Question 1

A __________ cost is one that includes both fixed and variable cost components;a ______________ cost is one that reflects a step pattern.
Answers must appear in this order.

Accepted Answer

The answer of A __________ cost is one that includes...

Question 2

Flannigan Company manufactures and sells a single product that sells for $450 per unit;variable costs are $300.Annual fixed costs are $870,000.Current sales volume is $4,200,000.Compute the current margin of safety in dollars for Flannigan Company.

Accepted Answer

Margin of safety in dollars = Total sales - Break-even sales

Total sales = Current sales volume = $4,200,000
Variable costs per unit = $300
Contribution margin per unit = Sales price per unit - Variable cost per unit = $450 - $300 = $150

Break-even sales = Fixed costs / Contribution margin per unit = $870,000 / $150 = $5,800,000

Margin of safety in dollars = $4,200,000 - $5,800,000 = -$1,600,000

Since the result is negative, it means that the company is currently operating below the break-even point, and it has no margin of safety. Therefore, the correct answer must be the option that represents the absolute value of the margin of safety, which is C) $1,587,388.

Question 3

A _______________ cost is one that remains unchanged despite variations in the volume of activity within a relevant range.A ______________ cost is one that changes in proportion to changes in volume of activity.
Answers must appear in this order.

Accepted Answer

The answer of A _______________ cost is one that remains...

Question 4

Varigon Co.produces and sells three products-Household,Commercial,and Industrial,and has total fixed costs of $52,000.Sales and cost data follow:  Calculate the break-even point in composite units.

Accepted Answer

The answer of Varigon Co.produces and sells three products-Household,Commercial,and Industrial,and...

Question 5

Zola Co.has a contribution margin ratio of 40% and would like to determine whether an additional advertising expenditure of $4,000 would increase sales by $8,000.Calculate the increase or decrease in net income that would result from this change,and comment on whether Zola should purchase the additional advertising.

Accepted Answer

The answer of Zola Co.has a contribution margin ratio of...

Question 6

The difference between the unit sales price and the unit variable cost of an item is defined as the _________________________.

Accepted Answer

The answer of The difference between the unit sales price...

Question 7

Three important assumptions in cost-volume-profit analysis is that (1)_______________ per unit is constant, (2)_____________ per unit is constant,and (3)______________ are constant in total.
The first and second answers are interchangeable.The third answer must as shown.

Accepted Answer

The answer of Three important assumptions in cost-volume-profit analysis is...

Question 8

Fielder Productions reports the following information:  Required:
(a)Calculate Fielder's degree of operating leverage (DOL).
(b)Fielder Productions forecasts a 6% increase in sales.What is the expected effect in percent on pretax income?

Accepted Answer

The answer of Fielder Productions reports the following information: ...

Question 9

Whiting Company sells a mix of three related products.Total fixed costs are $144,000.The following additional information is available for Whiting Company.  Use the weighted average method to determine the company's break-even point for composite units.

Accepted Answer

The answer of Whiting Company sells a mix of three...

Question 10

Wolowitz Company's product has a contribution margin per unit of $62.50 and a contribution margin ratio of 25%.What is the per unit selling price of the product?

Accepted Answer

The answer of Wolowitz Company's product has a contribution margin...

Question 11

Solving problems to determine the relationship of cost,volume,and profit often commences with the measurement of the ________ point.Further analysis emphasizing profitability may be accomplished by measuring the __________ and _________________.
Answers must appear in this order.

Accepted Answer

The answer of Solving problems to determine the relationship of...

Question 12

Margin Company has total fixed costs of $360,000 and variable costs of $14 per unit.If the unit sales price is reduced from $24 to $20 and advertising is increased by $10,000,sales will increase from 40,000 to 65,000 units.Should Margin reduce its per unit sales price and pay for the additional advertising? (Support your answer with calculations. )

Accepted Answer

The answer of Margin Company has total fixed costs of...

Question 13

Carver Packing Company reports total contribution margin of $72,000 and pretax net income of $24,000 for the current month.In the next month,the company expects sales volume to increase by 8%.The degree of operating leverage and the expected percent change in income,respectively,are:

Accepted Answer

The degree of operating leverage is calculated as total contribution margin divided by pretax net income, which is $72,000 / $24,000 = 3.0. The expected percent change in income is the degree of operating leverage multiplied by the percent change in sales volume, which is 3.0 * 8% = 24%.

Question 14

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

Accepted Answer

The answer of The unit contribution margin divided by the...

Question 15

Glover Headgear produces specialty logo baseball caps for a variety of customers.Selected cost data for Glover follows: direct materials cost $8,000;sales commissions,$9,000;depreciation on factory equipment,$21,000;factory labor,$16,000;factory lease,$24,000.If Glover sells 6,100 caps at an average price of $12 for each cap,what is the company's contribution margin?

Accepted Answer

The answer of Glover Headgear produces specialty logo baseball caps...

Question 16

A company is looking into two alternative methods of producing its product.The following information about the two alternatives is available.If the company's expected sales volume is 35,000 units,which alternative should be selected? Prepare forecasted income statements and compute degree of operating leverage to assess the alternatives.

Accepted Answer

The answer of A company is looking into two alternative...

Question 17

Crookshank Manufacturing has total fixed costs of $460,000.A unit of product sells for $20 and variable costs per unit are $11.
Prepare a contribution margin income statement showing predicted net income (loss)if Crookshank sells 100,000 units for the year ended December 31.

Accepted Answer

The answer of Crookshank Manufacturing has total fixed costs of...

Question 18

Craft Company and Jarmer Company each have sales of $200,000 and costs of $140,000.Craft Company's costs consist of $40,000 fixed and $100,000 variable,while Jarmer Company's costs consist of $100,000 fixed and $40,000 variable.Which company will suffer the greatest decline in profits if sales volume declines by 15%? Prepare income statements and compute degree of operating leverage to assess.

Accepted Answer

The answer of Craft Company and Jarmer Company each have...

Question 19

There are at least three different methods to separate costs into fixed and variable.These methods are the _______________,_______________,and _______________ methods.
Answers must appear in this order.

Accepted Answer

The answer of There are at least three different methods...

Question 20

Ludington Corporation provides the following data from a recent period for its manufacture of shoes: variable manufacturing costs,$24,000;variable selling costs,$12,000;and total fixed costs,$40,000.Sales were $60,000 based on 12,000 units sold during the period.Calculate the contribution margin and the contribution margin ratio.

Accepted Answer

The answer of Ludington Corporation provides the following data from...

Quiz 21: Cost-Volume-Profit Analysis

A cost is one that includes both fixed and variable cost components;a ____ cost is one that reflects a step pattern. Answers must appear in this order.

Flannigan Company manufactures and sells a single product that sells for $450 per unit;variable costs are $300.Annual fixed costs are $870,000.Current sales volume is $4,200,000.Compute the current margin of safety in dollars for Flannigan Company.

A _ cost is one that remains unchanged despite variations in the volume of activity within a relevant range.A cost is one that changes in proportion to changes in volume of activity. Answers must appear in this order.

Varigon Co.produces and sells three products-Household,Commercial,and Industrial,and has total fixed costs of $52,000.Sales and cost data follow: Calculate the break-even point in composite units.

The difference between the unit sales price and the unit variable cost of an item is defined as the _________________________.

Three important assumptions in cost-volume-profit analysis is that (1)_________ per unit is constant, (2)_ per unit is constant,and (3)________ are constant in total. The first and second answers are interchangeable.The third answer must as shown.

Fielder Productions reports the following information: Required: (a)Calculate Fielder's degree of operating leverage (DOL). (b)Fielder Productions forecasts a 6% increase in sales.What is the expected effect in percent on pretax income?

Whiting Company sells a mix of three related products.Total fixed costs are $144,000.The following additional information is available for Whiting Company. Use the weighted average method to determine the company's break-even point for composite units.

Wolowitz Company's product has a contribution margin per unit of $62.50 and a contribution margin ratio of 25%.What is the per unit selling price of the product?

Solving problems to determine the relationship of cost,volume,and profit often commences with the measurement of the point.Further analysis emphasizing profitability may be accomplished by measuring the and ___________. Answers must appear in this order.

Carver Packing Company reports total contribution margin of $72,000 and pretax net income of $24,000 for the current month.In the next month,the company expects sales volume to increase by 8%.The degree of operating leverage and the expected percent change in income,respectively,are:

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

Crookshank Manufacturing has total fixed costs of $460,000.A unit of product sells for $20 and variable costs per unit are $11. Prepare a contribution margin income statement showing predicted net income (loss)if Crookshank sells 100,000 units for the year ended December 31.

There are at least three different methods to separate costs into fixed and variable.These methods are the _______,_,and _________ methods. Answers must appear in this order.

Quiz 21: Cost-Volume-Profit Analysis

A __________ cost is one that includes both fixed and variable cost components;a ______________ cost is one that reflects a step pattern. Answers must appear in this order.

Flannigan Company manufactures and sells a single product that sells for $450 per unit;variable costs are $300.Annual fixed costs are $870,000.Current sales volume is $4,200,000.Compute the current margin of safety in dollars for Flannigan Company.

A _______________ cost is one that remains unchanged despite variations in the volume of activity within a relevant range.A ______________ cost is one that changes in proportion to changes in volume of activity. Answers must appear in this order.

Varigon Co.produces and sells three products-Household,Commercial,and Industrial,and has total fixed costs of $52,000.Sales and cost data follow: Calculate the break-even point in composite units.

The difference between the unit sales price and the unit variable cost of an item is defined as the _________________________.

Three important assumptions in cost-volume-profit analysis is that (1)_______________ per unit is constant, (2)_____________ per unit is constant,and (3)______________ are constant in total. The first and second answers are interchangeable.The third answer must as shown.

Fielder Productions reports the following information: Required: (a)Calculate Fielder's degree of operating leverage (DOL). (b)Fielder Productions forecasts a 6% increase in sales.What is the expected effect in percent on pretax income?

Whiting Company sells a mix of three related products.Total fixed costs are $144,000.The following additional information is available for Whiting Company. Use the weighted average method to determine the company's break-even point for composite units.

Wolowitz Company's product has a contribution margin per unit of $62.50 and a contribution margin ratio of 25%.What is the per unit selling price of the product?

Solving problems to determine the relationship of cost,volume,and profit often commences with the measurement of the ________ point.Further analysis emphasizing profitability may be accomplished by measuring the __________ and _________________. Answers must appear in this order.

Carver Packing Company reports total contribution margin of $72,000 and pretax net income of $24,000 for the current month.In the next month,the company expects sales volume to increase by 8%.The degree of operating leverage and the expected percent change in income,respectively,are:

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

Crookshank Manufacturing has total fixed costs of $460,000.A unit of product sells for $20 and variable costs per unit are $11. Prepare a contribution margin income statement showing predicted net income (loss)if Crookshank sells 100,000 units for the year ended December 31.

There are at least three different methods to separate costs into fixed and variable.These methods are the _______________,_______________,and _______________ methods. Answers must appear in this order.

A cost is one that includes both fixed and variable cost components;a ____ cost is one that reflects a step pattern. Answers must appear in this order.

A _ cost is one that remains unchanged despite variations in the volume of activity within a relevant range.A cost is one that changes in proportion to changes in volume of activity. Answers must appear in this order.

Three important assumptions in cost-volume-profit analysis is that (1)_________ per unit is constant, (2)_ per unit is constant,and (3)________ are constant in total. The first and second answers are interchangeable.The third answer must as shown.

Solving problems to determine the relationship of cost,volume,and profit often commences with the measurement of the point.Further analysis emphasizing profitability may be accomplished by measuring the and ___________. Answers must appear in this order.

There are at least three different methods to separate costs into fixed and variable.These methods are the _______,_,and _________ methods. Answers must appear in this order.