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The three most common cost behavior classifications are:

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a. fixed costs, variable costs, and mixed costs.

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b. variable costs, product costs, and sunk costs.

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c. variable costs, sunk costs, and opportunity costs.

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d. variable costs, period costs, and differential costs.

Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of \$86,625. In its slowest month, the company made 1,800 desks at a cost of \$49,500. Using the high-low method of cost estimation, total fixed costs are:

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a. \$61,875

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b. \$33,875

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c. \$24,750

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d. cannot be determined from the data given

If fixed costs increased and variable costs per unit decreased, the break-even point would:

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a. decrease.

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b. remain the same.

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c. increase.

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d. cannot be determined from the data provided

If sales are \$808,258, variable costs are 65% of sales, and operating income is \$222,866, what is the contribution margin ratio?

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35%

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28%

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65%

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72%

Which of the following conditions would cause the break-even point to decrease?

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a. Unit variable cost increases

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b. Unit selling price decreases

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c. Total fixed costs increase

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d. Unit variable cost decreases

In cost-volume-profit analysis, all costs are classified into the following two categories:

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a. variable costs and fixed costs

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b. mixed costs and variable costs

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c. sunk costs and fixed costs

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d. discretionary costs and sunk costs

Zeke Company sells 25,000 units at \$21 per unit. Variable costs are \$10 per unit, and fixed costs are \$75,000. The contribution margin ratio and the unit contribution margin are:

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a. 47% and \$11 per unit.

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b. 52% and \$11 per unit.

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c. 47% and \$8 per unit.

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d. 53% and \$7 per unit

Which of the graphs in Figure 20-1 illustrates the behavior of a total variable cost?

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a. Graph 2

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b. Graph 4

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c. Graph 1

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d. Graph 3

Contribution margin is:

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a. the same as sales revenue.

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b. another term for volume in the “cost-volume-profit” analysis.

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c. the excess of sales revenue over variable cost.

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d. profit.

Forde Co. has an operating leverage of 4. Sales are expected to increase by 12% next year. Operating income is:

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a. expected to increase by 3%

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b. unaffected

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c. expected to increase by 4 %

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d. expected to increase by 48%

If sales are \$861,399, variable costs are \$421,360, and operating income is \$276,326, what is the contribution margin ratio?

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81%

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32%

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49%

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51%

Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are:

What was Carter Co.’s weighted average variable cost?

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a. \$ 70

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b. \$ 64

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c. \$140

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d. \$ 60

If fixed costs are \$241,258, the unit selling price is \$115, and the unit variable costs are \$73, what is the break-even sales (units)?

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73 units

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5,744 units

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2,098 units

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4,825 units

Which of the following is an example of a cost that varies in total as the number of units produced changes?

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a. Straight-line depreciation on factory equipment

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b. Direct materials cost

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c. Salary of a production supervisor

[removed] d. Property taxes on factory buildings

Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are:

What was Carter Co.’s weighted average unit selling price?

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a. \$200

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b. \$100

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c. \$ 88

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d. \$ 80

Ingram Co. manufactures office furniture. During the most productive month of the year, 3,271 desks were manufactured at a total cost of \$84,759. In its slowest month, the company made 1,211 desks at a cost of \$39,935. Using the high-low method of cost estimation determine total fixed costs are.

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\$39,935

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\$44,824

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\$84,759

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\$13,585

The systematic examination of the relationships among selling prices, volume of sales and production, costs, and profits is termed:

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a. budgetary analysis.

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b. gross profit analysis.

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c. contribution margin analysis.

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d. cost-volume-profit analysis.

If sales are \$500,000, variable costs are 75% of sales, and operating income is \$40,000, what is the operating leverage?

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a. 3.1

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b. 1.3

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c. 1.25

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d. 0

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