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

O'Malley Company sells 100,000 units for $13 a unit.Fixed costs are $350,000 and net income is $250,000.What should be reported as variable expenses in the CVP income statement?

Variable costs for Abbey, Inc.are 25% of sales.Its selling price is $80 per unit.If Abbey sells one unit more than break-even units, how much will profit increase?

If variable costs per unit are 70% of sales, fixed costs are $290,000 and target net income is $70,000, required sales are $1,200,000.

Costs will not change in total within the relevant range of activity.

The trend in most companies is to have more variable costs and fewer fixed costs.

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 $270,000.What is Boswell's contribution margin ratio?

The contribution margin ratio is calculated by multiplying the unit contribution margin by the unit sales price.

A cost-volume-profit graph shows the amount of net income or loss at each level of sales.

A fixed cost is a cost which

The equation which reflects a CVP income statement is

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

Firms operating at 100% capacity

The break-even point is equal to the fixed costs plus net income.

For an activity base to be useful in cost behavior analysis,

CVP analysis is not important in

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

When applying the high-low method, the variable cost element of a mixed cost is calculated before the fixed cost element.

The fixed cost element of a mixed cost is the cost of having a service available.

Which of the following is not true about the graph of a mixed cost?

Changes in the level of activity will cause unit variable and unit fixed costs to change in opposite directions.