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Exam 21: Cost-Volume-Profit Analysis

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Question 31

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The excess of expected sales over the sales level at the break-even point is known as the:

A) Sales turnover.
B) Profit margin.
C) Contribution margin.
D) Relevant range.
E) Margin of safety.

F) A) and E)
G) A) and C)

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Question 32

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To determine the slope of the variable cost from a scatter diagram,divide the change in volume by the change in cost.

A) True
B) False

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Question 33

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The margin of safety is the excess of:

The budgeted income statement presented below is for Griffith Corporation for the coming fiscal year.If Griffith Corporation's income tax rate is 40%,compute the number of units that must be sold in order to achieve a target pretax income of $130,000.

Baines Brothers manufactures and sells two products,A and Z in the ratio of 4: 2.Product A sells for $75; Z sells for $95.Variable costs for product A are $35; for Z $40.Fixed costs are $418,500.Compute the break-even point in composite units.

Yamaguchi Company's break even point in units is 1,000.The sales price per unit is $10 and variable cost per unit is $7.If the company sells 2,500 units,what will net income be?

The budgeted income statement presented below is for Griffith Corporation for the coming fiscal year.If Griffith Corporation is able to achieve the budgeted level of

A product sells for $200 per unit,and its variable costs per unit are $130.The fixed costs are $420,000.If the firm wants to earn $35,000 pretax income,how many units must be sold?

Davison Company has fixed costs of $315,000 and a contribution margin ratio of 24%.If sales are expected to be $1,500,000,what is the percentage of the margin of safety?

Scatter diagrams plot volume on the vertical axis and cost on the horizontal axis.

The relevant range of operations excludes extremely high and low levels of production that are not likely to occur.

Winthrop Manufacturing produces a product that sells for $50.00.Fixed costs are $260,000 and variable costs are $24.00 per unit.Winthrop can buy a new production machine that will increase fixed costs by $11,400 per year,but will decrease variable costs by $3.50 per unit.Compute the contribution margin per unit if the machine is purchased.

Shown below are terms or phrases preceded by letters a through j followed by a list of definitions.Match the terms or phrases 1 through 10 with the correct definitions by placing the letter of the term or phrase in the answer space provided at the beginning of each definition.

A firm expects to sell 25,000 units of its product at $11 per unit.Pretax income is predicted to be $60,000.If the variable costs per unit are $5,total fixed costs must be:

What are the basic assumptions of CVP analysis with regard to variable cost,fixed cost,and selling price per unit? (Assume a single product).

Contribution margin is the amount of sales that exceeds total variable costs.

The relevant range of operations includes extremely high and low levels of production that are unlikely to occur.

Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300.Annual fixed costs are $990,000.Current sales volume is $4,200,000.Compute the break-even point in dollars.

The unit contribution margin divided by the selling price per unit is the _____________.

A step-wise variable cost can be separated into a fixed component and a variable component.