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

If a company faces declining sales over time,it must restructure its costs to break-even at a lower volume.In order to carry this out,what costs can be reduced?

Contribution margin is equal to ________.

The vertical axis on the cost-volume-profit graph is the ________.

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?

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

With mixed costs,the fixed cost element is viewed as the ________ and the variable cost element is viewed as the ________.

Winston Company has variable costs of $5 per unit and a selling price of $10 per unit.Fixed costs are $100,000.Planned unit sales for 2015 are 25,000 units.Actual unit sales for 2014 were 22,000 units.What is the margin of safety in units for 2015?

Which example is NOT a step cost?

Atkinson Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000 and the contribution margin is $6.00 per unit.Atkinson's tax rate is 40%.The number of units that must be sold to earn the targeted net income is ________.

What is the margin of safety in dollars?

The following information is available for Trump Corporation: Total fixed costs \3 00,000 Variable costs per unit \ 100 Selling price per unit \ 200 If total fixed costs increased to $600,000,then the break-even volume in dollars would increase by ________.

________ is the relative proportions or combinations of quantities of different products that comprise total sales.

The CVP graph uses the assumption that costs are linear over the relevant range.

Mixed costs are composed of only fixed costs.

Sole Company manufactures running shoes.The selling price is $80 per pair (unit)and variable costs are $60 per pair (unit).The sales volume of $776,000 generates $100,750 of net income before taxes. Required: A) Compute total fixed costs. B) Compute total variable costs. C) Compute the break-even point in units. D) Compute the quantity of units above the break-even point to reach targeted net income before taxes.

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

Beckham Company has the following information available: Selling price per unit \ 100 Variable cost per unit \ 55 Fixed costs per year \ 400,000 Expected sales per year 20,000 units What is the expected operating income for a year?

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

The break-even point is the level of revenue at which revenue equals fixed costs.

The break-even point may be reduced by reducing total fixed costs and holding everything else constant.