Question 1

A break-even point can be calculated either in units or in dollars.

Accepted Answer

A) True 
 B)False

Question 2

The high-low method can be used to estimate the cost equation using just two points.

Accepted Answer

A) True 
 B)False

Question 3

As the level of volume of activity increases,the variable cost per unit remains constant.

Accepted Answer

A) True 
 B)False

Question 4

Scatter diagrams plot volume (units)on the vertical axis and cost on the horizontal axis.

Accepted Answer

A) True 
 B)False

Question 5

The method most likely to produce the most precise line of cost behavior and require the least amount of judgment is the scatter diagram.

Accepted Answer

A) True 
 B)False

Question 6

A company manufactures and sells a product for $120 per unit.The company's fixed costs are $68,760,and its variable costs are $90 per unit.The company's break-even point in units is:

Accepted Answer

A) 2,292. 
B) 573. 
C) 764. 
D) 327. 
A) 2,292. 
B) 573. 
C) 764. 
D) 327.

Question 7

Carver Packing Company reports total contribution margin of $72,000 and pretax net income of $24,000 for the current month.In the next month,the company expects sales volume to increase by 8%.The degree of operating leverage and the expected percent change in income,respectively,are:

Accepted Answer

A) 4.0 and 32% 
B) 0.33 and 8% 
C) 0.33 and 2.7% 
D) 3.0 and 8% 
E) 3.0 and 24% 
A) 4.0 and 32% 
B) 0.33 and 8% 
C) 0.33 and 2.7% 
D) 3.0 and 8% 
E) 3.0 and 24%

Question 8

A cost with a flat cost line within a relevant range that shifts to another level when volume significantly changes is a(n):

Accepted Answer

A) Step-wise cost. 
B) Fixed cost. 
C) Curvilinear cost. 
D) Incremental cost. 
E) Flat line cost. 
A) Step-wise cost. 
B) Fixed cost. 
C) Curvilinear cost. 
D) Incremental cost. 
E) Flat line cost.

Question 9

A firm expects to sell 25,000 units of its product at $11 per unit and to incur variable costs per unit of $6.Total fixed costs are $70,000.The total contribution margin is:

Accepted Answer

A) $55,000. 
B) $90,000. 
C) $125,000. 
D) $150,000. 
E) $380,000. 
A) $55,000. 
B) $90,000. 
C) $125,000. 
D) $150,000. 
E) $380,000.

Question 10

Forrester Company is considering buying new equipment that would increase monthly fixed costs from $120,000 to $150,000 and would decrease the current variable costs of $70 by $10 per unit.The selling price of $100 is not expected to change.Forrester's current break-even sales are $400,000 and current break-even units are 4,000.If Forrester purchases this new equipment,the revised break-even point in units would:

Accepted Answer

A) Increase by 250. 
B) Decrease by 250. 
C) Increase by 12,000. 
D) Decrease by 8,000. 
E) Increase by 8,000. 
A) Increase by 250. 
B) Decrease by 250. 
C) Increase by 12,000. 
D) Decrease by 8,000. 
E) Increase by 8,000.

Question 11

Use the following information to determine the break-even point in units (rounded to the nearest whole unit):

Accepted Answer

A) 12,828 
B) 26,571 
C) 8,455 
D) 46,667 
E) 24,800 
A) 12,828 
B) 26,571 
C) 8,455 
D) 46,667 
E) 24,800

Question 12

Examining strategies that impact several estimates in the CVP analysis is known as _______________________.

Accepted Answer

sensitivit

Question 13

The ratio (proportion)of the sales volumes of the various products sold by a company is called the ______________________________.

Accepted Answer

The answer of The ratio (proportion)of the sales volumes of...

Question 14

Varigon Co.produces and sells three products-Household,Commercial,and Industrial,and has total fixed costs of $52,000.Sales and cost data follow:   Calculate the break-even point in composite units.

Accepted Answer

@#IMG-DLM& Break-even point in

Question 15

Use the following information to determine the contribution margin ratio:

Accepted Answer

A) 6.9%. 
B) 48.3%. 
C) 24.5%. 
D) 51.7%. 
E) 34.1%. 
A) 6.9%. 
B) 48.3%. 
C) 24.5%. 
D) 51.7%. 
E) 34.1%.

Question 16

Kent Manufacturing produces a product that sells for $50.00 and has variable costs of $24.00 per unit.Fixed costs are $260,000.Kent can buy a new production machine that will increase fixed costs by $11,400 per year,but will decrease variable costs by $3.50 per unit.Compute the revised break-even point in units if the new machine is purchased.

Accepted Answer

A) 10,438 units. 
B) 8,814 units. 
C) 10,000 units. 
D) 9,200 units. 
E) 9,869 units. 
A) 10,438 units. 
B) 8,814 units. 
C) 10,000 units. 
D) 9,200 units. 
E) 9,869 units.

Question 17

A cost that remains unchanged in total despite variations in volume of activity within a relevant range is a:

Accepted Answer

A) Fixed cost. 
B) Curvilinear cost. 
C) Variable cost. 
D) Step-wise variable cost. 
E) Standard cost. 
A) Fixed cost. 
B) Curvilinear cost. 
C) Variable cost. 
D) Step-wise variable cost. 
E) Standard cost.

Question 18

Henderson Co.has fixed costs of $36,000 and a contribution margin ratio of 24%.If expected sales are $200,000,what is the margin of safety as a percent of sales?

Accepted Answer

A) 6%. 
B) 25%. 
C) 33%. 
D) 50%. 
E) 75%. 
A) 6%. 
B) 25%. 
C) 33%. 
D) 50%. 
E) 75%.

Question 19

The proportion of sales volumes for various products in a multiproduct company is known as the composite mix.

Accepted Answer

A) True 
 B)False

Question 20

The dollar amount of sales needed to achieve a target income is computed by dividing the sum of fixed costs plus the target income by the contribution margin ratio.

Accepted Answer

A) True 
 B)False

Exam 21: Cost-Volume-Profit Analysis

A break-even point can be calculated either in units or in dollars.

The high-low method can be used to estimate the cost equation using just two points.

As the level of volume of activity increases,the variable cost per unit remains constant.

Scatter diagrams plot volume (units)on the vertical axis and cost on the horizontal axis.

The method most likely to produce the most precise line of cost behavior and require the least amount of judgment is the scatter diagram.

A company manufactures and sells a product for $120 per unit.The company's fixed costs are $68,760,and its variable costs are $90 per unit.The company's break-even point in units is:

Carver Packing Company reports total contribution margin of $72,000 and pretax net income of $24,000 for the current month.In the next month,the company expects sales volume to increase by 8%.The degree of operating leverage and the expected percent change in income,respectively,are:

A cost with a flat cost line within a relevant range that shifts to another level when volume significantly changes is a(n):

A firm expects to sell 25,000 units of its product at $11 per unit and to incur variable costs per unit of $6.Total fixed costs are $70,000.The total contribution margin is:

Use the following information to determine the break-even point in units (rounded to the nearest whole unit):

Examining strategies that impact several estimates in the CVP analysis is known as _______________________.

The ratio (proportion)of the sales volumes of the various products sold by a company is called the ______________________________.

Varigon Co.produces and sells three products-Household,Commercial,and Industrial,and has total fixed costs of $52,000.Sales and cost data follow: Calculate the break-even point in composite units.

Use the following information to determine the contribution margin ratio:

A cost that remains unchanged in total despite variations in volume of activity within a relevant range is a:

Henderson Co.has fixed costs of $36,000 and a contribution margin ratio of 24%.If expected sales are $200,000,what is the margin of safety as a percent of sales?

The proportion of sales volumes for various products in a multiproduct company is known as the composite mix.

The dollar amount of sales needed to achieve a target income is computed by dividing the sum of fixed costs plus the target income by the contribution margin ratio.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Appendix B: Time Value of Money

Appendix C: Activity-Based Costing

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