Exam 5: Cost Behavior Analysis

SHARE is trying to determine how many clients must be serviced in order to cover its monthly service overhead. Using the high-low method, it has determined that the variable cost per client is $800 and that the monthly fixed overhead is $28,000. -Assuming an average fee of $1,400 per client and a targeted profit of $26,000, the number of clients to be serviced is

At production levels beyond the breakeven point,

In a graph of variable costs, the slope of the line is dependent on the variable costs per unit.

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

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

Operating income is determined by deducting all fixed costs related to production, selling, and administration from contribution margin.

Cost-volume-profit analysis assumes a constant sales mix.