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Exam 18: Cost-Volume-Profit Analysis

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Question 41

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The ratio of the volumes of the various products sold by a company is called the ______________________________.

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Question 42

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A product sells for $200 per unit,and its variable costs per unit are $130.The fixed costs are $420,000.What is the break-even point in dollar sales?

A) $2,100
B) $6,000
C) $420,000
D) $646,154
E) $1,200,000

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

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Question 43

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The margin of safety is the amount that sales can drop before the company incurs a loss.

To calculate the break-even point in units,one must know unit fixed cost,unit variable cost,and unit sales price.

A __________ cost is one that includes both fixed and variable cost components; a ______________ cost is one that reflects a step pattern.

A break-even point can be calculated either in units or in dollars.

What-if analysis of cost,revenue,and volume changes is called _______________________.Further analysis of this nature may be achieved by measuring the degree of ______________________.

A product sells for $30 per unit and has variable costs of $18 per unit.The fixed costs are $720,000.If the variable costs per unit were to decrease to $15 per unit and fixed costs increase to $900,000,and the selling price does not change,break-even point in units would:

A cost that remains constant over a limited range of volume but increases by a lump sum when volume increases beyond a maximum amount is a(n) :

The contribution margin per unit is the price at which a unit must be sold in order for the company to break even.

The high-low method is used to derive an estimated line of cost behavior by graphically connecting the two cost amounts identified with the highest and lowest volume levels.

What is operating leverage? How can the degree of operating leverage be used in analyzing changes in sales?

A company is looking into two alternative methods of producing its product.The following information about the two alternatives is available: $\begin{array}{lcc}&\text { Alternative \#1 }&\text { Alternative \#2 }\\ \text { Variable costs per unit } & \$ 8 & \$ 12 \\\text { Fixed costs } & \$ 240,000 & \$ 140,000 \\\text { Selling price per unit } & \$ 20 & \$ 20\end{array}$ If the company's expected sales volume is 35,000 units,which alternative should be selected?

To determine the slope of the variable cost from a scatter diagram,divide the change in volume by the change in cost.

A company manufactures and sells a product for $150 per unit.The company's fixed costs are $68,200,and its variable costs are $95 per unit.The company's break-even point in units is:

Reference: 18_02 Tanner Inc. has incurred the following overhead costs over a six-week period: $\begin{array} { | c | c | c | } \hline \text { Week } & \text { Machine Hours } & \text { Overhead Cost } \\\hline 1 & 68 & \$ 1,190 \\\hline 2 & 62 & \$ 1,004 \\\hline 3 & 72 & \$ 918 \\\hline 4 & 46 & \$ 710 \\\hline 5 & 94 & \$ 1,025 \\\hline 6 & 48 & \$ 965 \\\hline\end{array}$ -Using the high-low method,calculate the variable cost component of these overhead costs (round to the nearest two decimal places) .

As the level of output activity increases,fixed cost per unit remains constant.

There are at least three different methods to estimate costs.These methods are the _______________,_______________,and _______________methods.

The margin of safety can be expressed in units of product,in dollars,or as a percentage of sales.

Identify items (a),(b),and (c)in the cost-volume-profit chart shown below.