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Exam 5: Cost Volume Profit Analysis

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Question 41

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Cordell, Inc. has an operating leverage of 3. Sales are expected to increase by 9% next year. What is the expected change in operating income next year?

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If sales increase 9% and the o...

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Question 42

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Piper Technology's fixed costs are $1,500,000, the unit selling price is $250, and the unit variable costs are $130, what is the amount of sales required to realize an operating income of $200,000?

A) 14,167 units
B) 12,500 units
C) 16,000 units
D) 11,538 units

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

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Question 43

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In a cost-volume-profit chart, the

If fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, what is the amount of sales required to realize an operating income of $200,000?

Douglas Company has a contribution margin ratio of 30%.  If Douglas has $336,420 in fixed costs, what amount of sales will need to be generated in order for the company to break even?

If direct materials cost per unit decreases, the amount of sales necessary to earn a desired amount of profit will decrease.

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?

For the past year, Pedi Company had fixed costs of $70,000, unit variable costs of $32, and a unit selling price of $40. For the coming year, no changes are expected in revenues and costs, except that property taxes are expected to increase by $10,000. Determine the break-even sales (units) for: (a) the past year (b) the coming year.

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.)

Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low method of cost estimation, total fixed costs are

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

Cost behavior refers to the manner in which a cost changes as the related activity changes.

Perfect Stampers makes and sells aftermarket hub caps. The variable cost for each hub cap is $4.75 and the hub cap sells for $9.95. Perfect Stampers has fixed costs per month of $3,120. Compute the contribution margin per unit and break-even sales in units and in dollars for the month.

Flying Cloud Co. has the following operating data for its manufacturing operations: The company has decided to increase the wages of hourly workers which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be

If fixed costs are $500,000 and variable costs are 60% of break-even sales, profit is zero when sales revenue is $930,000.

Which of the following activity bases would be the most appropriate for food costs of a hospital?

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?

The relevant activity base for a cost depends upon which base is most closely associated with the cost and the decision-making needs of management.

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

For purposes of analysis, mixed costs are