Question 1

For CVP analysis, both variable and fixed costs are assumed to have a linear relationship within the relevant range of activity.

Accepted Answer

A) True 
 B)False

Question 2

Fixed costs are $3,000,000 and the unit contribution margin is $150. What is the break-even point?

Accepted Answer

A) $7,500,000 
B) $20,000,000 
C) 7,500 units 
D) 20,000 units 
A) $7,500,000 
B) $20,000,000 
C) 7,500 units 
D) 20,000 units

Question 3

Which of the following would be the least controllable fixed costs?

Accepted Answer

A) Property taxes 
B) Rent 
C) Research and development 
D) Management training programs 
A) Property taxes 
B) Rent 
C) Research and development 
D) Management training programs

Question 4

At the high level of activity in November, 7,000 machine hours were run and power costs were $18,000. In April, a month of low activity, 2,000 machine hours were run and power costs amounted to $9,000. Using the high-low method, the estimated fixed cost element of power costs is

Accepted Answer

A) $18,000. 
B) $9,000. 
C) $5,400. 
D) $12,600. 
A) $18,000. 
B) $9,000. 
C) $5,400. 
D) $12,600.

Question 5

The equation which reflects a CVP income statement is

Accepted Answer

A) Sales = Cost of goods sold + Operating expenses + Net income. 
B) Sales + Fixed costs = Variable costs + Net income. 
C) Sales - Variable costs + Fixed costs = Net income. 
D) Sales - Variable costs - Fixed costs = Net income. 
A) Sales = Cost of goods sold + Operating expenses + Net income. 
B) Sales + Fixed costs = Variable costs + Net income. 
C) Sales - Variable costs + Fixed costs = Net income. 
D) Sales - Variable costs - Fixed costs = Net income.

Question 6

An increase in the level of activity will have the following effects on unit costs for variable and fixed costs:

Accepted Answer

The answer of An increase in the level of activity...

Question 7

The activity that causes changes in the behavior of costs is referred to as the activity

Accepted Answer

A) index. 
B) multiplier. 
C) element. 
D) correlation. 
A) index. 
B) multiplier. 
C) element. 
D) correlation.

Question 8

The fixed cost element of a mixed cost is the cost of having a service available.

Accepted Answer

A) True 
 B)False

Question 9

The increased use of automation and less use of the work force in companies has caused a trend towards an increase in

Accepted Answer

A) both variable and fixed costs. 
B) fixed costs and a decrease in variable costs. 
C) variable costs and a decrease in fixed costs. 
D) variable costs and no change in fixed costs. 
A) both variable and fixed costs. 
B) fixed costs and a decrease in variable costs. 
C) variable costs and a decrease in fixed costs. 
D) variable costs and no change in fixed costs.

Question 10

A cost-volume-profit graph shows the amount of net income or loss at each level of sales.

Accepted Answer

A) True 
 B)False

Question 11

Sales are $500,000 and variable costs are $330,000. What is the contribution margin ratio?

Accepted Answer

A) 52% 
B) 34% 
C) 66% 
D) Cannot be determined because amounts are not expressed per unit. 
A) 52% 
B) 34% 
C) 66% 
D) Cannot be determined because amounts are not expressed per unit.

Question 12

The high-low method is often employed in analyzing

Accepted Answer

A) fixed costs. 
B) mixed costs. 
C) variable costs. 
D) conversion costs. 
A) fixed costs. 
B) mixed costs. 
C) variable costs. 
D) conversion costs.

Question 13

The graph of variable costs that behave in a curvilinear fashion will

Accepted Answer

A) approximate a straight line within the relevant range. 
B) be sharply kinked on both sides of the relevant range. 
C) be downward sloping. 
D) be a stair-step pattern. 
A) approximate a straight line within the relevant range. 
B) be sharply kinked on both sides of the relevant range. 
C) be downward sloping. 
D) be a stair-step pattern.

Question 14

The break-even point is where

Accepted Answer

A) total sales equal total variable costs. 
B) contribution margin equals total fixed costs. 
C) total variable costs equal total fixed costs. 
D) total sales equal total fixed costs. 
A) total sales equal total variable costs. 
B) contribution margin equals total fixed costs. 
C) total variable costs equal total fixed costs. 
D) total sales equal total fixed costs.

Question 15

In CVP analysis, the term "cost" includes manufacturing costs, and selling and administrative expenses.

Accepted Answer

A) True 
 B)False

Question 16

At the break-even point of 2,000 units, variable costs are $165,000, and fixed costs are $96,000. How much is the selling price per unit?

Accepted Answer

A) $130.50 
B) $34.50 
C) $48.00 
D) Not enough information 
A) $130.50 
B) $34.50 
C) $48.00 
D) Not enough information

Question 17

Portman Company's activity for the first three months of 2016 are as follows: $\begin{array}{lll}&\text { Machine Hours}&\text { Electrical Cost }\\hline
\text { January } & 2,100 & \$ 4,800 \
\text { February } & 2,600 & \$ 5,800 \
\text { March } & 2,900 & \$ 6,400
\end{array}$ Using the high-low method, how much is the cost per machine hour?

Accepted Answer

A) $2.00 
B) $3.00 
C) $2.26 
D) $1.78 
A) $2.00 
B) $3.00 
C) $2.26 
D) $1.78

Question 18

CVP analysis is not important in

Accepted Answer

A) calculating depreciation expense. 
B) setting selling prices. 
C) determining the product mix. 
D) utilizing production facilities. 
A) calculating depreciation expense. 
B) setting selling prices. 
C) determining the product mix. 
D) utilizing production facilities.

Question 19

A target net income is calculated by taking actual sales minus the margin of safety.

Accepted Answer

A) True 
 B)False

Question 20

Montoya Manufacturing has fixed costs of $3,000,000 and variable costs are 40% of sales. What are the required sales if Montoya desires net income of $300,000?

Accepted Answer

A) $5,500,000 
B) $5,000,000 
C) $8,250,000 
D) $7,500,000 
A) $5,500,000 
B) $5,000,000 
C) $8,250,000 
D) $7,500,000

Exam 17: Cost-Volume-Profit

For CVP analysis, both variable and fixed costs are assumed to have a linear relationship within the relevant range of activity.

Fixed costs are $3,000,000 and the unit contribution margin is $150. What is the break-even point?

Which of the following would be the least controllable fixed costs?

At the high level of activity in November, 7,000 machine hours were run and power costs were $18,000. In April, a month of low activity, 2,000 machine hours were run and power costs amounted to $9,000. Using the high-low method, the estimated fixed cost element of power costs is

The equation which reflects a CVP income statement is

An increase in the level of activity will have the following effects on unit costs for variable and fixed costs:

The activity that causes changes in the behavior of costs is referred to as the activity

The fixed cost element of a mixed cost is the cost of having a service available.

The increased use of automation and less use of the work force in companies has caused a trend towards an increase in

A cost-volume-profit graph shows the amount of net income or loss at each level of sales.

Sales are $500,000 and variable costs are $330,000. What is the contribution margin ratio?

The high-low method is often employed in analyzing

The graph of variable costs that behave in a curvilinear fashion will

The break-even point is where

In CVP analysis, the term "cost" includes manufacturing costs, and selling and administrative expenses.

At the break-even point of 2,000 units, variable costs are $165,000, and fixed costs are $96,000. How much is the selling price per unit?

Portman Company's activity for the first three months of 2016 are as follows: Machine Hours Electrical Cost January 2,100 \ 4,800 February 2,600 \ 5,800 March 2,900 \ 6,400 Using the high-low method, how much is the cost per machine hour?

CVP analysis is not important in

A target net income is calculated by taking actual sales minus the margin of safety.

Montoya Manufacturing has fixed costs of $3,000,000 and variable costs are 40% of sales. What are the required sales if Montoya desires net income of $300,000?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

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