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Exam 17: Cost-Volume-Profit

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Question 31

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April Industries sells a product with a contribution margin of $12 per unit, fixed costs of $223,200, and sales for the current year of $300,000. How much is April's break-even point?

A) 13,800 units
B) $76,800
C) 18,600 units
D) 6,400 units

E) A) and B)
F) B) and D)

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Question 32

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If the activity index decreases, total variable costs will decrease proportionately.

A) True
B) False

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Question 33

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A division sold 200,000 calculators during 2017: $\begin{array}{lr}\text { Sales }&&\$2,000,000\\\text { Variable costs: }\\\text { Materials } & \$ 380,000 \\\text { Order processing } & 150,000 \\\text { Billing labor } & 110,000 \\\text { Selling expenses } & 60,000\\\text { Total variable costs }&&700,000\\\text { Fixed costs }&&1,000,000\end{array}$ How much is the unit contribution margin?

The relevant range of activity is the activity level where the firm will earn income.

The relevant range of activity refers to the

Variable costs for Abbey, Inc. are 25% of sales. Its selling price is $100 per unit. If Abbey sells one unit more than break-even units, how much will profit increase?

A fixed cost is a cost which

An activity index identifies the activity that has a causal relationship with a particular cost.

Danny's Lawn Equipment has actual sales of $800,000 and a break-even point of $520,000. How much is its margin of safety ratio?

In evaluating the margin of safety, the

For purposes of CVP analysis, mixed costs must be classified into their fixed and variable elements.

Walters Corporation sells radios for $50 per unit. The fixed costs are $525,000 and the variable costs are 60% of the selling price. As a result of new automated equipment, it is anticipated that fixed costs will increase by $125,000 and variable costs will be 50% of the selling price. The new break-even point in units is:

Bolton Industries had actual sales of $1,000,000 when break-even sales were $600,000. What is the margin of safety ratio?

Both variable and fixed costs are included in calculating the contribution margin.

Vintage Wines has fixed costs of $20,000 per year. Its warehouse sells wine with variable costs of 80% of its unit selling price. How much in sales does Vintage need to break even per year?

A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $240,000. The number of units the company must sell to break even is

Which one of the following is a name for the range over which a company expects to operate?

The following monthly data are available for Lumberyard Company. which produces only one product: Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $42,000; Actual sales for the month of June, 3,000 units. How much is the margin of safety for the company for June?

If a company had a contribution margin of $1,000,000 and a contribution margin ratio of 40%, total variable costs must have been

Which of the following is not a cost classification?