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Exam 11: Cost Behavior and Cost-Volume-Profit Analysis

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Question 31

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Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?

A) Direct labor
B) Salary of a factory supervisor
C) Units of production depreciation on factory equipment
D) Direct materials

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

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Question 32

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If variable costs per unit increased because of an increase in hourly wage rates,the break-even point would

A) decrease.
B) increase.
C) remain the same.
D) increase or decrease,depending upon the percentage increase in wage rates.

E) B) and D)
F) B) and C)

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Question 33

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Direct materials cost that varies with the number of units produced is an example of a fixed cost of production.

Variable costs as a percentage of sales for Leamon Inc.are 75%,current sales are $600,000,and fixed costs are $110,000.How much will operating income change if sales increase By $50,000?

If fixed costs are $850,000 and the unit contribution margin is $50,profit is zero when 15,000 units are sold.

Costs that vary in total in direct proportion to changes in an activity level are called

Assuming that last year's fixed costs totaled $910,000,what was Kennedy Co.'s break-even point in units?

Cost-volume-profit analysis can be presented in both equation form and graphic form.

For the current year ending April 30,Philip Company expects fixed costs of $70,000,a unit variable cost of $45,and a unit selling price of $95.

Which of the following activity bases would be the most appropriate for food costs of A hospital?

If direct materials cost per unit increases,the break-even point will increase.

The dollars available from each unit of sales to cover fixed cost and profit is the contribution margin per unit.

The variable cost per unit remains constant with changes in the level of activity.

If fixed costs are $250,000,the unit selling price is $105,and the unit variable costs are $65,what is the break-even sales (in units) ?

DeGiaimo Co.has an operating leverage of 5.If next year's sales are expected to increase by 10%,then the company's operating income will increase by 50%.

If the contribution margin ratio for Harrison Company is 38%,sales were $425,000 and fixed costs were $100,000,what was the income from operations?

If the volume of sales is $6,000,000 and sales at the break-even point amount to $4,800,000,the margin of safety is 25%.

Variable costs as a percentage of sales are equal to 100% minus the contribution margin ratio.

The relevant range is useful for analyzing cost behavior for management decision-making purposes.

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