, the

Which of the graphs in Figure 20-1 illustrates the nature of a mixed cost?

A company has a margin of safety of 25%, a contribution margin ratio of 30%, and sales of $1,000,000.

Which of the graphs in Figure 20-1 illustrates the behavior of a total fixed cost?

If variable costs per unit decreased because of a decrease in utility rates, the break-even point would: