Homework Answers
Answer(2): False.
Mixed cost contains fixed and variable cost. Fixed cost is the cost that remains fixed at each level of activity while variable cost is the cost that varies as per the level of activity. But mixed cost contains both.
Example: For a broadband connection, company pays $100 for 500 megabytes usage per month, that is fixed after that, price increases as per per unit basis.
Answer(3): False
Variable cost is the cost that varies as per the level of production and activity. Variable cost increases if production increases and decreases when production decreases. It depends upon the number of units produced.
Examples: Cost of raw material, Sales commission etc.
Answer(4): True.
Fixed cost remains same at each level of activity. Whether company serves 2 people or 10 people, it will remain fixed.
Examples: Rent of factory, Insurance of building etc.
Answer(5): True.
Contribution margin = Revenue - Variable cost
Variable cost: 80 * 40% =$32
Contribution margin: 80 - 32 = $48
Answer(6): False.
Contribution margin- It is the amount that comes after deducting variable cost from sales/revenues. It is the amount available t pay for fixed cost and to generate profit.
Answer(7): True.
Sales mix is the percentage that each product or product line contributes to the overall sales. For example if a company manufactures 100 widgets in which 30 are smaller size and 70 are larger so the sales mix is 30% small and 70% large.
Answer(8): True.
Break even point (In units) = Fixed cost / Contribution margin in units
BEP: 240000 / 300 = 800 Units
Answer(10): False.
Margin of safety is the amount of sales that is above the break even point.
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Question 1 1 pts The range over which a company is expected to operate is called...
Time LimLU.JU.00 Question 1 (1 point) Contribution margin 1) is always the same as gross profit...
Time LimLU.JU.00 Question 1 (1 point) Contribution margin 1) is always the same as gross profit margin. O 2) excludes variable selling costs from its calculation. 3) is calculated by subtracting total manufacturing costs per unit from sales revenue per unit. 4) equals sales revenue minus variable costs. Question 2 (1 point) Contribution margin is 1) the amount of revenue remaining after deducting fixed costs. O2) available to cover fixed costs and contribute to income for the company. 3) sales...
MULTIPLE CHOICE QUESTIONS / 100 Points). 1 The relevant range is a. The range of activity...
MULTIPLE CHOICE QUESTIONS / 100 Points). 1 The relevant range is a. The range of activity in which variable costs will be curvilinear. b. The range of activity in which fixed costs will be curvilinear. The range over which the company expects to operate during the period. d. Usually from zero to 100% of operating capacity 2. Semi variable cost consists of a: a. Variable cost element and a fixed cost element. b. Fixed cost element and a controllable cost...
Total Revenue Profit Total Cost CVP Analysis Variable Cout Fed Cost Units Sold In Class Example...
Total Revenue Profit Total Cost CVP Analysis Variable Cout Fed Cost Units Sold In Class Example Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable manufacturing costs of $60 per unit. Variable selling expenses are $18 per unit, annual fixed manufacturing costs are $480,000, and fixed selling and administrative costs are $240,000 per year. (1) Calculate the breakeven point in units and sales dollars. (2) Prepare a contribution margin income statement to...
The amount by which actual or expected sales exceeds break-even sales is referred to as contribution...
The amount by which actual or expected sales exceeds break-even sales is referred to as contribution margin margin of safety unanticipated profit. target net income. Question 22 Cost structure cannot be significantly changed by companies generally has little impact on profitability. refers to the relative proportion of fixed versus variable costs that a company incurs. refers to the relative proportion of operating versus nonoperating costs that a company incurs Question 19 The break-even point is where total sales equal total...
Question 15 4 pts A company has a unit contribution margin of $120 and a contribution margin ratio of 40%. What is the...
Question 15 4 pts A company has a unit contribution margin of $120 and a contribution margin ratio of 40%. What is the unit selling price? Cannot be determined $200 $300 $48 Question 16 A division sold 200,000 calculators during 2017: Sales $2,000,000 Variable costs: Materials $380,000 Order processing 150,000 Billing labor 110,000 Selling expenses 60,000 Total variable costs 700,000 Fixed costs 1,000,000 How much is the unit contribution margin? $6.50 $8.50 $3.50 $1.00 Question 17 4 pts At the...
QUESTION 1 Responsibility accounting is a system in which a manager is held responsible for those...
QUESTION 1 Responsibility accounting is a system in which a manager is held responsible for those items of revenues and costs-and only those items-that the manager can control to a significant extent. O True O False QUESTION 2 The sales volume in units that are needed to achieve a specific Target Profit can be calculated by Dividing the dollars of fixed costs by the unit contribution margin Dividing the dollars of fixed costs and target profit by the unit contribution...
Question 4 Waterway Company had sales in 2019 of $1,806,000 on 64,500 units. Variable costs totaled...
Question 4 Waterway Company had sales in 2019 of $1,806,000 on 64,500 units. Variable costs totaled $1,032,000, and fixed costs totaled $508,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $3.20). However, to process the new raw material, fixed operating costs will increase by $107,000. Management feels that one-half of the decline in the variable costs per unit should be passed on to customers in the form of a sales price...
Question 7 2 pts Regression analysis and the high-low method often result in the same fixed...
Question 7 2 pts Regression analysis and the high-low method often result in the same fixed and variable cost estimates because both approaches use the same data. True False Question 8 2 pts All costs behave in a linear manner. True False Question 9 2 pts The contribution margin is calculated by taking total sales revenue minus total fixed costs. True False
QUESTION 7 Which of the following statements is correct with regard to a CVP (Cost, Volume,...
QUESTION 7 Which of the following statements is correct with regard to a CVP (Cost, Volume, Profit) graph? 1.A CVP graph shows the maximum possible profit. 2.A CVP graph shows the break-even point as the intersection of the total sales revenue line and the total expense line 3.A CVP graph assumes that total expense varies in direct proportion to unit sales. 4.A CVP graph shows the operating leverage as the gap between total sales revenue and total expense at the...
Match each definition with its related term by selecting the appropriate term in the dropdown provided....
Match each definition with its related term by selecting the appropriate term in the dropdown provided. (Select "None of these are correct" If there is no term for the "Definition") Definition A. The way in which total cost behaves or changes, when some measure of activity changes. B. The range of activity over which assumptions about cost behavior hold true. c. A cost that changes in total in direct proportion to changes in activity while the per unit cost remains...
Time LimLU.JU.00 Question 1 (1 point) Contribution margin 1) is always the same as gross profit margin. O 2) excludes variable selling costs from its calculation. 3) is calculated by subtracting total manufacturing costs per unit from sales revenue per unit. 4) equals sales revenue minus variable costs. Question 2 (1 point) Contribution margin is 1) the amount of revenue remaining after deducting fixed costs. O2) available to cover fixed costs and contribute to income for the company. 3) sales...
MULTIPLE CHOICE QUESTIONS / 100 Points). 1 The relevant range is a. The range of activity in which variable costs will be curvilinear. b. The range of activity in which fixed costs will be curvilinear. The range over which the company expects to operate during the period. d. Usually from zero to 100% of operating capacity 2. Semi variable cost consists of a: a. Variable cost element and a fixed cost element. b. Fixed cost element and a controllable cost...
Total Revenue Profit Total Cost CVP Analysis Variable Cout Fed Cost Units Sold In Class Example Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable manufacturing costs of $60 per unit. Variable selling expenses are $18 per unit, annual fixed manufacturing costs are $480,000, and fixed selling and administrative costs are $240,000 per year. (1) Calculate the breakeven point in units and sales dollars. (2) Prepare a contribution margin income statement to...
The amount by which actual or expected sales exceeds break-even sales is referred to as contribution margin margin of safety unanticipated profit. target net income. Question 22 Cost structure cannot be significantly changed by companies generally has little impact on profitability. refers to the relative proportion of fixed versus variable costs that a company incurs. refers to the relative proportion of operating versus nonoperating costs that a company incurs Question 19 The break-even point is where total sales equal total...
Question 15 4 pts A company has a unit contribution margin of $120 and a contribution margin ratio of 40%. What is the unit selling price? Cannot be determined $200 $300 $48 Question 16 A division sold 200,000 calculators during 2017: Sales $2,000,000 Variable costs: Materials $380,000 Order processing 150,000 Billing labor 110,000 Selling expenses 60,000 Total variable costs 700,000 Fixed costs 1,000,000 How much is the unit contribution margin? $6.50 $8.50 $3.50 $1.00 Question 17 4 pts At the...
QUESTION 1 Responsibility accounting is a system in which a manager is held responsible for those items of revenues and costs-and only those items-that the manager can control to a significant extent. O True O False QUESTION 2 The sales volume in units that are needed to achieve a specific Target Profit can be calculated by Dividing the dollars of fixed costs by the unit contribution margin Dividing the dollars of fixed costs and target profit by the unit contribution...
Question 4 Waterway Company had sales in 2019 of $1,806,000 on 64,500 units. Variable costs totaled $1,032,000, and fixed costs totaled $508,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $3.20). However, to process the new raw material, fixed operating costs will increase by $107,000. Management feels that one-half of the decline in the variable costs per unit should be passed on to customers in the form of a sales price...
Question 7 2 pts Regression analysis and the high-low method often result in the same fixed and variable cost estimates because both approaches use the same data. True False Question 8 2 pts All costs behave in a linear manner. True False Question 9 2 pts The contribution margin is calculated by taking total sales revenue minus total fixed costs. True False
QUESTION 7 Which of the following statements is correct with regard to a CVP (Cost, Volume, Profit) graph? 1.A CVP graph shows the maximum possible profit. 2.A CVP graph shows the break-even point as the intersection of the total sales revenue line and the total expense line 3.A CVP graph assumes that total expense varies in direct proportion to unit sales. 4.A CVP graph shows the operating leverage as the gap between total sales revenue and total expense at the...
Match each definition with its related term by selecting the appropriate term in the dropdown provided. (Select "None of these are correct" If there is no term for the "Definition") Definition A. The way in which total cost behaves or changes, when some measure of activity changes. B. The range of activity over which assumptions about cost behavior hold true. c. A cost that changes in total in direct proportion to changes in activity while the per unit cost remains...
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