201. Match the following terms with their definitions.
1. Where a business’s revenues exactly equal costsVariable costs
2. The excess of sales revenues over variable costsFixed costs
3. Remain the same in total dollar amount as the level of activity changesBreak-even point
4. A specific activity range over which the cost changes are of interest.Relevant range
5. Vary in proportion to changes in activity levels.Contribution margin
202. Match the following terms with their definitions.
1. Focuses on costs, sales, and operating profit or loss.Margin of safety
2. Indicates the possible decrease in sales that may occur before operating loss results.Operating leverage
3. Focuses on profits rather than on revenues or costs.Cost-volume-profit chart
4. Contribution margin divided by income from operations.Profit-volume chart
5. The relative distribution of sales among products sold by a company.Sales mix
203. The following is a list of various costs of producing sweatshirts. Classify each cost as either a variable, fixed, or mixed cost for units produced and sold.
(a)Lubricants used to oil machinery.
(b)Warehouse rent of $6,000 per month plus $.50 per square foot of storage used.
(c)Thread.
(d)Electricity costs of $.025 per kilowatt-hour.
(e)Janitorial costs of $2,000 per month.
(f)Advertising costs of $10,000 per month.
(g)Sales salaries.
(h)Color dyes for producing different colors of sweatshirts.
(i)Salary of the production supervisor.
(j)Straight-line depreciation on sewing machines.
(k)Patterns for different designs. Patterns typically last many years before being replaced.
(l)Hourly wages of sewing machine operators.
(m)Property taxes on factory, building, and equipment.
(n)Cotton and polyester cloth.
(o)Maintenance costs with sewing machine company. The cost is $2,000 per year plus $.001 for each machine hour of use.