A rental cost of $40,000 plus $0.50 per machine hour of use is an example of a mixed cost.
The fixed cost per unit varies with changes in the level of activity. true For purposes of analysis, mixed costs can generally be separated into their variable and fixed components. true The contribution margin ratio is the same as the variable cost ratio. false Variable costs as a percentage of sales are equal to 100% minus the contribution margin ratio. true If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 40%. true If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 60%. false If sales total $1,000,000, fixed costs total $400,000, and variable costs are 55% of sales, the contribution margin ratio is 45%. true The dollars available from each unit of sales to cover fixed cost and profit is the contribution margin per unit. true The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed the contribution margin ratio. true The data required for determining the break-even point for a business are the total estimated fixed costs for a period stated as a percentage of net sales. false The point in operations at which revenues and expired costs are exactly equal is called the break-even point. true Break-even analysis is one type of cost-volume-profit analysis. true If the property tax rates are increased, this change in fixed costs will result in an increase in the break-even point. If yearly insurance premiums are increased, this change in fixed costs will result in a decrease in the break-even point. If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease. If direct materials cost per unit increases, the break-even point will increase. If direct materials cost per unit decreases, the break-even point will increase. If direct materials cost per unit decreases, the amount of sales necessary to earn a desired amount of profit will decrease. If fixed costs are $300,000 and variable costs are 70% of break-even sales, profit is zero when sales revenue is $1,000,000.
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- Winter '15