FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 18: Cost-Volume-Profit Analysis

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Essay

Review LaterAdd Note

Review Later

What are the basic assumptions of CVP analysis with regard to variable cost,fixed cost,and selling price per unit.(Assume a single product).

Correct Answer

verified

Variable costs per unit are co...

View Answer

Show Answer

Question 62

Essay

Review LaterAdd Note

Review Later

Thomas Company has total fixed costs of $360,000 and variable costs of $14 per unit.If the unit sales price is reduced from $24 to $20 and advertising is increased by $10,000,sales will increase from 40,000 to 65,000 units.Should Thomas reduce its per unit sales price and pay for the additional advertising? (Support your answer with calculations.)

Correct Answer

verified

_TB6312_00_TB6312_00 Since the...

View Answer

Show Answer

Question 63

True/False

Review LaterAdd Note

A visual inspection of a scatter diagram may be used to identify the approximate relation between past cost and volume.

The following data relate to a product sold by Nelson Company: $\begin{array}{lr}\text { Total variable costs } & \$ 90,000 \\\text { Total fixed costs } & 27,000 \\\text { Predicted after-tax income (30\% tax) } & 12,600 \\\text { Contribution margin per unit } & 5\end{array}$ (a)Calculate the number of units expected to be sold. (b)Calculate the expected total dollar sales.

The Haskins Company manufactures and sells radios.Each radio sells for $23.75 and the variable cost per unit is $16.25.Haskin's total fixed costs are $25,000,and budgeted sales are 8,000 units.What is the contribution margin per unit?

A product sells for $200 per unit,and its variable costs per unit are $130.The fixed costs are $420,000.If the firm wants to earn $35,000 pretax income,how many units must be sold?

What is an important feature that must be remembered when using cost estimation methods?

A CVP graph presents data on:

A product sells for $210 per unit,and its variable costs per unit are $130.The fixed costs are $420,000.If the firm wants to earn $35,000 after tax income (assume a 30% tax rate) ,how many units must be sold?

The most complex of the cost estimation methods is the high-low method.

One aid in measuring cost behavior involves creating a display of the data about past costs in graphical form.Such a visual display is called a ______________________.

The margin of safety is the excess of:

A company has total fixed costs of $200,000.Its product sells for $25 per unit and variable costs amount to $15 per unit.The company wishes to earn an after-tax income of $35,000.Assume that the company has a 30% tax rate.How many units must be sold to achieve this after-tax income level?

Total variable costs change proportionately with changes in output activity.

Narrows 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 $75; and total fixed costs of $140,000.Calculate the break-even point: a.In units. b.In dollar sales.

Contribution margin ratio is calculated as the ________________ divided by _____________.

Reference: 18_02 Tanner Inc. has incurred the following overhead costs over a six-week period: $\begin{array} { | c | c | c | } \hline \text { Week } & \text { Machine Hours } & \text { Overhead Cost } \\\hline 1 & 68 & \$ 1,190 \\\hline 2 & 62 & \$ 1,004 \\\hline 3 & 72 & \$ 918 \\\hline 4 & 46 & \$ 710 \\\hline 5 & 94 & \$ 1,025 \\\hline 6 & 48 & \$ 965 \\\hline\end{array}$ -Calculate the approximate fixed cost component of Tanner's overhead costs using the high-low method.

Cost-volume-profit analysis is frequently based on the assumption that the production level is the same as the sales level.

The sales level at which a company neither earns a profit nor incurs a loss is the:

A statistical method for deriving an estimated line of cost behavior is the: