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Exam 5: Cost Behavior Cost-Volume-Profit Analysis

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Question 51

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Alvarez 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?

A) $4,500
B) $7,500
C) $17,000
D) $35,000
E) $3,000

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

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Question 52

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A manufacturer reports the following information below for its first three years in operation. Income for year 3-year period using absorption costing is:

A) $280,000.
B) $310,000.
C) $300,000.
D) $305,000.
E) $308,000.

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

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Question 53

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A manufacturer reports the following costs to produce 10,000 units in its first year of operations: Direct materials, $10 per unit, Direct labor, $6 per unit, Variable overhead, $70,000, and Fixed overhead, $120,000. The total product cost per unit under absorption costing is:

Portal Manufacturing has total fixed costs of $520,000. A unit of product sells for $15 and variable costs per unit are $11. a) Prepare a contribution margin income statement showing predicted net income (loss) if Portal sells 100,000 units for the year ended December 31. b) At a minimum, how many units must Portal sell in order not to incur a loss?

Scatter diagrams plot volume (units) on the horizontal axis and cost on the vertical axis.

One aid in measuring cost behavior involves creating a display of the data about past costs in graphical form. Such a visual display is called a ________.

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

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 dollars is:

Ludington Corporation provides the following data from a recent period for its manufacture of shoes: variable manufacturing costs, $24,000; variable selling costs, $12,000; and total fixed costs, $40,000. Sales were $60,000 based on 12,000 units sold during the period. Calculate the contribution margin and the contribution margin ratio.

Madison Corporation sells three products (M, N, and O) in the following mix: 3:1:2. Unit price and cost data are: Total fixed costs are $340,000. The contribution margin per composite unit for the current sales mix (round to the nearest cent) is:

Fielder Productions reports the following information: Total Contribution Margin………………….. $32,000 Total Fixed Costs……………………………. $28,000 Required: (a) Calculate Fielder's degree of operating leverage (DOL). (b) Fielder Productions forecasts a 6% increase in sales. What is the expected effect in percent on pretax income?

A firm expects to sell 25,000 units of its product at $11 per unit. Pretax income is predicted to be $60,000. If the variable costs per unit are $5, total fixed costs must be:

At Midland Company's break-even point of 9,000 units, fixed costs are $180,000 and variable costs are $540,000 in total. The unit sales price is:

Use the following information to determine the contribution margin ratio:

Dividing a mixed cost into its separate fixed and variable cost components makes it more difficult to perform cost-volume-profit analysis.

The ratio (proportion) of the sales volumes for the various products sold by a company is called the:

What is a scatter diagram? How is a scatter diagram used to estimate cost behavior?

Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $270. Annual fixed costs are $800,000. Current sales volume is $4,200,000. Flannigan Company management targets an annual pre-tax income of $1,125,000. Compute the dollar sales to earn the target pre-tax net income.

Barclay Enterprises manufactures and sells three distinct styles of bicycles: the Youth model sells for $300 and has a unit contribution margin of $105; the Adult model sells for $850 and has a unit contribution margin of $450; and the Recreational model sells for $1,000 and has a unit contribution margin of $500. The company's sales mix includes: 5 Youth models; 9 Adult models; and 6 Recreational models. If the firm's annual fixed costs total $6,500,000, calculate the firm's contribution margin ratio per composite unit (rounded to the nearest whole percentage) .

A graph used to analyze past cost behaviors by displaying costs and unit data for each period as points on the diagram is called a: