Question 1

Assuming no other changes, operating income will be the same under both the variable and absorption costing methods when the number of units manufactured equals the number of units sold.

Accepted Answer

A) True 
 B)False

Question 2

Waterfall Company sells a product for $150 per unit. The variable cost is $80 per unit, and fixed costs are $270,000.?Determine the 
(a) break-even point in sales units and 
(b) break-even point in sales units if the company desires a target profit of $36,000. Round answer to the nearest whole number.

Accepted Answer

The answer of Waterfall Company sells a product for $150...

Question 3

Given the following cost and activity observations for Smithson Company's utilities, use the high-low method to calculate Smithson's fixed costs per month. Do not round intermediate calculations.

Accepted Answer

A)  $1,533 
B)  $2,530 
C)  $22,800 
D)  $50,600

Question 4

The point in operations at which revenues and expenses are exactly equal is called the break-even point.

Accepted Answer

A) True 
 B)False

Question 5

Companies with large amounts of fixed costs will generally have a high operating leverage.

Accepted Answer

A) True 
 B)False

Exam 21: Cost-Volume-Profit Analysis

Assuming no other changes, operating income will be the same under both the variable and absorption costing methods when the number of units manufactured equals the number of units sold.

Given the following cost and activity observations for Smithson Company's utilities, use the high-low method to calculate Smithson's fixed costs per month. Do not round intermediate calculations.

The point in operations at which revenues and expenses are exactly equal is called the break-even point.

Companies with large amounts of fixed costs will generally have a high operating leverage.