WGU C213: Topic 11 - "Cost Behavior and Using C-V-P Analysis"

Which of the following items is NOT a key factor involved in cost-volume-profit (C-V-P) analysis?

Sales revenue

The mix of products sold

Time value of money

Fixed and variable costs

Time value of money

C-V-P analysis is useful to managers in:

Evaluating decisions

All of these are correct

Planning

Controlling decisions

All of these are correct

C-V-P analysis, while useful for several purposes, is primarily useful in:

Financing decisions

Controlling decisions

Evaluating decisions

Planning

Planning

The type of cost that remains constant (in total) over the relevant range is a:

Variable cost

Fixed cost

Mixed cost

Semi-variable cost

Fixed cost

As activity level increases within the relevant range, total variable costs usually will:

Vary randomly

Remain the same

Increase

Decrease

Increase

All the following are common cost behavior patterns EXCEPT:

Mixed costs

Variable costs

Manufacturing costs

Fixed costs

Manufacturing costs

The relevant range refers to the activity range over which:

Fixed and variable cost relationships remain the same

Total variable costs do not change

Fixed costs per unit remain the same

Variable costs per unit decrease

Fixed and variable cost relationships remain the same

Within the relevant range, per-unit variable cost:

Decreases as activity level decreases

Increases as activity level increases

Decreases as activity level increases

Remains constant as activity level increases

Remains constant as activity level increases

Which of the following is NOT a cost behavior pattern?

Variable costs

Relevant costs

Mixed costs

Stepped costs

Relevant costs

All the following are common cost behavior patterns EXCEPT:

Variable costs

Fixed costs

Mixed costs

Manufacturing costs

Manufacturing costs

The relevant range refers to the activity range over which:

Fixed costs per unit remain the same

Variable costs per unit decrease

Fixed and variable cost relationships remain the same

Total variable costs do not change

Fixed and variable cost relationships remain the same

As activity level increases within the relevant range, total variable costs usually will:

Increase

Remain the same

Vary randomly

Decrease

Increase

Fixed costs per unit:

Remain constant as activity levels increase

Increase as activity levels increase

Decrease as activity levels increase

None of these are correct

Decrease as activity levels increase

The slope of the line in a scattergraph represents the:

Fixed cost per unit

Mixed cost per unit

Opportunity cost per unit

Variable cost per unit

Variable cost per unit

Which of the following is the formula used to calculate the slope of the regression line on a scattergraph?

Fixed costs ÷ change in cost

Change in cost ÷ change in activity

Change in activity ÷ change in cost

Fixed costs ÷ change in activity

Change in cost ÷ change in activity

The scattergraph method is a useful tool for:

Analyzing abrupt changes in cost behavior

Separating mixed costs into their variable and fixed components

Determining the break-even point

Working outside the relevant range

Separating mixed costs into their variable and fixed components

When other factors remain constant, a decrease in sales price:

Decreases the number of units needed to earn profits

Increases the number of units needed to earn profits

Has no effect on the number of units needed to earn profits

Decreases the number of units needed to break even

Increases the number of units needed to earn profits

When other factors remain constant, a decrease in fixed costs:

Decreases the number of units needed to earn profits

Has no effect on the number of units needed to earn profits

Increases the number of units needed to break even

Increases the number of units needed to earn profits

Decreases the number of units needed to earn profits

The contribution margin minus total fixed costs is equal to:

Net income

Variable costs

Earnings per share

Gross margin

Net income

If two firms have the same sales prices for their merchandise once fixed costs are covered, the firm with a higher variable cost rate will have:

Smaller increases in profits as sales increase

None of these are correct

The same increase in profits as sales increase

Greater increases in profits as sales increase

Smaller increases in profits as sales increase

A firm will break even when:

Revenues = Variable costs − Fixed costs

Revenues = Variable costs + Fixed costs

Revenues − Variable costs = Fixed costs

Both Revenues = Variable costs + Fixed costs and Revenues − Variable costs = Fixed costs are correct

Both Revenues = Variable costs + Fixed costs and Revenues − Variable costs = Fixed costs are correct

Assume that Upward Company has total variable costs of $90,000 when 30,000 units are sold. If 40,000 units were sold, total variable costs would be:

$120,000

Variable cost per unit:

$90,000 / 30,000 units = $3 per unit

Total variable costs:

40,000 units x $3 = $120,000

The following cost data are available for Malta Marketing:

Total Manufacturing

Direct

Month

Overhead Cost

Labor Hours

July

$64,000

8,400

August

57,000

6,800

September

48,000

4,000

October

77,000

12,000

November

90,000

18,000

December

82,000

15,000

Given the data above and using the high-low method of analysis, total fixed costs are approximately:

$36,000Variable costs:($90,000 - $48,000) / (18,000 - 4,000) = $3Fixed costs:$90,000 - (18,000 x $3) = $36,000