Exam 2: Introduction to Cost Behavior and Cost-Volume Relationships

Consider the following activity: The installation of seats by an airplane manufacturer in a commercial airplane.What is an appropriate cost driver for the labor resources used for this activity?

If the variable cost per unit increases,what is the effect on the break-even point? (Assume no other changes.)

The sales price is $30 per unit,the contribution margin is $8 per unit and total fixed costs are $32,000.What is the break-even point in units?

To predict costs and manage them on a day-to-day basis,managers must identify:

Which of the following statements about costs is FALSE?

Company TTT has the following information available: How many units must be sold to achieve the targeted after-tax net income?

Several machines are used in the factory to manufacture a simple product.What is an appropriate cost driver for the depreciation expense on the machines?

General Hospital has variable costs of 90% of total revenues and total 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?

Gross margin focuses on sales in relation to variable costs.

Wildwood Corporation produces one product.Total fixed costs are $500,000. The unit selling price is $68.50 and the unit variable cost is $50.95. Required: A)Compute the contribution margin per unit. B)Compute the contribution-margin ratio. C)Compute the break-even point in units. D)Compute the break-even volume in dollars.

As sales exceed the break-even point,a firm with a high contribution-margin percentage ________.

The Forever Memories Company has the following information available: How many units should be sold to achieve the targeted after-tax net income?

The equation for the income statement is: Sales - Variable Expenses- Fixed Expenses = Net Income

Brunswick Manufacturing has prepared the following income statement: According to company records,$50,000 of Cost of Goods Sold and $166,000 of Operating Expenses are fixed. Required: A)Compute the contribution margin. B)Compute the contribution margin ratio. C)Compute the break-even volume in sales dollars.

The following information is available for Donald Corporation: If total fixed costs increased to $394,850,then the break-even volume in dollars would increase by ________.

The following information is available for Kinsner Corporation: If management has a targeted net income of $46,200,then the number of units that must be sold is ________.

Southwest Hospital has fixed costs of $100 million per year.Variable costs represent approximately 80% of the total revenue.There are 50,000 patient-days estimated for next year. Required: A)What is the break-even point expressed in total revenue? B)What is the average daily revenue per patient necessary to break even?

If the selling price per unit increases,what is the effect on the break-even point? (Assume no other changes.)

HugME Company produces dolls.Each doll sells for $20.00.Variable costs per unit are $14.00 and total fixed costs for the period are $435,000.What is the break-even point in units?

The SLOW Company has the following information available: What is the after-tax net income?