Question 1

Compex Inc. produces microprocessors for laptops. Last year, the company recognized revenues of $2,000,000. Total costs for the period were $1,000,000, of which $250,000 were fixed. 
If sales were to increase by $300,000, by how much would Computate's operating income increase?

Accepted Answer

The answer of Compex Inc. produces microprocessors for laptops. Last...

Question 2

Compex Inc. produces microprocessors for laptops. Last year, the company recognized revenues of $2,000,000. Total costs for the period were $1,000,000, of which $250,000 were fixed. 
What was Compex's margin of safety for the period?

Accepted Answer

The answer of Compex Inc. produces microprocessors for laptops. Last...

Question 3

Securiteez offers 2 types of window coverings - automobile and home. For every home window covering sold, Securiteez typically sells 4 auto window coverings. Securiteez charges $120 for each auto window covering and $300 for home window covering. However, given the standardization of the manufacturing process, the variable costs associated with each are the same, at $30 per covering. Overall, Securiteez incurs $320,000 in fixed costs per period. 
Using CVP analysis and assuming a constant sales mix, how many of each covering type must Insurity sell to realize a pre-tax profit of $800,000?

Accepted Answer

The answer of Securiteez offers 2 types of window coverings...

Question 4

Using the following data, apply the high-low method of cost analysis to the three cost data groups:
  What cost behavior patterns are apparent for each group? What is the cost formula for each group?

Accepted Answer

The answer of Using the following data, apply the high-low...

Question 5

Using the following data, apply the high-low method of cost analysis to the three cost data groups:
  What cost behavior patterns are apparent for each group? What is the cost formula for each group?

Accepted Answer

The answer of Using the following data, apply the high-low...

Question 6

Oches Company has analyzed its overhead costs and derived a general formula for their behavior: $50,000 + $18 per direct labor hour employed. The company expects to use 40,000 direct labor hours during the next accounting period. 
What overhead rate per direct labor hour should be applied to jobs worked during the period?

Accepted Answer

The answer of Oches Company has analyzed its overhead costs...

Question 7

Owens Company has analyzed its overhead costs and derived a general formula for their behavior: $75,000 + $20 per direct labor hour employed. The company expects to use 25,000 direct labor hours during the next accounting period. 
What overhead rate per Direct Labor hour should be applied to jobs worked during the period?

Accepted Answer

The answer of Owens Company has analyzed its overhead costs...

Question 8

Wellington Company has analyzed its overhead costs and derived a general formula for their behavior: $30,000 + $15 per direct labor hour employed. The company expects to use 60,000 direct labor hours during the next accounting period. 
What overhead rate per Direct Labor hour should be applied to jobs worked during the period?

Accepted Answer

The answer of Wellington Company has analyzed its overhead costs...

Question 9

Sullivan's T-Shirt Store sells t-shirt with a sales price of $25 each. Each t-shirt costs the company $15 to produce, and the store incurs a total of $100,000 in fixed costs each year. 
What is the yearly breakeven point in units?

Accepted Answer

The answer of Sullivan's T-Shirt Store sells t-shirt with a...

Question 10

Coryell Hammocks Unlimited sells hammocks with a sales price of $35 each. Each hammock costs the company $20 to produce, and the store incurs a total of $300,000 in fixed costs each year. 
What is the yearly breakeven point in units?

Accepted Answer

The answer of Coryell Hammocks Unlimited sells hammocks with a...

Question 11

Matthews Beach Towel Company sells custom beach towels with a sales price of $20 each. Each beach towel costs the company $15 to produce, and the company incurs a total of $150,000 in fixed costs each year. 
What is the yearly breakeven point in units?

Accepted Answer

The answer of Matthews Beach Towel Company sells custom beach...

Question 12

Sabin's Cheesesteak Sammies sells gourmet sandwiches. These cheesesteaks sandwiches are so delicious, that the sandwiches are the only item on the menu. In recent years, Sabin's breakeven point has been 25,000 cheesesteak sandwiches. Annual fixed cost are $250,000 and the sandwiches have a sales price of $15. 
What is the variable cost per unit of each cheesesteak sandwich?

Accepted Answer

The answer of Sabin's Cheesesteak Sammies sells gourmet sandwiches. These...

Question 13

Karem's Sandwiches sells its signature 2-foot long sub sandwiches. These sandwiches are so good, it is the only item on the menu. In recent years,Karem's breakeven point has been 30,000 sandwiches. Annual fixed cost are $600,000 and the sandwiches have a sales price of $27. 
What is the variable cost per unit of each sandwich?

Accepted Answer

The answer of Karem's Sandwiches sells its signature 2-foot long...

Question 14

Christopher's Lunch Box sells gourmet take-out lunches. These lunches are so good, they are the only item on the menu. In recent years, Christopher's breakeven point has been 40,000 lunches. Annual fixed cost are $200,000 and the lunches have a sales price of $15. 
What is the variable cost per unit of each lunch?

Accepted Answer

The answer of Christopher's Lunch Box sells gourmet take-out lunches....

Question 15

Kane Company sells a single product for $12 per unit. Variable costs are $7 per unit and fixed costs are $65,000.
Required:
a. What is Kane Company's break-even point in units?
b. How many units must Kane sell to earn $15,000 before income tax?
c. How many units must Kane sell to earn $14,000 after income tax, assuming a 20% tax rate?

Accepted Answer

The answer of Kane Company sells a single product for...

Question 16

Barren Company sells a single product for $15 per unit. Variable costs are $5 per unit and fixed costs are $75,000.
Required:
a. What is Barren Company's break-even point in units?
b. How many units must Barren sell to earn $25,000 before income tax?
c. How many units must Barren sell to earn $21,000 after income tax, assuming a 20% tax rate?

Accepted Answer

The answer of Barren Company sells a single product for...

Question 17

Leaptrott Company sells a single product for $8 per unit. Variable costs are $5 per unit and fixed costs are $36,000.
Required:
a. What is Leaptrott Company's break-even point in units?
b. How many units must Leaptrott sell to earn $18,000 before income tax?
c. How many units must Leaptrott sell to earn $31,500 after income tax, assuming a 20% tax rate?

Accepted Answer

The answer of Leaptrott Company sells a single product for...

Question 18

Jakob & Bailey Company charges a selling price of $30 per unit for its single product, incurs variable costs of $14 per unit, and total fixed costs of $280,000.
Required:
a. What unit sales volume is necessary to earn a net income before tax of $40,000?
b. What sales volume is necessary to earn a net income after tax of $42,000, assuming a tax rate of 25%?

Accepted Answer

The answer of Jakob & Bailey Company charges a selling...

Question 19

Chad Company charges a selling price of $25 per unit for its single product, incurs variable costs of $17 per unit, and total fixed costs of $140,000.
Required:
a. What unit sales volume is necessary to earn a net income before tax of $32,000?
b. What sales volume is necessary to earn a net income after tax of $36,000, assuming a tax rate of 25%?

Accepted Answer

The answer of Chad Company charges a selling price of...

Question 20

Stewart Company charges a selling price of $50 per unit for its single product, incurs variable costs of $30 per unit, and total fixed costs of $400,000.
Required:
a. What unit sales volume is necessary to earn a net income before tax of $65,000?
b. What sales volume is necessary to earn a net income after tax of $72,000, assuming a tax rate of 25%?

Accepted Answer

The answer of Stewart Company charges a selling price of...

Quiz 6: Cost-Volume-Profit Relationships

Compex Inc. produces microprocessors for laptops. Last year, the company recognized revenues of $2,000,000. Total costs for the period were $1,000,000, of which $250,000 were fixed. If sales were to increase by $300,000, by how much would Computate's operating income increase?

Compex Inc. produces microprocessors for laptops. Last year, the company recognized revenues of $2,000,000. Total costs for the period were $1,000,000, of which $250,000 were fixed. What was Compex's margin of safety for the period?

Using the following data, apply the high-low method of cost analysis to the three cost data groups: What cost behavior patterns are apparent for each group? What is the cost formula for each group?

Using the following data, apply the high-low method of cost analysis to the three cost data groups: What cost behavior patterns are apparent for each group? What is the cost formula for each group?

Sullivan's T-Shirt Store sells t-shirt with a sales price of $25 each. Each t-shirt costs the company $15 to produce, and the store incurs a total of $100,000 in fixed costs each year. What is the yearly breakeven point in units?

Coryell Hammocks Unlimited sells hammocks with a sales price of $35 each. Each hammock costs the company $20 to produce, and the store incurs a total of $300,000 in fixed costs each year. What is the yearly breakeven point in units?

Matthews Beach Towel Company sells custom beach towels with a sales price of $20 each. Each beach towel costs the company $15 to produce, and the company incurs a total of $150,000 in fixed costs each year. What is the yearly breakeven point in units?