Question 43 of 50

What is the primary focus of cost behavior analysis in managerial accounting?

According to the text, how do total variable costs and variable costs per unit behave in response to changes in activity level?

How do total fixed costs and fixed costs per unit behave as activity volume increases?

What is the relevant range in the context of cost behavior analysis?

What are mixed costs?

Using the data for Metro Transit Company on page 967, what is the variable cost per unit (per mile) calculated using the high-low method?

Using the high-low method and data for Metro Transit Company on page 967, what are the total fixed costs?

What is contribution margin?

For Vargo Video Company, with a selling price of $500 and unit variable costs of $300, what is the unit contribution margin?

How is the contribution margin ratio calculated?

What is the definition of the break-even point?

Using the mathematical equation approach for Vargo Video, with a selling price of $500, variable costs of $300 per unit, and fixed costs of $200,000, what is the break-even point in units?

How is the break-even point in units calculated using the contribution margin technique?

How is the break-even point in dollars calculated using the contribution margin ratio?

What does the margin of safety measure?

For Vargo Video, if actual sales are $750,000 and break-even sales are $500,000, what is the margin of safety in dollars?

How is the margin of safety ratio calculated?

What is the formula to determine the required sales to achieve a target net income, using the mathematical equation approach?

Using the contribution margin technique, what is the formula to calculate the required sales in units to meet a target net income?

In Case I for Vargo Video on page 980, a 10 percent discount on the $500 selling price is considered. What is the new break-even point in units if fixed costs are $200,000?

In Case II for Vargo Video on page 981, fixed costs increase by 30 percent and variable costs decrease by 30 percent. What is the new break-even point in units?

In Case III for Vargo Video on page 981, variable costs increase by $25 per unit and fixed costs decrease by $17,500. What is the required sales volume in units to maintain the current net income of $80,000?

One of the key assumptions underlying CVP analysis is that:

The high-low method is used to:

Which of the following is an example of a variable cost for a manufacturer?

What does a contribution margin of zero signify?

In a CVP graph, where is the break-even point located?

If a company increases its sales by $50,000 and its contribution margin ratio is 30 percent, by how much will net income increase, assuming fixed costs remain constant?

Under variable costing, how are fixed manufacturing overhead costs treated?

When will net income under absorption costing be higher than net income under variable costing?

For the Premium Products Corporation example, the absorption costing manufacturing cost per unit is $13, while the variable costing cost per unit is $9. What causes this $4 difference?

Why is variable costing not acceptable for external financial reporting under generally accepted accounting principles (GAAP)?

What is the primary purpose of a CVP income statement?

For the DO IT! 4 example on page 977, Lombardi Company has a unit selling price of $400 and variable costs of $240. What is its unit contribution margin?

For the DO IT! 4 example on page 977, Lombardi Company has fixed costs of $180,000 and a unit contribution margin of $160. What is the break-even point in units?

The margin of safety ratio for Vargo Video is 33 percent, as shown in Illustration 22-29. What does this mean?

If a company wants to determine the sales dollars required to earn a target net income, which formula using the contribution margin ratio is correct?

Which of the following would NOT be a valid reason for a company's total fixed costs to change?

In the detailed CVP income statement for Vargo Video on page 982, which of the following is treated as a variable expense?

What is the primary benefit of absorption costing for external reporting?

If a company has a contribution margin of $200,000 and fixed costs of $200,000, what is its net income?

What is the primary reason the high-low method of analyzing mixed costs can be arbitrary?

For Premium Products Corporation in Appendix 22A, 30,000 units were produced and 20,000 units were sold. What is the value of the ending inventory under absorption costing?

In the DO IT! 1 exercise on page 966, Maintenance is classified as what type of cost?

What is the primary advantage of using a CVP graph?

For the DO IT! 5 exercise on page 980, what is the break-even point in dollars for Zootsuit Inc.?

In the DO IT! 5 exercise on page 980, if actual sales are $1,382,400 and break-even sales are $1,280,000, what is the margin of safety ratio?

For Premium Products Corporation in Appendix 22A, what is the net income under absorption costing compared to variable costing?

Which statement best describes the relationship between total costs and activity levels in a linear CVP model?