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

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Question 21

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Conan Company has total fixed costs of $112,000. Its product sells for $35 per unit and variable costs amount to $25 per unit. Next year Conan Company wishes to earn a pretax income that equals 10% of fixed costs. How many units must be sold to achieve this target income level?

A) 1,120
B) 8,214
C) 11,200
D) 12,320
E) 14,080

F) A) and E)
G) B) and D)

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Question 22

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A company has fixed costs of $90,000. Its contribution margin ratio is 30% and the product sells for $75 per unit. What is the company's break-even point in dollar sales?

A) $60,000
B) $128,571
C) $180,000
D) $210,000
E) $300,000

F) A) and C)
G) A) and D)

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Question 23

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The dollar amount of sales needed to achieve a target after-tax income is computed by dividing the sum of fixed costs plus the desired after-tax income plus income taxes by the contribution margin ratio.

A company manufactures and sells a product for $150 per unit. The company's fixed costs are $68,200, and its variable costs are $95 per unit. The company's break-even point in dollars is:

The contribution margin per unit is:

The sales mix of Palm Company is 5 units of A, 3 units of B, and 1 unit of C. Per unit sales prices for each product are $30, $40, and $50, respectively. Variable costs per unit are $14, $24, and $34, respectively. Fixed costs are $597,600. What is the break-even point in composite units and in units of A, B, and C?

A company manufactures and sells a product for $120 per unit. The company's fixed costs are $68,760, and its variable costs are $90 per unit. The company's break-even point in units is:

A break-even point can be calculated either in units or in dollars.

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

A line on a scatter diagram that is intended to reflect the past relation between cost and volume is the:

A company is looking into two alternative methods of producing its product. The following information about the two alternatives is available:

The contribution margin per unit expressed as a percentage of the product's selling price is the:

Curvilinear costs always increase:

The contribution margin ratio is the percent by which the margin of safety exceeds the break-even point.

To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and sales price.

What do unit contribution margin and contribution margin ratio reveal about a company's cost structure?

The break-even point in units is:

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

A graphic presentation of cost-volume-profit data is known as a __________________ graph (or chart); this presentation is also sometimes called a ______________ chart.

A __________ cost is one that includes both fixed and variable cost components; a ______________ cost is one that reflects a step pattern.