Exam 20: Cost Behavior Analysis

A digitized music tuner has been a staple in Smooth Sounds' product line for several years.Annual fixed costs of production and administration related to this product in the past have been $643,500.Variable costs of production and sales have been $17 per unit.The selling price in the past has been $28 per unit.Based on the appearance of competing products on the market,management has asked you to do the following: a. Compute the breakeven point in units and sales dollars for the present product. b. Compute the breakeven point in units and sales dollars if the variable costs increased by $3 per unit and the fixed costs increased by $14,375 per month. c. Using the information from (b), an expected additional monthly advertising charge of $10,000, and a monthly sales rate of 15,000 units, compute the competitive selling price that the company must obtain in order to have a profit of $32,000 per month.

For every unit that a company produces and sells above the breakeven point,its profitability is improved (ignoring taxes)by the unit's

If fixed costs are $80,000,the contribution margin is $25 per unit,and the targeted profit is $30,000,then the required unit sales are

The level of operating capacity that is needed to meet expected sales demand is called

The delivery trucks of Italiana's Pizzeria incurred maintenance costs of $2,400 during its busiest month of 20xx,in which 8,000 miles were driven collectively.During its slowest month,$1,800 in maintenance costs were incurred,resulting from 5,000 miles being driven.Using the high-low method,what maintenance cost would the company expect to incur at 6,800 miles of driving?

In a graph of variable costs,the slope of the line is dependent on the variable costs per unit.

Unit variable costs vary with changes in productive output,whereas total variable costs remain constant.

Identify the following as fixed costs,variable costs,or mixed costs: _____________a.Direct materials _____________b.Electricity _____________c.Factory building rent _____________d.Advertising expense _____________e.Shipping expense _____________f.Insurance on the factory building _____________g.Cost of goods sold _____________h.Direct labor

Which of the following statements is true regarding fixed and variable costs?

Contribution Margin Income Statement is prepared to present for external users of financial information.

Which of the following costs is a variable manufacturing cost?

Contribution margin (CM)is the amount that remains after all fixed costs are subtracted from sales.

Tigor Enterprises has sales revenue of $340,000 for 20xx.Its product sells for $12 and has a 20 percent contribution margin.Fixed costs are $32,000.What is Tigor Enterprises' operating income for 20xx?

Fixed costs always remain constant.

The weighted-average contribution margin is computed by multiplying each product's unit contribution margin by the sales mix percentage of each product.

Trawest,Inc.,has prepared the following data: Unit Sales Price Unit Variable Costs Unit Sales Product A \ 34.00 \ 20.00 35,000 Product B 26.00 14.50 7,000 Product C 18.00 10.50 14,000 The sales mix for Products A,B,and C is

The contribution margin and the gross margin can be used interchangeably.

Using the contribution margin approach,find the contribution margin ratio for Consumer Products if the selling price per unit is $12,the variable cost per unit is $3,and the fixed costs are $8,040.

"Breakeven" is the point at which a company will begin to earn a profit.

All variable costs except manufacturing costs are subtracted from sales to determine the total contribution margin.