Exam 20: Cost Behavior Analysis

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

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

Dilly LLC,wants to make a profit of $30,000.It has variable costs of $66 per unit and fixed costs of $20,000.How much must it charge per unit if 5,000 units are sold?

Telephone costs are an example of a mixed cost.

Meredith Marshall owns a home inspection business,offering her services to homeowners.She currently charges $180 per inspection but wants to know if her fee should be raised.She has provided the following data from the past six months: Month Number of Overhead Inspections Costs March 60 \ 3,420 April 64 3,555 May 76 3,989 June 90 4,044 July 97 4,101 August 110 4,120 Meredith takes her daughter with her on all inspections and pays her $40 per inspection.Due to slower business in the cooler months,Meredith estimates she will average 60 inspections per month for the next six months.Prepare a schedule showing Meredith 's estimated total cost per inspection.

The contribution margin equals total fixed costs at the breakeven point.

Within the relevant range,fixed and variable costs behave differently.

The variable cost per unit ____________ as the number of sales increase.

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

Repair bills for large machinery may include a flat fee for the visit to the company's premises plus additional labor charges per hour of repair work and various costs of replacement parts needed.What type of cost is the repair?

An increase in the unit sales price will cause the breakeven point to increase.

Dapper Hat Makers is in the business of designing and producing specialty hats.The material used for derbies costs $4.50 per unit,and Dapper pays each of its two full-time employees $250 per week.If Employee A makes 15 derbies in one week,what is the variable cost per derby? (Round to two decimal places where necessary.)

During this past year,a small publishing company sold 60,000 copies of Super Travel paperbacks (its only product)at $5 per book; total fixed costs were $14,000; and total variable costs were $3 per book.What is this company's breakeven point in units?

You have calculated,using the high-low method,a variable cost per machine hour of $0.80 for your production power costs.Power costs at 6,000 machine hours are $5,400; at 9,000 machine hours,they are $7,800.What are the total fixed costs that you would use to estimate production power costs for your company at any level within your relevant range?

Margin of safety is the excess of actual sales over break even sales.

The following are monthly totals taken from the log of a color photocopying machine used by the Kinlo's Printing Company.Cost was based on a flat fee plus a declining cost per copy made after a minimum number of copies had been made each month. Number of Copies Month Made Total Cot January 35,200 110,800 February 30,400 9,600 March 32,900 10,225 April 40,300 12,075 May 38,400 11,600 June 48,900 14,225 To differentiate the variable and fixed costs in the use of this machine for future planning,use the high-low method to (a)determine the variable cost per copy and (b)compute the fixed and variable costs for the months of February and June.

The high-low method allows you to differentiate between fixed and variable costs when dealing with mixed costs.

When managers plan,they may use cost behavior to decide how to change the mix of products to meet changing demand.

Cost behavior is the way prices are adjusted due to changes in costs.

Which of the following costs is a variable manufacturing cost?