Julius Corporation had the following income statement for 2018: \[\begin{array} { l r } \text { Sales } & \$ 80,000 \\ \text { Variable expenses } & 56,000 \\ \text { Contribution margin } & \$ 24,000 \\ \text { Fixed expenses } & 16,000 \\ \text { Operating income } & \$ 8,000 \end{array}\] What is the degree of operating leverage for Julius Corporation for 2018?

A) 3.000 B) 2.000 C) 0.333 D) 2.333 A) 3.000 B) 2.000 C) 0.333 D) 2.333

Assume the following information: $\begin{array} { l } \text { Selling price per unit}&\$180\\ \text { Contribution margin ratio}&\$48\%\\ \text {Total fixed costs }&\$270,000\\ \end{array}$ How many units must be sold to generate a before-tax profit of $54,000?

A) 4,000 units B) 2,750 units C) 3,570 units D) 3,750 units A) 4,000 units B) 2,750 units C) 3,570 units D) 3,750 units

Assume the following cost behavior data for Alpha Arts Company: $\begin{array}{lc} \text { Sales price } & \$ 20.00 \text { per unit } \\ \text { Variable costs } & \$ 15.00 \text { per unit } \\ \text { Fixed costs } & \$ 20,000 \\ \text { Tax rate } & 30 \% \end{array}$ What volume of sales dollars is required to earn a before-tax income of $25,000?

A) $290,000 B) $140,000 C) $180,000 D) $250,000 A) $290,000 B) $140,000 C) $180,000 D) $250,000

The Cumberland Company provides the following information: $\begin{array} { l } \text {Sales (250,000 units) }&\$625,000\\ \text {Manufacturing costs: }&\\ \text {Variable }&212,500\\ \text { Fixed}&37,500\\ \text {Selling and administrative costs: }&\\ \text {Variable }&100,000\\ \text { Fixed}&25,000\\ \end{array}$ What is the contribution margin ratio for Cumberland?

A) 0.16 B) 0.76 C) 0.50 D) 0.34 A) 0.16 B) 0.76 C) 0.50 D) 0.34

Information about the Harmonious Company's two products includes: $\begin{array}{llr}&\text { Product } X & \text { Product } Y\\ \text { Unit selling price } & \$ 11.25 & \$ 11.25 \\ \text { Unit variable costs: } \\ \text { Manufacturing }& \$ 5.25 & \$ 6.75 \\ \text { Selling } & .75& .75 \\ \text { Total }&\$6.00 &\$7.50\\ \end{array}$ $\begin{array}{lr} \text { Monthly fixed costs are as follows: } & \\ \text { Manufacturing } & \$ 82,500 \\ \text { Selling and administrative } & 45,000 \\ \text { Total } & \$ 127,500 \end{array}$ If the sales mix in units is 50 percent Product X and 50 percent Product Y, the monthly break-even total sales dollars is

A) $75,000. B) $318,746. C) $275,000. D) $315,000. A) $75,000. B) $318,746. C) $275,000. D) $315,000.

The Cumberland Company provides the following information: $\begin{array} { l } \text {Sales (250,000 units) }&\$625,000\\ \text {Manufacturing costs: }&\\ \text {Variable }&212,500\\ \text { Fixed}&37,500\\ \text {Selling and administrative costs: }&\\ \text {Variable }&100,000\\ \text { Fixed}&25,000\\ \end{array}$ What is the variable product cost per unit for Cumberland?

A) $2.50 B) $1.25 C) $0.40 D) $0.85 A) $2.50 B) $1.25 C) $0.40 D) $0.85

The DesMaris Company had the following income statement for the month of November 2018: $\begin{array}{c} \text { DesMaris Company}\\ \text { Income Statement}\\ \text { For the Month of November 2018}\\ \begin{array}{llcc} \text { Sales \( (\$ 60 \times 10,000) $} &&\$600,000\\ \text { Cost of goods sold: }\\ \text { Direct material $ \mathrm{s}(\$ 12 \times 10,000) $} &\$120,000\\ \text {Direct labor $ (\$ 9 \times 10,000) $ } &\$90,000\\ \text { Variable factory overhead $ (\$ 7.50 \times 10,000) $ } &75,000\\ \text {Fixed factory overhead } &120,000&405,000\\ \text { Gross profit } &&\$195,000\\ \text { Selling and administrative expenses: } &&\$195,000\\ \text { Variable $ (\$ 1.50 \times 10,000) $ } &\$15,000\\ \text {Fixed } & \underline{90,000}& \underline{105,000}\\ \text {Operating income } && \underline{\$90,000}\\ \end{array} \end{array}\) What is the sales volume required to earn an operating profit of $9,000?

A) 3,300 units B) 10,000 units C) 4,300 units D) 7,300 units A) 3,300 units B) 10,000 units C) 4,300 units D) 7,300 units

Exam 16: Cost-Volume-Profit Analysis

Julius Corporation had the following income statement for 2018: Sales \ 80,000 Variable expenses 56,000 Contribution margin \ 24,000 Fixed expenses 16,000 Operating income \ 8,000 What is the degree of operating leverage for Julius Corporation for 2018?

(Multiple Choice)

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Question 101

Total contribution margin is calculated by subtracting

(Multiple Choice)

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Question 102

Assume the following information: Selling price per unit \1 80 Contribution margin ratio \4 8\% Total fixed costs \2 70,000 How many units must be sold to generate a before-tax profit of $54,000?

(Multiple Choice)

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(65)

Question 103

Assume the following cost behavior data for Alpha Arts Company: Sales price \ 20.00 per unit Variable costs \ 15.00 per unit Fixed costs \ 20,000 Tax rate 30\% What volume of sales dollars is required to earn a before-tax income of $25,000?

(Multiple Choice)

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(100)

Question 104

The Cumberland Company provides the following information: Sales (250,000 units) \6 25,000 Manufacturing costs: Variable 212,500 Fixed 37,500 Selling and administrative costs: Variable 100,000 Fixed 25,000 What is the contribution margin ratio for Cumberland?

(Multiple Choice)

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Question 105

Increased sales of high contribution margin items __________ the break-even point.

(Short Answer)

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Question 106

Product 1 has a contribution margin of $6.00 per unit, and Product 2 has a contribution margin of $7.50 per unit. Total fixed costs are $300,000. Sales mix and total volume varies from one period to another. Which of the following is TRUE?

(Multiple Choice)

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Question 107

Information about the Harmonious Company's two products includes: Product X Product Y Unit selling price \ 11.25 \ 11.25 Unit variable costs: Manufacturing \ 5.25 \ 6.75 Selling .75 .75 Total \6 .00 \7 .50 Monthly fixed costs are as follows: Manufacturing \ 82,500 Selling and administrative 45,000 Total \ 127,500 If the sales mix in units is 50 percent Product X and 50 percent Product Y, the monthly break-even total sales dollars is

(Multiple Choice)

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Question 108

Which of the following is NOT a use of CVP (Cost-Volume-Profit) analysis?

(Multiple Choice)

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Question 109

Which of the following formulas is used to compute operating income?

(Multiple Choice)

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Question 110

On a profit-volume graph, the intersection of the profit line with the vertical axis provides a

(Multiple Choice)

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Question 111

Which of the following assumptions does NOT pertain to cost-volume-profit analysis?

(Multiple Choice)

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Question 112

The Cumberland Company provides the following information: Sales (250,000 units) \6 25,000 Manufacturing costs: Variable 212,500 Fixed 37,500 Selling and administrative costs: Variable 100,000 Fixed 25,000 What is the variable product cost per unit for Cumberland?

(Multiple Choice)

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Question 113

In a cost-volume-profit graph, the slope of the total cost line represents

(Multiple Choice)

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Question 114

If all else is the same, if the break-even point increases, then the variable cost per unit must have __________ .

(Short Answer)

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Question 115

Assuming all other things are equal, if there was a decrease in the break-even point, fixed costs must have:

(Multiple Choice)

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Question 116

Cost-volume-profit analysis focuses on the break-even point and the impact of changes in fixed costs and price.

(True/False)

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Question 117

Which of the following items would NOT be considered in cost-volume-profit analysis?

(Multiple Choice)

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Question 118

The DesMaris Company had the following income statement for the month of November 2018: DesMaris Company Income Statement For the Month of November 2018 Sales (\ 60 \times 10,000) \6 00,000 Cost of goods sold: Direct material (\ 12\times10,000) \1 20,000 Direct labor (\ 9\times10,000) \9 0,000 Variable factory overhead (\ 7.50\times10,000) 75,000 Fixed factory overhead 120,000 405,000 Gross profit \1 95,000 Selling and administrative expenses: \1 95,000 Variable (\ 1.50\times10,000) \1 5,000 Fixed Operating income What is the sales volume required to earn an operating profit of $9,000?

(Multiple Choice)

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Question 119

Which of the following refers to the relative combination of products being sold by a firm?

(Multiple Choice)

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Question 120

Julius Corporation had the following income statement for 2018: Sales \ 80,000 Variable expenses 56,000 Contribution margin \ 24,000 Fixed expenses 16,000 Operating income \ 8,000 What is the degree of operating leverage for Julius Corporation for 2018?

Total contribution margin is calculated by subtracting

Assume the following information: Selling price per unit \1 80 Contribution margin ratio \4 8\% Total fixed costs \2 70,000 How many units must be sold to generate a before-tax profit of $54,000?

Assume the following cost behavior data for Alpha Arts Company: Sales price \ 20.00 per unit Variable costs \ 15.00 per unit Fixed costs \ 20,000 Tax rate 30\% What volume of sales dollars is required to earn a before-tax income of $25,000?

The Cumberland Company provides the following information: Sales (250,000 units) \6 25,000 Manufacturing costs: Variable 212,500 Fixed 37,500 Selling and administrative costs: Variable 100,000 Fixed 25,000 What is the contribution margin ratio for Cumberland?

Increased sales of high contribution margin items __________ the break-even point.

Product 1 has a contribution margin of $6.00 per unit, and Product 2 has a contribution margin of $7.50 per unit. Total fixed costs are $300,000. Sales mix and total volume varies from one period to another. Which of the following is TRUE?

Which of the following is NOT a use of CVP (Cost-Volume-Profit) analysis?

Which of the following formulas is used to compute operating income?

On a profit-volume graph, the intersection of the profit line with the vertical axis provides a

Which of the following assumptions does NOT pertain to cost-volume-profit analysis?

The Cumberland Company provides the following information: Sales (250,000 units) \6 25,000 Manufacturing costs: Variable 212,500 Fixed 37,500 Selling and administrative costs: Variable 100,000 Fixed 25,000 What is the variable product cost per unit for Cumberland?

In a cost-volume-profit graph, the slope of the total cost line represents

If all else is the same, if the break-even point increases, then the variable cost per unit must have __________ .

Assuming all other things are equal, if there was a decrease in the break-even point, fixed costs must have:

Cost-volume-profit analysis focuses on the break-even point and the impact of changes in fixed costs and price.

Which of the following items would NOT be considered in cost-volume-profit analysis?

Which of the following refers to the relative combination of products being sold by a firm?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

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