COST-VOLUME PROFIT ANALYSIS 1) SUN Company has the following data: Variable costs are 70% of the unit
Question:
COST-VOLUME PROFIT ANALYSIS
1) SUN Company has the following data:
Variable costs are 70% of the unit selling price.
The contribution margin ratio is 30%.
The contribution margin per unit is $500.
The fixed costs are $500,000.
Which of the following does not express the break-even point?
O $500,000 $500 = X
O $500,000 0.30 = X
O $500,000 + 0.70X = X
O $500.000 + 0.30X = X
2) Which of the following is not an underlying assumption of CVP analysis?
O There are no changes in inventory levels
O Cost classifications are reasonably accurate.
O Sales mix is constant.
O Changes in activity are the only factors that affect costs.
3) ABC Company provided the information below from its accounting records for 2009:
Expected production 30 000 labor hours
Actual production 28 000 labor hours
Budgeted overhead $1 500 000
Actual overhead $1 450 000
How much is the overhead application rate if ABC Company bases it on direct labor hours?
O $46.67 per hour
O $48.33 per hour
O $50 per hour
O $51.79 per hour
4) For an activity base to be useful in explaining cost behavior,
O the activity should always be stated in dollars
O there should be a correlation between changes in the level of activity and changes in costs.
O the activity be related to direct labor or machine hours.
O the activity level should be constant over a period of time
Expert Answer:
Financial Accounting
ISBN: 978-1259103285
5th Canadian edition
Authors: Robert Libby, Patricia Libby, Daniel Short, George Kanaan, M
