Question 1

The linear equation for total cost is (Unit variable cost ´ Units)+ Fixed cost.

Accepted Answer

A) True 
 B)False

Question 2

Figure 4-5. Standlar Company makes wireless speakers.The standard model price is $360 and variable expenses are $210.The deluxe model price is $500 and variable expenses are $300.The superior model price is $1,600 and variable expense per unit is $600.Total fixed expenses are $300,000.Generally,Standlar sells 8 standard models and 4 deluxe models for every superior model sold.
Refer to Figure 4-5.What is the number of deluxe models sold at break-even?

Accepted Answer

A) 250 
B) 500 
C) 400 
D) 100 
E) 1,000 
A) 250 
B) 500 
C) 400 
D) 100 
E) 1,000

Question 3

Direct fixed expenses are the fixed costs that are not traceable to the segments and would remain even if one of the segments was eliminated.

Accepted Answer

A) True 
 B)False

Question 4

A graph that depicts the relationships among cost,volume and profits (operating income)is the

Accepted Answer

A) Cost graph. 
B) Volume graph. 
C) Cost-volume-profit graph. 
D) Profit-volume graph. 
E) break-even graph. 
A) Cost graph. 
B) Volume graph. 
C) Cost-volume-profit graph. 
D) Profit-volume graph. 
E) break-even graph.

Question 5

To find the number of units to sell to earn a targeted income,it is acceptable to simply adjust the break-even units equation by adding target income to the variable cost.

Accepted Answer

A) True 
 B)False

Question 6

Common fixed expenses are the fixed costs that are traceable to the segments and would be avoided if the segment did not exist.

Accepted Answer

A) True 
 B)False

Question 7

Newman Company expects to produce and sell 2,000 units next month.Data on costs follows:
   Required:

Accepted Answer

The answer of Newman Company expects to produce and sell...

Question 8

If variable costs per unit decrease,sales volume at the break-even point will

Accepted Answer

A) decrease. 
B) stay constant. 
C) double. 
D) increase. 
A) decrease. 
B) stay constant. 
C) double. 
D) increase.

Question 9

Fixed costs that are not traceable to the segments and would remain even if one of the segments was eliminated are known as _____________________________.

Accepted Answer

common fix

Question 10

Figure 4-4. Yerke Company makes jungle gyms and tree houses for children.For jungle gyms,the price is $120 and variable expenses are $90 per unit.For tree houses,the price is $200 and variable expenses are $100.Total fixed expenses are $253,750.Last year,Yerke sold 12,000 gyms and 4,000 tree houses.
Refer to Figure 4-4.Now suppose that Yerke expects tree house demand to increase from 4,000 to 8,000 units.What is the new contribution margin ratio (rounded to two decimal places)?

Accepted Answer

A) 38% 
B) 62% 
C) 40% 
D) 60% 
E) 50% 
A) 38% 
B) 62% 
C) 40% 
D) 60% 
E) 50%

Question 11

Patricia Company produces two products,X and Y,which account for 60 percent and 40 percent,respectively,of total sales dollars.Contribution margin ratios are 50 percent for X and 25 percent for Y.Total fixed costs are $120,000.What is Patricia's break-even point in sales dollars?

Accepted Answer

A) $300,000 
B) $328,767 
C) $342,856 
D) $375,000 
A) $300,000 
B) $328,767 
C) $342,856 
D) $375,000

Question 12

Figure 4-6. Shorter Company had originally expected to earn operating income of $130,000 in the coming year.Shorter's degree of operating leverage is 2.4.Recently,Shorter revised its plans and now expects to increase sales by 20% next year.
Refer to Figure 4-6.What is Shorter's revised expected operating income for the coming year?

Accepted Answer

A) $192,400 
B) $156,000 
C) $312,000 
D) $130,000 
E) $62,400 
A) $192,400 
B) $156,000 
C) $312,000 
D) $130,000 
E) $62,400

Question 13

Sarah Smith,a sole proprietor,has the following projected figures for next year:   What is the contribution margin ratio?

Accepted Answer

A) 0.300 
B) 1.429 
C) 0.429 
D) 3.333 
A) 0.300 
B) 1.429 
C) 0.429 
D) 3.333

Question 14

The following information was extracted from the accounting records of MVP Corporation:
   Required:

Accepted Answer

The answer of The following information was extracted from the...

Question 15

You Decide
As a cost accountant at A&E Company you have been given a set of data and have been asked to perform a break-even analysis as well as a sensitivity analysis.Why are these analyses important?

Accepted Answer

A break-even analysis is important to a

Question 16

Stepford Company makes dolls.The price is $10 and the variable expense per unit is $6.What is the contribution margin ratio?

Accepted Answer

A) 62.5% 
B) 37.5% 
C) 55% 
D) 40% 
E) 60% 
A) 62.5% 
B) 37.5% 
C) 55% 
D) 40% 
E) 60%

Question 17

Contribution margin ratio can be calculated in all of the following ways except

Accepted Answer

A) Fixed costs/Contribution margin per unit 
B) 1 - Variable cost ratio 
C) Contribution margin per unit/price 
D) Total contribution margin/Total sales 
E) all of these are correct 
A) Fixed costs/Contribution margin per unit 
B) 1 - Variable cost ratio 
C) Contribution margin per unit/price 
D) Total contribution margin/Total sales 
E) all of these are correct

Question 18

Figure 4-4. Yerke Company makes jungle gyms and tree houses for children.For jungle gyms,the price is $120 and variable expenses are $90 per unit.For tree houses,the price is $200 and variable expenses are $100.Total fixed expenses are $253,750.Last year,Yerke sold 12,000 gyms and 4,000 tree houses.
Refer to Figure 4-4.Now suppose that Yerke expects tree house demand to increase from 4,000 to 8,000 units.What is the number of tree houses sold at break-even?

Accepted Answer

A) 1,750 
B) 668 
C) 2,625 
D) 1,002 
E) 875 
A) 1,750 
B) 668 
C) 2,625 
D) 1,002 
E) 875

Question 19

The ________________________ is the point where total revenue equals total cost.

Accepted Answer

The answer of The ________________________ is the point where total...

Question 20

McCallen Company expects to produce and sell 500 units next month.Data on costs follows:
   Required:

Accepted Answer

The answer of McCallen Company expects to produce and sell...

The linear equation for total cost is (Unit variable cost ´ Units)+ Fixed cost.

Direct fixed expenses are the fixed costs that are not traceable to the segments and would remain even if one of the segments was eliminated.

A graph that depicts the relationships among cost,volume and profits (operating income)is the

To find the number of units to sell to earn a targeted income,it is acceptable to simply adjust the break-even units equation by adding target income to the variable cost.

Common fixed expenses are the fixed costs that are traceable to the segments and would be avoided if the segment did not exist.

Newman Company expects to produce and sell 2,000 units next month.Data on costs follows: Required:

If variable costs per unit decrease,sales volume at the break-even point will

Fixed costs that are not traceable to the segments and would remain even if one of the segments was eliminated are known as _____________________________.

Patricia Company produces two products,X and Y,which account for 60 percent and 40 percent,respectively,of total sales dollars.Contribution margin ratios are 50 percent for X and 25 percent for Y.Total fixed costs are $120,000.What is Patricia's break-even point in sales dollars?

Sarah Smith,a sole proprietor,has the following projected figures for next year: What is the contribution margin ratio?

The following information was extracted from the accounting records of MVP Corporation: Required:

You Decide As a cost accountant at A&E Company you have been given a set of data and have been asked to perform a break-even analysis as well as a sensitivity analysis.Why are these analyses important?

Stepford Company makes dolls.The price is $10 and the variable expense per unit is $6.What is the contribution margin ratio?

Contribution margin ratio can be calculated in all of the following ways except

The ________________________ is the point where total revenue equals total cost.

McCallen Company expects to produce and sell 500 units next month.Data on costs follows: Required:

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool

The linear equation for total cost is (Unit variable cost ´ Units)+ Fixed cost.

Direct fixed expenses are the fixed costs that are not traceable to the segments and would remain even if one of the segments was eliminated.

A graph that depicts the relationships among cost,volume and profits (operating income)is the

To find the number of units to sell to earn a targeted income,it is acceptable to simply adjust the break-even units equation by adding target income to the variable cost.

Common fixed expenses are the fixed costs that are traceable to the segments and would be avoided if the segment did not exist.

Newman Company expects to produce and sell 2,000 units next month.Data on costs follows: Required:

If variable costs per unit decrease,sales volume at the break-even point will

Fixed costs that are not traceable to the segments and would remain even if one of the segments was eliminated are known as _____________________________.

Patricia Company produces two products,X and Y,which account for 60 percent and 40 percent,respectively,of total sales dollars.Contribution margin ratios are 50 percent for X and 25 percent for Y.Total fixed costs are $120,000.What is Patricia's break-even point in sales dollars?

Sarah Smith,a sole proprietor,has the following projected figures for next year: What is the contribution margin ratio?

The following information was extracted from the accounting records of MVP Corporation: Required:

You Decide As a cost accountant at A&E Company you have been given a set of data and have been asked to perform a break-even analysis as well as a sensitivity analysis.Why are these analyses important?

Stepford Company makes dolls.The price is $10 and the variable expense per unit is $6.What is the contribution margin ratio?

Contribution margin ratio can be calculated in all of the following ways except

The ________________________ is the point where total revenue equals total cost.

McCallen Company expects to produce and sell 500 units next month.Data on costs follows: Required:

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters