Exam 21: Cost-Volume-Profit Analysis

Which of the following describes the behavior of a variable cost per unit?

If sales are $820,000, variable costs are 55% of sales, and operating income is $260,000, what is the contribution margin ratio?

Contribution margin is

Forde Co. has an operating leverage of 4. Sales are expected to increase by 12% next year. Operating income is

Costs that remain constant in total dollar amount as the level of activity changes are called

Match the following terms with their definitions. -Where a business's revenues exactly equal costs

Variable costs are costs that vary on a per-unit basis with changes in the activity level.

The relative distribution of sales among the various products sold by a business is the

The difference between the current sales revenue and the sales at the break-even point is called the

If fixed costs are $450,000 and the unit contribution margin is $50, the sales necessary to earn an operating income of $50,000 are 10,000 units.

If employees accept a wage contract that increases the unit contribution margin, the break-even point will decrease.

Douglas Company has a contribution margin ratio of 30%. If Douglas has $336,420 in fixed costs, what amount of sales will need to be generated in order for the company to break even?

If a business had a capacity of $10,000,000 of sales, actual sales of $6,000,000, break-even sales of $4,200,000, fixed costs of $1,800,000, and variable costs of 60% of sales, what is the margin of safety expressed as a percentage of sales?

Match the following terms with their definitions. -A specific activity range over which the cost changes are of interest

If the volume of sales is $7,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 45.8%.

The relevant activity base for a cost depends on which base is most closely associated with the cost and the decision-making needs of management.

If a business sells two products, it is not possible to estimate the break-even point.

Bryce Co. sales are $914,000, variable costs are $498,130, and operating income is $196,000. What is the contribution margin ratio?

Match the following terms (a-e) with their definitions. -Graphically shows costs, sales, and operating profit or loss at various levels of units sold

If fixed costs are $450,000, the unit selling price is $75, and the unit variable costs are $50, what are the old and new break-even sales in units (rounded to a whole number) if the unit selling price increases by $10?