Cost Volume Profit Analysis

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Cost Volume Profit Analysis Questions and Answers

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How to calculate the variable cost per unit within the relevant range?
Cost-volume-profit analysis can be used to estimate the firm's operating profits at different levels of what?
Some financial data for each of the three firms are as follows: Jake's Lawn Chairs Sarasota Sky Lights Jefferson Wholesale Average selling price per unit $32.00 $875.00 $97.77 Average variable cos...
A store has a total fixed cost of $9,000.00 and a planned net income of $6,000.00. How many sales dollars are required to achieve a 15% contribution margin rate?
Within the relevant range a. variable cost per unit decreases as the volume of sales decreases. b. fixed cost per unit increases as the volume of sales decreases. c. fixed costs per unit decreases...
Based on CVP (Cost-Volume-Profit), present a chart that depicts the four steps that are necessary to develop the CVP chart.
Present a chart that depicts the four steps that are necessary to develop the CVP chart.
All of the following are assumptions used in cost - volume - profit analysis, except: A) All costs are classified as fixed or variable. B) The total cost function is linear. C) The total revenue...
Identify when cost analysis would be required (a) When certified cost or pricing data are required (b) Whenever a price proposal is received (c) To evaluate profit or fee (d) For all proposals exce...
Explain how to calculate the generalized variance.
Modern Artifacts can produce keepsakes that will be sold for $50 each. Non-depreciation fixed costs are $1,500 per year, and variable costs are $30 per unit. The initial investment of $2,000 will b...
Which of the following statements is not correct about cost-volume-profit analysis? A) CVP analysis is a decision-making tool for managers. B) CVP analysis works best when all variables are changed...
Explain how a CVP analysis would be useful for determining whether or not the investment is worth it. Also, explain the limitations of a CVP analysis in this situation and for making managerial dec...
Describe and explain what CVP analysis is. Provide examples of how managers may use this tool for sensitivity analysis.
Discuss cost-volume-profit (CVP) analysis and how it is used as a decision tool.
At an activity level of 4,000 machine-hours in a month, Curt Corporation's total variable production engineering cost is $154,200 and its total fixed production engineering cost is $129,000. What w...
How does CVP analysis contribute to increasing the quality of decisions?
Top Disc manufactures frisbees. The following information is available for 2013, the company's first year in business when it produced 325,000 units. Revenue of $450,000 was generated by the sale o...
The following data are available for a product manufactured and sold by Logan Company: Maximum capacity with present facilities 40,000 units Total fixed cost (per period) $468,000 Variable cost pe...
1. Why is it important that we have a good understanding of the way costs behave (fixed / variable / relevant range) in order for the tool to be effective? 2. What makes it difficult to get this u...
Cost-Volume-Profit is a way to toggle variables in your algebraic equation that helps you determine if your cost changes, or you volume changes, or your profit changes, how the change impact the ot...
Barnes Company reports the following operating results for the month of August: Sales $325,000 (units 5,000); variable costs $218,000; and fixed costs $70,000. Management is considering the followi...
At current production volume, unit costs (total costs per unit) are $50/unit, which consists of $30 in variable costs per unit and $20 of fixed costs per unit. How much will our total costs change...
A company manufactures 1,000,000 units of a product yearly. A new design of the product will reduce materials cost by 12%, but will increase processing cost by 2%. If materials cost is $1.20 per un...
How is cost-volume-profit analysis useful?
Financial information is presented below: Operating expenses $29000 Sales revenue 199000 Cost of goods sold 165000 The profit margin ratio would be: A. 0.17 B. 0.83 C. 0.97 D. 0.03
A basic assumption of the cost-volume-profit model is that: a. All costs can be accurately classified as either fixed or variable. b. Cost drivers can be organized into unit-level, batch-level, p...
If the fixed expenses of a product increase while variable expenses and the selling price remain constant, what will happen to the total contribution margin and the break-even point? Contribution...
Erin Shelton, Inc., wants to earn a target profit of $940,000 this year. The company?s fixed costs are expected to be $1,280,000 and its variable costs are expected to be 75% of sales. Erin Shelton...
Cost-volume profit (CVP) analysis is a key factor in many decisions, including choice of product lines, pricing of products, marketing strategy, and use of productive facilities. A calculation used...
In CVP analysis, the graph of total revenues versus total costs is linear in nature relation to units sold within a relevant range and time period. True False
It is assumed in CVP analysis that the unit selling price, unit variable costs, and unit fixed costs are known and constant. True False
True or False: Many companies find even the simplest CVP analysis helps with strategic and long-range planning.
When there are multiple cost drivers, the simple CVP formula of Q = (FC + OI)/CMU can still be used. True False
What is meant by the term relevant range?
How does a cost-volume-profit (CVP) income statement help management make decisions?
What are the components of cost-volume-profit (CVP) analysis?
Your client is introducing a new cosmetic range of carbon-based lotions. Expected fixed costs from the operation is $68,000 per month, unit variable cost is estimated at $10 per item and they would...
Oakbrook Company is subject to a 30% income tax rate. The following data pertain to the period just ended when the company produced and sold 45,000 units: |Sales revenue|$1,350,000 |Variable Cost|...
Jane has been told that there will be an increase in the price of her product line, which will ultimately increase the original variable cost of $60 by $20 a month. Her current sales per month are...
When conducting a cost-volume profit analysis, determine where the most challenges for accountants occur. Recommend action to overcome the challenge(s).
In a CVP income statement, cost of goods sold is generally: a) completely a variable cost. b) completely a fixed cost. c) neither a variable cost nor a fixed cost. d) partly a variable cost and par...
Which of the following factors is not involved in building a cost/volume/profit (CVP) model? a. Desired profit, expressed on an after-tax basis. b. Variable cost per unit. c.Total fixed costs....
The following information pertains to the Flying Fig Corporation: Total Units for information given 3,000 Fixed Cost per Unit 50.00 Selling Price per Unit 300.00 Variable Costs per Unit $225 Targe...
Based on CVP (Cost-Volume-Profit), what is margin of safety and operating leverage?
Explain CVP analysis's usefulness to small businesses, as opposed to managers of larger entities. Do I write about the advantages of using CVP in small businesses and disadvantages of CVP in larger...
Which of the following are assumptions of cost volume profit analysis? i. Sales mix is constant. ii. External factors do not change. = iii. Fixed costs change with sales volume. = iv. Variable cost...
Nombre Company management predicts $1,560,000 of variable costs, $2,038,000 of fixed costs, and a pretax income of $302,000 in the next period. Management also predicts that the contribution margin...
Generally, Cost Volume Profit Analysis (CVP) is used for one of two possible reasons. It is either used to calculate a break even point for a business, or to help in measuring for a target profit...
CVP is a methodical analysis of the dynamic inter-relationship between selling prices, saled and production volume, cost exspenses and profits. Explain each of the three elements of CVP analysis. D...
Identify the similarities and differences between the CVP income statement and the traditional income statement.
How does assuming that operating activity occurs within a relevant range affect cost-volume-profit analysis?
How is cost-volume-profit analysis useful? Explain.
Knowing how costs behave to change in the level of activity is useful to management for all the following reasons except: a) predicting customer demand b) predicting profits as sales and production...
Discuss how managers use CVP analysis.
Explain each of the three elements of CVP analysis.
If a caterer'd (selling concert tickets) charges will be higher if ticket sales are below 4,000, but lower if sales exceed 12,000 tickets, help me to understand the relevant range. What does this t...
Explain why and how it is important for Coca Cola management to understand cost-volume-profit relationships when it comes to their main product, Coke?
The marketing department of Specialty Coffees estimates the following monthly demand for a latte in these four price-quantity relationships: Demand a) 5,000 cups at $5.50 per cup b) 6,000 cups a...
Cost-volume-profit analysis can be used to predict the effects of reduced selling prices, increased fixed costs, and reduced variable costs on break-even points. True False
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