Exam 11: Cost Behavior and Cost-Volume-Profit Analysis

For purposes of analysis,mixed costs can generally be separated into their variable and fixed components.

A low operating leverage is normal for highly automated industries.

If sales are $820,000,variable costs are 68% of sales,and operating income is $260,000,what is the contribution margin ratio?

Direct materials and direct labor costs are examples of variable costs of production.

If yearly insurance premiums are increased,this change in fixed costs will result in a decrease in the break-even point.

Variable costs are costs that vary on a per-unit basis as the level of manufacturing activity changes.

If fixed costs are $450,000 and the unit contribution margin is $50,the sales necessary to earn an operating income of $30,000 are 14,000 units.

Foggy Co.has the following operating data for its manufacturing operations: The company has decided to increase the wages of hourly workers,which will increase the unit variable cost by 10%.Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%.If sales prices are held constant,the break-even point for Flynn Co.will

The data required for determining the break-even point for a business are the total estimated fixed costs for a period stated as a percentage of net sales.

For the coming year,Belton Company estimates fixed costs at $60,000,the unit variable cost at $25,and the unit selling price at $50.Determine (a)the break-even point in units of sales, (b)the unit sales required to realize operating income of $100,000,and (c)the probable operating income if sales total $400,000.

A production supervisor's salary that does NOT vary with the number of units produced is an example of a fixed cost.

Even if a business sells six products,it is possible to estimate the break-even point.

If the volume of sales is $6,000,000 and sales at the break-even point amount to $4,800,000,the margin of safety is 20%.

The difference between the current sales revenue and the sales at the break-even point is called the

If a business sells four products,it is NOT possible to estimate the break-even point.

With the aid of computer software,managers can vary assumptions regarding selling prices,costs,and volume and can immediately see the effects of each change on the break-even point and profit.Such an analysis is called

Only a single line,which represents the difference between total sales revenues and total costs,is plotted on the cost-volume-profit chart.

Variable costs are costs that vary in total in direct proportion to changes in the activity level.

If sales are $200,000,variable costs are 56% of sales,and operating income is $30,000,what is the contribution margin ratio?

Total fixed costs remain constant as the level of activity changes.