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

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Question 71

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Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000?

A) $8,000 increase
B) $8,000 decrease
C) $30,000 decrease
D) $30,000 increase

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

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Question 72

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Spice Inc.'s unit selling price is $60, the unit variable costs are $35, fixed costs are $125,000, and current sales are 10,000 units. How much will operating income change if sales increase by 8,000 units?

A) $150,000 decrease
B) $175,000 increase
C) $200,000 increase
D) $150,000 increase

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

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Question 73

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For purposes of analysis, mixed costs can generally be separated into their variable and fixed components.

The relative distribution of sales among the various products sold by a business is the

The manufacturing cost of Mocha Industries for three months of the year are provided below: $\begin{array} { | l | l | l | } \hline & \text { Total Cost } & \text { Production } \\\hline \text { April } & \$ 63,100 & 1,100 \text { units } \\\hline \text { May } & 80,920 & 1,800 \\\hline \text { June } & 100,900 & 2,600 \\\hline\end{array}$ Using the high-low method, determine the a) variable cost per unit, and b) the total fixed costs.

Penny Company sells 25,000 units at $59 per unit. Variable costs are $29 per unit, and loss from operations is $50,000). Determine the a) unit contribution margin b) contribution margin ratio, and c) fixed costs per unit at production of 25,000 units.

When units manufactured exceed units sold:

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

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

Copper Hill Inc. manufactures laser printers within a relevant range of production of 70,000 to 100,000 printers per year. The following partially completed manufacturing cost schedule has been prepared: Complete the preceding cost schedule, identifying each cost by the appropriate letter a) through o).

When a business sells more than one product at varying selling prices, the business's break-even point can be determined as long as the number of products does not exceed

When Isaiah Company has fixed costs of $120,000 and the contribution margin is $30, the break-even point is

Figure 21-1 -Which of the graphs in Figure 21-1 illustrates the nature of a mixed cost?

Given the following costs and activities for Dance Company electrical costs, use the high-low method to calculate Dance's variable electrical costs per machine hour.

The Klein Company reports the following data: Sales $980,000 Variable costs 500,000 Fixed costs 350,000 Determine Klein Company's operating leverage. Round your answer to two decimal places.

The fixed cost per unit varies with changes in the level of activity.

Given the following: Variable cost as a percentage of sales = 60% Unit variable cost = $30 Fixed costs = $200,000 What is the break-even point in units?

Companies with large amounts of fixed costs will generally have a high operating leverage.

What would Timmer's net income be for the year using variable costing?

Assume that Corn Co. sold 8,000 units of Product A and 2,000 units of Product B during the past year. The unit contribution margins for Products A and B are $30 and $60, respectively. Corn has fixed costs of $378,000. The break-even point in units is