Exam 20: Cost Behavior Analysis

A retail manager is preparing a budget for the coming year and is considering the various costs of the retail store.What is the best approach for the manager to take when budgeting for the cost of the store's merchandise?

The objective of breakeven analysis is to find the level of activity at which sales revenue equals the sum of all variable and fixed costs.

If targeted sales are 12,000 units,the sales price per unit is $70,fixed costs are $130,000,and variable costs are $40 per unit,then planned profit must be $230,000.

Explain what cost-volume-profit analysis is and how managers use it.Give examples of some purposes for which it might be used.

When fixed costs are $46,500,the variable cost is $12 per unit,and the product sells for $22 per unit,the breakeven point is

When fixed costs are $18,000 and the contribution margin per unit is $4,the breakeven point is

Excerpts from a cost-volume-profit analysis indicate fixed costs of $49,000,a contribution margin per unit of $35,a selling price of $90,and a sales level of 4,000 units.What must be the targeted level of profit?

Listed below are selected costs of sports car manufacturer at a production level of 4,000 cars.(a)Identify three fixed costs.(b)Support your answer by illustrating the cost behavior pattern per unit and in total as the annual volume of motorcycles produced increases from 4,000 cars to 8,000 cars for one fixed cost.(Note: The production increase is within the relevant range.) Monthly machine rental charge \ 8,000 Monthly insurance premiums on the plant 800 Sports car tire cost (per tire) 100 Salaried employees' weekly payroll cost 51,000 Manufacturing hourly employees' weekly payroll 88,000 Depreciation on the equipment for the month 6,000 Car battery (one batterv) 70

If fixed costs are $24,000,variable costs are $25 per unit,and the product sells for $45,the total contribution margin at the breakeven point is $1,200.

The new Corina watch has an expected selling price per watch of $42,the projected variable cost per unit is $24,and estimated fixed costs per month are $31,680. The breakeven point in sales dollars is

Linear approximation is a method of converting nonlinear variable costs into linear fixed costs.

A retail organization's sales salaries consist of a base amount plus a commission of 5 percent on each sale.Which of the following would properly classify the cost of sales salaries?

Cost-volume-profit analysis cannot be used to estimate a targeted profit for service businesses.

Using the high-low method and the information below,compute the monthly total fixed costs for SKP Corporation. Month Telephone Hours Used Telephane Expense: Apri 100 \ 4,500 May 110 4,800 June 150 5,400

Edward Cheezer's makes and sells frozen four-cheese pizzas,New York-style.The expected selling price is $10 per pizza.The projected variable cost per pizza is $6.The estimated fixed costs per month are $10,000. If 6,000 pizzas are sold in a given month and fixed costs increase by $5,000,the overall profit is

As production increases,what should you expect to happen to the fixed costs per unit?

Contribution Margin Income Statement divides costs into product and period costs.

Last year,RC Rancho's revenue was $120,000,000,variable costs were $90,000,000 and fixed costs were $15,000,000.RC Rancho's contribution margin ratio was 25 percent.

At the breakeven point,the contribution margin

When using the high-low method,the accountant assumes the fixed portion of mixed costs to be the lowest fixed amount incurred during the period under review.