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Exam 18: Cost Behavior and Cost-Volume-Profit Analysis

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Question 1

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Barclay Bikes 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 break-even point in total sales dollars.

A) $13,250,000.
B) $13,000,000.
C) $12,750,000.
D) $12,900,050.
E) $12,750,625.

F) None of the above
G) A) and D)

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Question 2

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The relevant range of operations includes extremely high and low levels of production that are unlikely to occur.

A) True
B) False

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Question 3

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Varigon Co.produces and sells three products-Household,Commercial,and Industrial,and has total fixed costs of $52,000.Sales and cost data follow: Calculate the break-even point in composite units.

Wolowitz Company's product has a contribution margin per unit of $62.50 and a contribution margin ratio of 25%.What is the per unit selling price of the product?

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

The high-low method can be used to estimate the cost equation using just two points.

A company's normal operating range,which excludes extremely high or low operating levels that are not likely to occur,is called the:

The margin of safety can be expressed in dollars or as a percent of sales.

Under variable costing,fixed overhead costs are excluded from product costs.

McCoy Brothers manufactures and sells two products,A and Z in the ratio of 5:2.Product A sells for $75; Z sells for $95.Variable costs for product A are $35; for Z $40.Fixed costs are $418,500.Compute the break-even point in composite units.

Raven Company has a target of $70,000 pre-tax income.The contribution margin ratio is 30%.What amount of dollar sales must be achieved to reach the goal if fixed costs are $36,000?

A company has fixed costs of $320,000 and a contribution margin per unit of $15.If the company wants to earn a target $40,000 pretax income,how many units must be sold (rounded to the nearest whole unit) ?

Use the following information to determine the break-even point in sales dollars:

In Keegan Corporation's most recent fiscal year,the company reported pretax earnings of $215,000.Fixed costs totaled $325,800,the unit selling price of the firm's only product was $60,and the variable costs per unit were 40% of the selling price.Based on this information,the firm's break-even point in units was:

The margin of safety is the excess of:

Curvilinear costs always increase:

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 break-even point in composite units for the current sales mix (round to the nearest unit) is:

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. -Of the 10,000 units produced,9,200 were sold,and 800 remain in inventory at year-end.Under variable costing,the value of the inventory is:

Expanse Co.is considering the production and sale of a new product line with the following sales and cost data: unit sales price $125; unit variable costs $50; and total fixed costs of $150,000.Calculate the break-even point in units and in dollar sales.

A manufacturer reports the following information below for its first three years in operation. -Income for year 2 using absorption costing is: