ACCT 212 Read & Interact Wild & Shaw Chapter 5 Cost-Volume-Profit Analysis solution complete answers

ACCT 212 Read & Interact Wild & Shaw Chapter 5 Cost-Volume-Profit Analysis solutions complete answers 

 

A company produces a product with a contribution margin per unit of $36. If the company incurs $62,000 in total fixed costs and expects to sell 2,500 units their income would be $ .

 

Assuming all other factors remain constant, if fixed costs increase, then the break-even point will:

 

RST Company produces a product that has a selling price of $10 per unit and variable cost of $6 per unit. The company's fixed costs are $30,000. If the company sells 15,000 units, the degree of operating leverage is  .

 

Managers make assumptions in CVP analysis. These assumptions include: (Check all that apply.)

 

A measure to assess the effect of changes in the level of sales on income is the :

 

Sales mix is the (volume/proportion/mix)  of the sales volume for each product.

 

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. RST desires to earn a target income of $20,000. The sales level in dollars to achieve the desired target income is $ .

 

A company produces a product with a contribution margin per unit of $36. If the company incurs $62,000 in total fixed costs, expects to sell 2,500 units income is $ .

 

CVP analysis relies on all of the following assumptions except:

 

Sales mix is the proportion of _____ for various products.

 

A company produces a product with variable costs of $2.50 per unit. The product sells for $5.00 per unit. The company has fixed costs of $3,000 and desires a target income of $10,000. The sales level in dollars to achieve the desired target income is $ .

 

A company sells 800 units at $16 each, has variable costs of $12 per unit, and fixed costs of $1,200. Income is $ .

 

Maker's Company produces a product that has a variable cost of $4 per unit. The company's fixed costs are $40,000. The product sells for $12 per unit. The company is considering purchasing a new manufacturing machine which would improve efficiency. The new machine would decrease the variable cost to $3, but increase fixed costs by $5,000. The revised break-even point in dollars is $ .

 

Assuming all other factors remain constant, if sales price per unit increases, then the break-even point will:

 

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. RST desires to earn a profit of $20,000. The contribution margin per unit is $ .

 

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. The company is considering purchasing a new manufacturing machine which would improve efficiency. The new machine would decrease the variable cost to $4, but increase fixed costs by $15,000. The revised break-even point in dollars is $ .

 

List the cost estimation methods from the least precise to the most precise, with the least precise on top.

 

Assuming all other factors remain constant, if variable cost per unit increases, then the break-even point will:

 

LMN Company produces a product that sells for $1. The company has production costs of $600,000, half of which are fixed costs. Assuming production and sales of 750,000 units, the contribution margin per unit is $ .

 

A statistical method of identifying cost behavior that is computed using spreadsheet programs or calculators is:

 

Match each cost estimation method to its characteristics.

 

When using the high-low method, the slope represents:

 

When preparing a scatter diagram, the estimated line of cost behavior is drawn on a scatter diagram to show the relation between:

 

A statistical method for identifying cost behavior is called  .

 

The high-low method uses ___ points to estimate the cost equation.

 

True or false: On a scatter diagram, costs are plotted on the horizontal axis.

 

A   cost remains unchanged when the volume of activity changes within the relevant range.

 

Match each example below to the correct cost type.

 

CVP analysis looks at how  _ is affected by sales price per unit, variable costs per unit, volume, and fixed costs.

 

The extent, or relative size, of fixed costs in the total cost structure is known as:

 

Mandolin produced 70,000 units and sold 50,000 units. Their unit selling price is $20 and they have variable unit production costs of $10, variable selling expenses of $3 and fixed overhead of $10,000. Compute Mandolin's net income under variable costing.

 

On a CVP chart, the line which crosses the vertical axis at the level of fixed costs and slopes upwards has a slope equal to:

 

The break-even point can be expressed as sales in        or       .

 

In        costing, only costs that change in total with changes in production levels are included in product costs.

 

A company has a margin of safety of 20%. If expected sales are $50,000, then break-even sales are:

 

Each of the following are methods used to separate mixed costs into their fixed and variable components except:

 

The three methods used to classify costs into their fixed and variable components includes

 

Conventional CVP analysis requires management to classify all costs as either        or        with respect to production or sales volume.

 

When using the high-low method, the estimated line of cost behavior connects the: 

 

On a CVP chart, on either side of the break-even point, the vertical distance between the total sales line and the total cost line represents: 

 

Which of the following is the correct statement about fixed costs? 

 

The contribution margin ratio is interpreted as the percent of:

 

A(n)        cost includes both fixed and variable components. 

 

The margin of safety is: (Check all that apply.) 

 

Which of the following is the correct statement about variable costs? 

 

The break-even point is the sales level at which a company: (Check all that apply.) 

 

Cost-volume-profit analysis helps managers predict how changes in        and        levels affect income.

 

Jack works on the production line at an assembly plant. Jack receives a base salary plus $1.25 per unit assembled. This is an example of a ______ cost.

 

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. If the company sells 15,000 units, the degree of operating leverage is       .

 

Under a _____ costing income statement, only variable costs are included in the computation of total cost per unit.

 

A(n)        cost changes in proportion to changes in volume of activity.

 

A(n)        cost remains unchanged in amount when the volume of activity varies from period to period within the relevant range.

 

When using the high-low method, the slope of the estimated line of cost behavior represents:

 

The percent by which a product's unit selling price exceeds its total unit variable cost is the:

 

A company has a degree of operating leverage of 2.5. If sales increase by 10%, then profits will:

 

On a CVP chart, the line which crosses the vertical axis at the level of fixed costs and slopes upwards represents ______ costs.

 

On a CVP chart, the horizontal line represents ______ costs.

 

Naples Company produced 650,000 units and sold 500,000 units. Their unit selling price is $10. Cost of goods sold is $6 per unit. Fixed selling expenses are $10,000 and variable selling and administrative expenses are $3 per unit. Compute Naple's net income under absorption costing.