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

In applying the high-low method, what is the fixed cost? Month Miles Total Cost January \ 144,000 February 50,000 120,000 March 70,000 141,000 April 90,000 195,000

The relevant range of activity is the activity level where the firm will earn income.

The margin of safety is the difference between contribution margin and fixed costs.

A target net income is calculated by taking actual sales minus the margin of safety.

Fixed costs are $600,000 and the variable costs are 75% of the unit selling price.What is the break-even point in dollars?

In evaluating the margin of safety, the

The relevant range of activity refers to the

Required sales in dollars to meet a target net income is computed by dividing

Dunbar Manufacturing's variable costs are 30% of sales.The company is contemplating an advertising campaign that will cost $44,000.If sales are expected to increase $80,000, by how much will the company's net income increase?

The high-low method is criticized because it

If the activity level increases 10%, total variable costs will

A CVP graph does not include a

At the break-even point,

CVP analysis does not consider

Contribution margin is the amount of revenues remaining after deducting cost of goods sold.

Which of the following costs are variable? Cost 10,000 Units 30,000 Units 1. \ 100,000 \ 300,000 2. 40,000 240,000 3. 90,000 90,000 4. 50,000 150,000

Farmers' Industries has fixed costs of $400,000 and variable costs are 60% of sales.How much will Farmers report as sales when its net income equals $40,000?

The break-even point cannot be determined by

The activity level is represented by an activity index such as direct labor hours, units of output, or sales dollars.

A variable cost remains constant per unit at various levels of activity.