Exam 2: Introduction to Cost Behavior and Cost Volume Relationships

If targeted after- tax net income is $67,500 with a 40% tax rate, contribution margin per unit is $2.00, and total fixed costs are $370,000, then the number of units which must be sold is:

A fixed cost changes in direct proportion to changes in a cost driver.

Which of the following would be a good cost driver for salaries of product and supervisory salaries?

Net income / (1 - tax rate)

Generally, companies that spend heavily for advertising are willing to do so because they have low contribution- margin percentages.

Squeeze Me Company produces Beanie Babies. Each doll sells for $20.00. Variable costs per unit total $14.00, of which $6.25 is for direct materials and $5.25 is for direct labor. If total fixed costs are $435,000, then the break- even point is:

If the sales price per unit is $100, the total fixed costs are $75,000, and the break- even volume in dollar sales is $250,000, then the variable cost per unit is:

On a day- to- day basis managers must manage the activities required to make products and services.

Suppose a Comfort Inn motel has annual fixed costs applicable to its rooms of $1.2 million for its 300- room motel, average daily room rents of $50, and average variable costs of $10 for each room rented. It operates 365 days per year. The break- even point in number of rooms rented is:

A good cost driver for maintenance wages

The planned or desired net income

A cost that changes in direct proportion to changes in the cost driver

Oak N' More Corporation sells desks at $480 per desk. The costs associated with each desk are as follows: Direct materials \ 195 Direct labor 126 Variable factory overhead 51 Total fixed costs for the period are $456,840. The contribution margin per desk is:

An assumption of the CVP analysis is that the sales mix can fluctuate.

Assuming a constant mix of 3 units of Alpha for every 1 unit of Beta, a selling price of $21.60 for Alpha and $28.80 for Beta, variable costs per unit of $14.40 for Alpha and $16.80 for Beta, and total fixed costs of $53,760, the break- even point in units would be:

As the level of activity decreases within the relevant range:

If the sales price per unit is $100, the unit variable cost is $75, and total fixed costs are $150,000, then the break- even volume in dollar sales rounded to the nearest whole dollar is:

The relative proportion or combinations of quantities of products that constitute total sales

If total fixed costs are $350,000, contribution margin per unit is $7.50, the tax rate is 30%, and the number of units to be sold is 100,000, then the after- tax net income will be:

is not shown in the cost- volume- profit graph.