ACCT 212 Read & Interact Wild & Shaw Chapter 5 Cost-Volume-Profit Analysis
Liberty University updated answers
RST Company produces a product that has a selling price of $10 per
unit and variable cost of $6 per unit. The company's fixed costs are
$30,000. If the
company sells 15,000 units, the degree of operating leverage is .
CVP analysis relies on all of the following assumptions except:
Sales mix is the proportion of for various products.
RST Company produces a product that has a variable cost of $6 per
unit. The company's fixed costs are $30,000. The product sells for $10
per unit. RST
desires to earn a target income of $20,000. The sales level
in dollars to achieve
the desired target income is $ .
A company produces a product with a contribution margin per unit of $36.
If the company incurs $62,000 in total fixed costs and expects to sell
2,500 units their
income would be $ .
A measure to assess the effect of changes in the level of sales on income
is the :
A company has a margin of safety of 20%. If expected sales are
$50,000, then break-even sales are:
Managers make assumptions in CVP analysis. These assumptions
include: (Check all that apply.)
Maker's Company produces a product that has a variable cost of $4
per unit. The company's fixed costs are $40,000. The product sells for
$12 per unit. The
company is considering purchasing a new manufacturing machine which
would improve efficiency. The new machine would decrease the variable
cost to $3, but increase fixed costs by $5,000. The revised break-even
point in dollars is $
.
Sales mix is the
(volume/proportion/mix) product. of the sales volume for
each
Assuming all other factors remain constant, if variable cost per unit
increases, then the break-even point will:
A company produces a product with variable costs of $2.50 per unit. The
product sells for $5.00 per unit. The company has fixed costs of $3,000
and desires a target income of $10,000. The sales level in dollars to
achieve the desired target
income is $ .
The break-even point can be expressed as sales in or .
A company sells 800 units at $16 each, has variable costs of $12 per
unit, and fixed costs of $1,200. Income is $ .
LMN Company produces a product that sells for $1. The company has
production costs of $600,000, half of which are fixed costs. Assuming
production and sales
of 750,000 units, the contribution margin per unit is $ .
The margin of safety is: (Check all that apply.)
Match each cost estimation method to its characteristics.
RST Company produces a product that has a variable cost of $6 per unit.
The company's fixed costs are $30,000. The product sells for $10 per
unit. The company is considering purchasing a new manufacturing
machine which would improve efficiency. The new machine would
decrease the variable cost to $4, but
increase fixed costs by $15,000. The revised break-even point in
dollars is $
.
A statistical method of identifying cost behavior that is computed
using spreadsheet programs or calculators is:
Assuming all other factors remain constant, if sales price per unit
increases, then the break-even point will:
The high-low method uses points to estimate the cost equation.
The break-even point is the sales level at which a company: (Check
all that apply.)
When preparing a scatter diagram, the estimated line of cost behavior is
drawn on a scatter diagram to show the relation between:
RST Company produces a product that has a variable cost of $6 per
unit. The company's fixed costs are $30,000. The product sells for $10
per unit. RST desires to earn a profit of $20,000. The contribution
margin per unit is $
.
Each of the following are methods used to separate mixed costs into their
fixed
and variable components except:
List the cost estimation methods from the least precise to the most
precise, with the least precise on top.
Match each example below to the correct cost type.
A statistical method for identifying cost behavior is called .
A cost includes both fixed and variable components.
When using the high-low method, the slope represents:
A cost changes in proportion to changes in volume of activity.
True or false: On a scatter diagram, costs are plotted on the horizontal
axis.
A cost remains unchanged when the volume of activity
changes
within the relevant range.
The three methods used to classify costs into their fixed and
variable
components includes
Cost-volume-profit analysis helps managers predict how
changes in and levels affect income.
Match each example below to the correct cost type.
Jack works on the production line at an assembly plant. Jack receives
a base salary plus $1.25 per unit assembled. This is an example of
a cost.
Which of the following is the correct statement about variable costs?
Which of the following is the correct statement about fixed costs?
CVP analysis looks at how _ is affected by sales price per unit,
variable costs per unit, volume, and fixed costs.
