Exam 5: Merchandising Operations and the Multiple-Step Income Statement

Boswell company reported the following information for the current year: Sales (50,000 units) $1,000,000, direct materials and direct labor $500,000, other variable costs $50,000, and fixed costs $360,000.What is Boswell's contribution margin ratio?

Two costs at Bradshaw Company appear below for specific months of operation. Month Amount Units Produced Delivery costs September \ 40,000 40,000 October 55,000 60,000 Utilities September \ 84,000 40,000 October 126,000 60,000 Which type of costs are these?

Weatherspoon Company has a product with a selling price per unit of $200, the unit variable cost is $110, and the total monthly fixed costs are $300,000.How much is Weatherspoon's contribution margin ratio?

The graph of variable costs that behave in a curvilinear fashion will

Contribution margin

For planning purposes, mixed costs are generally grouped with fixed costs.

The relevant range of activity refers to the

Which one of the following is not an assumption of CVP analysis?

If volume increases, all costs will increase.

Fixed costs normally will not include

The high-low method is criticized because it

Which of the following would be the least controllable fixed costs?

A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $240,000.The number of units the company must sell to break even is

Walters Corporation sells radios for $50 per unit.The fixed costs are $525,000 and the variable costs are 60% of the selling price.As a result of new automated equipment, it is anticipated that fixed costs will increase by $125,000 and variable costs will be 50% of the selling price.The new break-even point in units is:

Which of the following is not an underlying assumption of CVP analysis?

Murphy Company produces flash drives for computers, which it sells for $20 each.Each flash drive costs $6 of variable costs to make.During April, 700 drives were sold.Fixed costs for April were $4 per unit for a total of $2,800 for the month.How much does Murphy's operating income increase for each $1,000 increase in revenue per month?

At the break-even point of 2,000 units, variable costs are $165,000, and fixed costs are $96,000.How much is the selling price per unit?

If a firm increases its activity level,

Portman Company's activity for the first three months of 2016 are as follows: Machine Hours Electrical Cost January 2,100 \ 4,800 February 2,600 \ 5,800 March 2,900 \ 6,400 Using the high-low method, how much is the cost per machine hour?

A CVP income statement shows contribution margin instead of gross profit.