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Exam 18: Cost Behavior and Cost-Volume-Profit Analysis

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Question 121

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Least-squares regression is a statistical method for identifying cost behavior.

A) True
B) False

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Question 122

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Under variable costing,only costs that change in total with changes in production levels are included in product costs.

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Question 123

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A term describing a firm's normal range of operating activities is:

Scatter diagrams plot volume (units)on the vertical axis and cost on the horizontal axis.

A cost-volume-profit (CVP)chart is a graph that plots number of units produced on the horizontal axis and dollars of costs and sales on the vertical axis.

A line on a scatter diagram that is intended to reflect the past relation between cost and unit volume is the:

When using the high-low method for estimating cost behavior,the slope,or variable cost per unit,is calculated by ________.

An important assumption in multiproduct CVP analysis is a constant sales mix.

Target income refers to:

Cost-volume-profit analysis is used to predict future costs to be incurred,volumes of activity,sales to be made,and profit to be earned.

The following information describes a product expected to be produced and sold by Quark Corporation: Required: (a)Calculate the contribution margin per unit. (b)Calculate the break-even point in units.

During a recent fiscal year,Creek Company reported pretax income of $125,000,a contribution margin ratio of 25% and total contribution margin of $400,000.Total variable costs must have been:

Select cost information for Klondike Corporation is as follows: Based on this information:

During its most recent fiscal year,Dover,Inc.had total sales of $3,200,000.Contribution margin amounted to $1,500,000 and pretax income was $400,000.What amount should have been reported as fixed costs in the company's contribution margin income statement for the year?

A visual line fit to points in a scatter diagram may be used to identify the approximate relation between past cost and unit data.

The relevant range of operations is a range of volume neither close to zero nor at maximum capacity.

A company sells a single product that has a contribution margin ratio of 28%.If the company's total fixed costs are $84,000,what is the break-even point in dollar sales?

Variable costs per unit increase proportionately with increases in volume of activity.

Describe and compare the three cost estimation methods used to develop a cost equation.

Mullis Corp.manufactures DVDs that sell for $5.00.Fixed costs are $28,000 and variable costs are $3.60 per unit.Mullis can buy a newer production machine that will increase fixed costs by $8,000 per year,but will decrease variable costs by $0.40 per unit.What effect would the purchase of the new machine have on Mullis' break-even point in units?