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Exam 2: Introduction to Cost Behavior and Cost-Volume Relationships

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Question 21

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The Love Company has provided the following information: Required: A)Compute the break-even point in units. B)Compute the sales volume in units necessary to generate an after-tax net income of $10,000. C)Compute the sales volume in units necessary to generate an after-tax net income of $20,000.

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A)46,200/($6.60 - $5.28)= 35,000 units $...

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Question 22

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Assume the following information for Janice Company: If fixed costs increased by 10% and management wanted to maintain the original break-even point,then the selling price per unit would have to be increased to ________.

A) $150.40
B) $155.20
C) $158.40
D) $208.00

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Question 23

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Lakers Company produces two products.The following information is available: Total fixed costs are $234,000.Lakers plans to sell 21,000 units of Product X and 7,000 units of Product Y. Required: A)Compute the contribution margin for each product. B)What is the expected net income? C)Assume the sales mix is 3 units of Product X for every 1 unit of Product Y. What is the break-even point in units for each product? D)Assume the sales mix is 3 units of Product X for every 2 units of Product Y. What is the break-even point in units for each product?

Explosion Company produces one type of product.Total fixed costs are $100,000.Unit variable costs are $6.00.The break-even point is 25,000 units.Planned unit sales are 30,000. Required: A)Compute the selling price per unit. B)Compute the contribution-margin ratio. C)Compute the break-even volume in dollars.

Strongsville Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000 and the contribution margin is $6.00 per unit.Strongsville's tax rate is 40%.The number of units that must be sold to earn the targeted net income is ________.

Costs may behave in a linear or a nonlinear manner.

Gross margin is the same as contribution margin for most companies.

An assumption of the CVP analysis is that the sales mix can fluctuate.

An industry that has a high contribution-margin percentage is the airlines.

With very short time spans,more costs are fixed and fewer are variable.

Walnut Corporation sells desks at $480 per desk.The variable costs associated with each desk are $372.Total fixed costs for the period are $456,840.The contribution margin per desk is ________.

The relevant range is the limit of cost-driver level within which a specific relationship between costs and the cost driver is valid.

The horizontal axis on the cost-volume-profit graph is the ________.

Frances Company produces only one product.The selling price is $95 per unit and the variable cost is $65 per unit.Total fixed costs are $130,000. Required: A)Compute break-even point in units. B)Compute break-even volume in dollars.

Deadwood Hospital has variable costs of 50% of total revenues and fixed costs of $40 million per year.There are 40,000 patient-days estimated for the next year.The break-even point expressed in total revenue is ________.

Zachary Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000 and the contribution margin is $6.00 per unit.Zachary's tax rate is 40%.The number of units that must be sold to breakeven is ________.

What action will decrease a company's break-even point?

Assume the following facts: How many units must be sold to achieve the targeted net income?

Assume the following information for two products,Hawaii Fantasy and Hawaii Joy. Fixed expenses total $475,800 per year.What is the breakeven point in units for each product?

Assume ZZZ Company has the following information available: If fixed costs increase $200,000,what is the break-even point in units?