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Exam 11: Cost Behavior and Cost-Volume-Profit Analysis

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Question 51

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Assume that Crowson Co. sold 8,000 units of Product A and 2,000 units of Product B in the last year. The unit contribution margins for Products A and B are $20 and $45, respectively. Crowson has fixed costs of $350,000. The break-even point in units is:

A) 14,000 units.
B) 25,278 units.
C) 8,000 units.
D) 10,769 units.

E) A) and B)
F) A) and C)

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Question 52

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As production increases, what should happen to the variable costs per unit?

A) Remain constant
B) Increase
C) Decrease
D) Either increase or decrease, depending on the fixed costs

E) C) and D)
F) B) and C)

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Question 53

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Currently, fixed costs are $450,000, the unit selling price is $75, and the unit variable cost is $50. What would be the break-even sales (in units) , if the unit selling price is increased by $5?

A rental cost of $40,000 plus $0.50 per machine hour of use is an example of a mixed cost.

Variable costs are costs that remain constant in total with changes in the activity level.

The contribution margin ratio is the same as the variable cost ratio.

As production increases, fixed costs per unit would:

Knowing how costs behave to change in the level of activity is useful to management for all the following reasons except for:

Cost-volume-profit analysis can be presented in both graphically and equation form.

If variable costs per unit decreased because of a decrease in utility rates, the break-even point would:

Kennedy Co. sells two products, Arks and Bins. Last year, Kennedy sold 32,000 units of Arks and 18,000 units of Bins. Related data are: Use the above given data to solve the following questions: Refer to the information provided for Kennedy Co. What was Kennedy's sales mix last year?

Even if a business sells six products, it is possible to estimate the break-even point.

The point where the profit line intersects the horizontal axis on the profit-volume chart represents:

Kennedy Co. sells two products, Arks and Bins. Last year, Kennedy sold 32,000 units of Arks and 18,000 units of Bins. Related data are: Use the above given data to solve the following questions: Refer to the information provided for Kennedy Co. What was Kennedy's overall product's unit contribution margin?

Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service such as UPS?

Which of the following best describes the behavior of the variable cost per unit?

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

Fixed costs are costs that vary in total dollar amount as the level of activity changes.

The point in operations at which revenues and expenses are exactly equal is called the break-even point.

Which of the following costs is a mixed cost?