Exam 2: Introduction to Cost Behavior and Cost Volume Relationships

The cost of advertisements is part of this value- chain function

If the proportions in a sales mix change, the:

Variable costs:

Rampart Hospital has total variable costs of 90% of total revenues and fixed costs of $50 million per year. There are 50,000 patient- days estimated for next year. What is the average daily revenue per patient necessary to breakeven?

Which value chain function would include advertising costs?

Companies with high contribution- margin percentages

A firm's ratio of fixed to variable costs

The sales mix is the relative proportions or combinations of quantities of products that constitute total sales.

The difference between planned sales and break- even sales

In highly leveraged companies, small changes in sales volume result in large changes in net income.

The horizontal axis on the CVP graph is the dollars of cost and revenue.

Assume the following cost information for Melissa Company: Selling price per unit \ 144 Variable cost p per unit \ 80 Total fixed costs \ 80,000 Tax rate 40\% of sales dollars is required to earn an after- tax net income of $24,000.

Burning Company, a producer of salsa, has the following information: Income tax rate 30\% Selling price per unit \ 5.00 Variable cost per unit \ 3.00 Tot al fixed costs \ 90,000.00 The break- even point in dollars is:

(fixed expenses + target net income) / unit contribution margin

The relevant range is the limit of cost- driver activity within which a specific relationship between costs and the cost driver is valid.

The sales price minus the cost of goods sold

is the excess of sales over the cost of goods sold.

A change in the tax rate will not affect the break- even point.

Highly leveraged companies have low fixed costs and high variable costs.

The level of sales at which revenues equal expenses and net income is zero is called the: