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

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Question 91

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The three most common cost behavior classifications are

A) variable costs, product costs, and sunk costs
B) fixed costs, variable costs, and mixed costs
C) variable costs, period costs, and differential costs
D) variable costs, sunk costs, and opportunity costs

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

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Question 92

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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.)

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a) variable i) fixed
b) mixed ...

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Question 93

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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) ?

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?

If fixed costs are $450,000 and the unit contribution margin is $50, the sales necessary to earn an operating income of $50,000 are 10,000 units.

Variable costs as a percentage of sales are equal to 100% minus the contribution margin ratio.

Contribution margin is

The manufacturing cost of Calico Industries for three months of the year are provided below: Using the high-low method, the variable cost per unit and the total fixed costs are

The Rocky Company reports the following data: Sales $800,000 Variable costs 300,000 Fixed costs 120,000 Rocky Company's operating leverage is

Carter Co. sells two products, Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are: $\begin{array} { l l l l } & \text { Unit Selling } & \text { Unit Variable } & \text { Unit Contribution } \\\text { Product } & \text { Price } & \text { Cost } & \text { Margin } \\\hline \text { Arks } & \$ 120 & \$ 80 & \$ 40 \\\text { Bins } & 80 & 60 & 20\end{array}$ -What was Carter Co.'s sales mix last year?

Currently, the unit selling price is $50, the variable cost, $34, and the total fixed costs, $108,000. A proposal is being evaluated to increase the selling price to $54. a) Compute the current break-even sales units). b) Compute the anticipated break-even sales units), assuming that the unit selling price is increased and all costs remain constant.

Absorption costing is required for financial reporting under generally accepted accounting principles.

If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 40%.

Match the following terms a-e) with their definitions. -Graphically shows costs, sales, and operating profit or loss at various levels of units sold

A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost.

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.

If the volume of sales is $6,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 25%.

Blane Company has the following data: $\begin{array}{ll}\text { Total sales } & \$ 800,000 \\\text { Total variable costs } & \$ 300,000 \\\text { Fixed costs } & \$ 200,000 \\\text { Units sold } & 50,000 \text { units }\end{array}$ What will operating income be if units sold double to 100,000 units?

If sales are $400,000, variable costs are 80% of sales, and operating income is $40,000, what is the operating leverage?

If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?