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Exam 19: Cost-Volume-Profit Analysis

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Question 151

True/False

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If the property tax rates are increased,this change in fixed costs will result in a decrease in the break-even point.

A) True
B) False

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Question 152

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Cost behavior refers to the manner in which

A) a cost changes as the related activity changes
B) a cost is allocated to products
C) a cost is used in setting selling prices
D) a cost is estimated

E) None of the above
F) B) and C)

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Question 153

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Understanding how costs behave is useful to management for all the following reasons except

The Atlantic Company sells a product with a break-even point of 3,000 sales units.The variable cost is $60 per unit,and fixed costs are $270,000. ​ Determine the (a)unit sales price,and (b)break-even points in sales units if the company desires a target profit of $36,000.

If employees accept a wage contract that decreases the unit contribution margin,the break-even point will decrease.

A cost that has characteristics of both a variable cost and a fixed cost is called a

If the contribution margin ratio for France Company is 45%,sales were $425,000,and fixed costs were $100,000,what was the income from operations?

A firm operated at 80% of capacity for the past year,during which fixed costs were $330,000,variable costs were 70% of sales,and sales were $1,000,000.Operating profit (loss) was

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

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

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%.

Understanding how costs behave is useful to management for all the following reasons except

The three most common cost behavior classifications are

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

Connor Company's fixed costs are $400,000,the unit selling price is $25,and the unit variable costs are $15.What is the break-even sales (units) if the variable costs are increased by $2?

If the contribution margin ratio for France Company is 45%,sales were $425,000,and fixed costs were $100,000,what was the income from operations?

If a business sells four products,it is not possible to estimate the break-even point.

The systematic examination of the relationships among selling prices,volume of sales and production,costs,and profits is termed

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

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.