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

Cost-volume-profit analysis includes all of the following assumptions except

The CVP income statement

If the unit contribution margin is $1 and unit sales are 10,000 units above the break-even volume, then net income will be $10,000.

At the high level of activity in November, 7,000 machine hours were run and power costs were $16,000.In April, a month of low activity, 2,000 machine hours were run and power costs amounted to $8,000.Using the high-low method, the estimated fixed cost element of power costs is

A division sold 100,000 calculators during 2013: Sales \2 ,000,000 Variable costs: Materials \ 380,000 Order processing 150,000 Billing labor 110,000 Selling expenses 60,000 Total variable costs 700,000 Fixed costs 1,000,000 How much is the contribution margin per unit?

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?

A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $180,000.The number of units the company must sell to break even is

Which one of the following is a name for the range over which a company expects to operate?

A company desires to sell a sufficient quantity of products to earn a profit of $300,000.If the unit sales price is $20, unit variable cost is $12, and total fixed costs are $600,000, how many units must be sold to earn net income of $300,000?

An assumption of CVP analysis is that all costs can be classified as either variable or fixed.

A mixed cost has both selling and administrative cost elements.

An increase in the level of activity will have the following effects on unit costs for variable and fixed costs: Unit Variable Cost $\quad$$\quad$ Unit Fixed Cost a. Increases $\quad$$\quad$$\quad$$\quad$$\quad$ Decreases b. Remains constant $\quad$$\quad$ Remains constant c. Decreases $\quad$$\quad$$\quad$$\quad$ Remains constant d. Remains constant $\quad$$\quad$ Decreases

Danny's Lawn Equipment has actual sales of $800,000 and a break-even point of $600,000.How much is its margin of safety ratio?

The break-even point is where

If a firm increases its activity level,

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

If the activity index decreases, total variable costs will decrease proportionately.

Contribution margin

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

If a company had a contribution margin of $750,000 and a contribution margin ratio of 40%, total variable costs must have been