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

Assume the sales price is $100 per unit and the total fixed costs are $75,000.The break-even volume in dollar sales is $250,000.What is the variable cost per unit?

The following information is available for Company ZZ: If sales increase to $1,500,000,what is operating income?

________ is the ratio of fixed costs to variable costs.

The benefits of using a computer model in CVP analysis always exceed the costs.

Cherry Wood Company sells desks at $480 per desk.The variable costs are $372 per desk.Total fixed costs for the period are $456,840.The contribution margin ratio is ________.

What happens when the cost-driver activity level increases within the relevant range?

ADEL Company has the following information: Assume the tax rate decreases to 30%.How many fewer units can be sold to retain the same after-tax net income of $42,000?

An accountant may have difficulty classifying costs as fixed or variable because ________.

When changes occur in the sales mix,there is no effect on the cost-volume-profit relationships.

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

Which of the following statements about highly leveraged companies is true?

YY Company has the following information available: If variable costs increase to $65 per unit and fixed costs increase $200,000,what is the break-even point in units?

Assume ZZZ Company has the following information available: If variable costs increase to $65 per unit,what is the expected net income for one year?

Assume the following information for Marie Company: To achieve the targeted after-tax net income,what amount of sales in dollars is necessary?

An increase in total variable costs usually indicates ________.

Suppose a Holiday Inn Hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel.Average daily room rents are $50 per room and average variable costs are $10 for each room rented.It operates 365 days per year.What percent of occupancy is needed to breakeven?

Which of the following costs is a fixed cost?

The break-even point may be reduced by increasing the per unit variable cost.

Consider the following activity: Several product and process engineers are working to make improvements to several existing products.These improvements revolve around safety and durability issues.What is an appropriate cost driver for this activity?

The Eastman Family Restaurant is open 24 hours per day.Fixed costs are $24,000 per month.Variable costs are estimated at $9.60 per meal.The average revenue is $12 per meal.The restaurant wished to earn a profit before taxes of $6,000 per month. Required: A)Compute the number of meals that must be served to earn a profit before taxes of $6,000 per month. B)Assume that fixed costs increase to $30,000 per month.How many additional meals must be served to earn a profit before taxes of $6,000 per month?