Exam 11: Cost-Volume-Profit Analysis for Decision Making

Mailroom clerks at Speedy Mail are paid a salary of $2200 per month. All clerks are full time. A new clerk is hired whenever the volume of mail increases by 40 000 pieces since the last clerk was hired. If volume of mail is the activity base mail-handling costs are:

The most serious shortcoming of the high-low method of estimating a mixed cost function is that it:

Costs which, in total, vary directly or nearly directly with the volume of production are known as:

What will be the effect on the breakeven point if advertising is increased?

Within the relevant range of activity fixed cost per unit will tend to:

Items such as depreciation, property taxes and insurance can be described as:

Mitcham Ltd has observed that at an activity level of 10 000 units the maintenance cost is $13 000, and at 20 000 units the maintenance cost is $18 000. Using the high-low method, the cost formula for maintenance is:

Super Saver light globes can sell 10 000 units of a product for which the variable expenses are $4 per unit. Fixed expenses are $20 000 and the business wishes to earn a profit of $20 000. What price must Super Saver charge?

Which of these is an example of a fixed cost?

CVP analysis is based on a number of assumptions, which of these is not one of those assumptions?

It is not an assumption of cost-volume-profit analysis that:

The following information is available for Eve Ltd The variable expense variance is:

The high-low method is:

A retail organisation pays its employees a commission of three percent on each sale. This is a:

Contribution margin is:

The vertical axis of the cost-volume-profit chart represents:

A small publishing house sold 50 000 copies of 'How to Control Dogs' in paperback at $3 per book. Fixed costs were $36 000 and variable costs were $90 000. What is the break-even point in units?

Contribution margin can be calculated as:

On a per unit basis, a variable cost will:

The formula for break-even point sales in dollars is: