Exam 5: Cost Behavior Analysis

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?

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

Theoretical capacity reduced by normal and anticipated work stoppages is called

Unit fixed costs vary inversely with activity or volume.

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.

Sales mix is the proportion of each product's unit sales relative to the company's total sales dollars.

Total costs that change in direct proportion to changes in productive output, or any other volume measure, are called variable costs.

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?

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?

Retleb Manufacturing Company noticed that, during its busiest month of 20xx, maintenance costs totaled $15,400, resulting from the production of 32,000 units. During its slowest month, $12,600 in maintenance costs were incurred, resulting from the production of 24,000 units. Using the high-low method, what maintenance cost would the company expect to incur at a volume of 20,000 units?

The weighted-average breakeven point is the breakeven point for the entire company.

The relevant range of activity is the range in which actual operations are likely to occur.

Cost behavior analysis is not useful to a service business.

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.)

Loren, Inc., sold 30,000 units of its product last year with the following results: Salesrevenue \ 900,000 Variable costs 630,000 Fixed costs 190,000 Operating income \ 80,000 The company expects variable costs to increase by $4.00 per unit this year. a. Assuming the unit sale price remains constant, compute the unit contribution margin and the contribution margin ratio for this year. b. Given the expected change in variable costs, how many units will have to be sold this year to earn the same operating income as last year? c. Assuming the company is willing to raise the unit sales price but wants the contribution margin to be the same as last year, determine the unit sales price the company must charge to cover the expected increase in variable costs.

Adding the contribution margin as a component to cost-volume-profit computations will not change the resulting amount of breakeven units in a given situation.

In terms of cost behavior, telephone expense and direct materials are classified as

Using the contribution margin approach, find the breakeven point in units for Consumer Products if the selling price per unit is $12, the variable cost per unit is $6, and the fixed costs are $8,040.

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