Exam 4: Cost Behavior and Cost-Volume-Profit Analysis

If sales are $820,000, variable costs are 45% of sales, and operating income is $260,000, what is the contribution margin ratio?

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

If fixed costs are $500,000 and variable costs are 60% of break-even sales, profit is zero when sales revenue is $930,000.

The Rocky Company reports the following data. Rocky Company's operating leverage is:

Forde Co. has an operating leverage of 4. Sales are expected to increase by 12% next year. Operating income is:

For the current year ending April 30, Hal Company expects fixed costs of $60,000, a unit variable cost of $70, and anticipated break-even of 1,715 sales units.

If sales are $400,000, variable costs are 80% of sales, and operating income is $40,000, what is the operating leverage?

Break-even analysis is one type of cost-volume-profit analysis.

If fixed costs are $850,000 and the unit contribution margin is $50, profit is zero when 15,000 units are sold.

Harold Corporation just started business in January 2012. They had no beginning inventories. During 2012 they manufactured 12,000 units of product, and sold 10,000 units. The selling price of each unit was $20. Variable manufacturing costs were $4 per unit, and variable selling and administrative costs were $2 per unit. Fixed manufacturing costs were $24,000 and fixed selling and administrative costs were $6,000. What would be the Harold Corporations Net income for 2012 using variable costing?

Variable costs are costs that remain constant in total dollar amount as the level of activity changes.

Flying Cloud 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 next break-even point for Flying Cloud Co. will be:

When units manufactured exceed units sold:

The Grant Company has sales of $300,000, and the break-even point in sales dollars if $225,000. Determine the company's margin of safety percentage.

If the volume of sales is $7,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 45.8%.

Rusty Co. sells two products, X and Y. Last year Rusty sold 5,000 units of X's and 35,000 units of Y's. Related data are: What was Rusty Co.'s weighted average unit selling price?

Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are: What was Carter Co.'s weighted average unit contribution margin?

Silver River Company sells Products S and T and has made the following estimates for the coming year:

If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?

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. This is called: