Question 1

Use the following information to determine the break-even point in sales dollars:

Accepted Answer

A) $88,500. 
B) $108,500. 
C) $173,600. 
D) $326,400. 
E) $500,000. 
A) $88,500. 
B) $108,500. 
C) $173,600. 
D) $326,400. 
E) $500,000.

Question 2

A step-wise variable cost can be separated into a fixed component and a variable component.

Accepted Answer

A) True 
 B)False

Question 3

The margin of safety is the amount that sales can drop before the company incurs a loss.

Accepted Answer

A) True 
 B)False

Question 4

The high-low method is used to derive the variable cost per unit and total fixed costs using just the highest and lowest volume levels.

Accepted Answer

A) True 
 B)False

Question 5

The relevant range of operations is a range of volume neither close to zero nor at maximum capacity.

Accepted Answer

A) True 
 B)False

Question 6

A target income refers to:

Accepted Answer

A) Income at the break-even point. 
B) Income from the most recent period. 
C) Income planned for a future period. 
D) Income only in a multiproduct environment. 
E) Income at the minimum contribution margin. 
A) Income at the break-even point. 
B) Income from the most recent period. 
C) Income planned for a future period. 
D) Income only in a multiproduct environment. 
E) Income at the minimum contribution margin.

Question 7

Total contribution margin in dollars divided by pretax income is the:

Accepted Answer

A) Degree of operating leverage. 
B) Contribution margin ratio. 
C) Margin of safety. 
D) Sales mix. 
E) Break-even point in units. 
A) Degree of operating leverage. 
B) Contribution margin ratio. 
C) Margin of safety. 
D) Sales mix. 
E) Break-even point in units.

Question 8

Ludington Corporation provides the following data from a recent period for its manufacture of shoes: variable manufacturing costs,$24,000;variable selling costs,$12,000;and total fixed costs,$40,000.Sales were $60,000 based on 12,000 units sold during the period.Calculate the contribution margin and the contribution margin ratio.

Accepted Answer

The answer of Ludington Corporation provides the following data from...

Question 9

The contribution margin ratio is the percent by which the margin of safety exceeds the break-even point.

Accepted Answer

A) True 
 B)False

Question 10

The unit contribution margin divided by the selling price per unit is the _____________.

Accepted Answer

contributi

Question 11

The ______________________ is the sales level at which a company neither earns a profit nor incurs a loss.

Accepted Answer

The answer of The ______________________ is the sales level at...

Question 12

Raven Company has a target of earning $70,000 pre-tax income.The contribution margin ratio is 30%.What amount of dollar sales must be achieved to reach the goal if fixed costs are $36,000?

Accepted Answer

A) $23,333. 
B) $36,000. 
C) $300,000. 
D) $353,333. 
E) $420,000. 
A) $23,333. 
B) $36,000. 
C) $300,000. 
D) $353,333. 
E) $420,000.

Question 13

Assume that sales are predicted to be $3,750,the expected contribution margin is $1,500,and a net loss of $250 is anticipated.The break-even point in sales dollars is:

Accepted Answer

A) $1,750. 
B) $2,500. 
C) $4,000. 
D) $4,250. 
E) $4,375. 
A) $1,750. 
B) $2,500. 
C) $4,000. 
D) $4,250. 
E) $4,375.

Question 14

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 contribution margin per unit if the machine is purchased.

Accepted Answer

A) $22.50. 
B) $26.00. 
C) $29.50. 
D) $28.50. 
E) $27.50. 
A) $22.50. 
B) $26.00. 
C) $29.50. 
D) $28.50. 
E) $27.50.

Question 15

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 pretax net income 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 16

Select cost information for Klondike Corporation is as follows:   Based on this information:

Accepted Answer

A) Both direct materials and rent expense are variable costs. 
B) Direct materials is a fixed cost and rent expense is a variable cost. 
C) Both direct materials and rent expense are fixed costs. 
D) Direct materials is a variable cost and rent expense is a fixed cost. 
E) Both direct materials and utilities expense are mixed costs. 
A) Both direct materials and rent expense are variable costs. 
B) Direct materials is a fixed cost and rent expense is a variable cost. 
C) Both direct materials and rent expense are fixed costs. 
D) Direct materials is a variable cost and rent expense is a fixed cost. 
E) Both direct materials and utilities expense are mixed costs.

Question 17

Leeks Company's product has a contribution margin per unit of $11.25 and a contribution margin ratio of 22.5%.What is the selling price of the product?

Accepted Answer

A) $5. 
B) $20. 
C) $30. 
D) $40. 
E) $50. 
A) $5. 
B) $20. 
C) $30. 
D) $40. 
E) $50.

Question 18

Select cost information for Seacrest Enterprises is as follows:   Based on this information:

Accepted Answer

A) Both direct materials and rent expense are variable costs. 
B) Utilities expense is a mixed cost and rent expense is a variable cost. 
C) Utilities expense is a mixed cost and rent expense is a fixed cost. 
D) Direct materials is a fixed cost and utilities expense is a mixed cost. 
E) Both direct materials and utilities expense are mixed costs. 
A) Both direct materials and rent expense are variable costs. 
B) Utilities expense is a mixed cost and rent expense is a variable cost. 
C) Utilities expense is a mixed cost and rent expense is a fixed cost. 
D) Direct materials is a fixed cost and utilities expense is a mixed cost. 
E) Both direct materials and utilities expense are mixed costs.

Question 19

Whiting Company sells a mix of three related products.Total fixed costs are $144,000.The following additional information is available for Whiting Company.   Use the weighted average method to determine the company's break-even point for composite units.

Accepted Answer

@#IMG-DLM& Break-eve

Question 20

McCoy Brothers manufactures and sells two products,A and Z in the ratio of 5:2.Product A sells for $75;Z sells for $95.Variable costs for product A are $35;for Z $40.Fixed costs are $418,500.Compute the break-even point in composite units.

Accepted Answer

A) 2,092. 
B) 3,805. 
C) 1,350. 
D) 1,395. 
E) 1,550. 
A) 2,092. 
B) 3,805. 
C) 1,350. 
D) 1,395. 
E) 1,550.

Exam 21: Cost-Volume-Profit Analysis

Use the following information to determine the break-even point in sales dollars:

A step-wise variable cost can be separated into a fixed component and a variable component.

The margin of safety is the amount that sales can drop before the company incurs a loss.

The high-low method is used to derive the variable cost per unit and total fixed costs using just the highest and lowest volume levels.

The relevant range of operations is a range of volume neither close to zero nor at maximum capacity.

A target income refers to:

Total contribution margin in dollars divided by pretax income is the:

The contribution margin ratio is the percent by which the margin of safety exceeds the break-even point.

The unit contribution margin divided by the selling price per unit is the _____________.

The ______________________ is the sales level at which a company neither earns a profit nor incurs a loss.

Raven Company has a target of earning $70,000 pre-tax income.The contribution margin ratio is 30%.What amount of dollar sales must be achieved to reach the goal if fixed costs are $36,000?

Assume that sales are predicted to be $3,750,the expected contribution margin is $1,500,and a net loss of $250 is anticipated.The break-even point in sales dollars is:

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 pretax net income is:

Select cost information for Klondike Corporation is as follows: Based on this information:

Leeks Company's product has a contribution margin per unit of $11.25 and a contribution margin ratio of 22.5%.What is the selling price of the product?

Select cost information for Seacrest Enterprises is as follows: Based on this information:

Whiting Company sells a mix of three related products.Total fixed costs are $144,000.The following additional information is available for Whiting Company. Use the weighted average method to determine the company's break-even point for composite units.

McCoy Brothers manufactures and sells two products,A and Z in the ratio of 5:2.Product A sells for $75;Z sells for $95.Variable costs for product A are $35;for Z $40.Fixed costs are $418,500.Compute the break-even point in composite units.

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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