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

Weatherspoon Company has a product with a selling price per unit of $200, the unit variable cost is $90, and the total monthly fixed costs are $300,000.How much is Weatherspoon's contribution margin ratio?

In the Restin Company, maintenance costs are a mixed cost.At the low level of activity (160 direct labor hours), maintenance costs are $600.At the high level of activity (400 direct labor hours), maintenance costs are $1,100.Using the high-low method, what is the variable maintenance cost per unit and the total fixed maintenance cost? Variable Cost Per Unit Total Fixed Cost a. \ 2.08 \ 268 b. \ 2.08 \ 500 c. \ 2.75 \ 220 d. \ 2.75 \ 400

Walters Corporation sells radios for $50 per unit.The fixed costs are $420,000 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 $100,000 and variable costs will be 50% of the selling price.The new break-even point in units is:

Both variable and fixed costs are included in calculating the contribution margin.

A company requires $1,360,000 in sales to meet its net income target.Its contribution margin is 30%, and fixed costs are $240,000.What is the target net income?

Greg's Golf Carts produces two models: Model 24 has sales of 500 units with a contribution margin of $40 each; Model 26 has sales of 350 units with a contribution margin of $50 each.If sales of Model 26 increase by 100 units, how much will profit change?

Kaplan, Inc.produces flash drives for computers, which it sells for $20 each.The variable cost to make each flash drive is $13.During April, 700 drives were sold.Fixed costs for April were $2 per unit for a total of $1,400 for the month.How much is the monthly break-even level of sales in dollars for Kaplan?

Target net income is the income objective for an individual product line.

The contribution margin ratio increases when

An example of a mixed cost is

Sweet Manufacturing is planning to sell 400,000 hammers for $3 per unit.The contribution margin ratio is 20%.If Sweet will break even at this level of sales, what are the fixed costs?

Which of the following is not a cost classification?

An activity index identifies the activity that has a causal relationship with a particular cost.

Montoya Manufacturing has fixed costs of $2,500,000 and variable costs are 40% of sales.What are the required sales if Montoya desires net income of $250,000?

Bolton Industries had actual sales of $750,000 when break-even sales were $600,000.What is the margin of safety ratio?

How much sales are required to earn a target income of $160,000 if total fixed costs are $200,000 and the contribution margin ratio is 40%?

If graphed, fixed costs that behave in a curvilinear fashion resemble a(n)

The following information is available for Wade Corp.: Sales \ 550,000 Total fixed expenses \ 150,000 Cost of goods sold 390,000 Total variable expenses 360,000 A CVP income statement would report

Select the correct statement concerning the cost-volume-profit graph at right:

For purposes of CVP analysis, mixed costs must be classified into their fixed and variable elements.