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Exam 18: Cost Behavior and Cost-Volume-Profit Analysis

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Question 121

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A cost-volume-profit (CVP)chart is a graph that plots number of units produced on the horizontal axis and dollars of costs and sales on the vertical axis.

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B) False

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Question 122

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

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B) False

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Question 123

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An important assumption in multiproduct CVP analysis is a constant sales mix.

Select cost information for Klondike Corporation is as follows: Based on this information:

Least-squares regression is a statistical method for identifying cost behavior.

A company sells a single product that has a contribution margin ratio of 28%.If the company's total fixed costs are $84,000,what is the break-even point in dollar sales?

A term describing a firm's normal range of operating activities is:

During its most recent fiscal year,Dover,Inc.had total sales of $3,200,000.Contribution margin amounted to $1,500,000 and pretax income was $400,000.What amount should have been reported as fixed costs in the company's contribution margin income statement for the year?

When using the high-low method for estimating cost behavior,the slope,or variable cost per unit,is calculated by ________.

The following information describes a product expected to be produced and sold by Quark Corporation: Required: (a)Calculate the contribution margin per unit. (b)Calculate the break-even point in units.

The relevant range of operations is a range of volume neither close to zero nor at maximum capacity.

A line on a scatter diagram that is intended to reflect the past relation between cost and unit volume is the:

A visual line fit to points in a scatter diagram may be used to identify the approximate relation between past cost and unit data.

Describe and compare the three cost estimation methods used to develop a cost equation.

Target income refers to:

Cost-volume-profit analysis is used to predict future costs to be incurred,volumes of activity,sales to be made,and profit to be earned.

Variable costs per unit increase proportionately with increases in volume of activity.

Mullis Corp.manufactures DVDs that sell for $5.00.Fixed costs are $28,000 and variable costs are $3.60 per unit.Mullis can buy a newer production machine that will increase fixed costs by $8,000 per year,but will decrease variable costs by $0.40 per unit.What effect would the purchase of the new machine have on Mullis' break-even point in units?

Under variable costing,only costs that change in total with changes in production levels are included in product costs.

During a recent fiscal year,Creek Company reported pretax income of $125,000,a contribution margin ratio of 25% and total contribution margin of $400,000.Total variable costs must have been: