Reference: 08-04 The following data relate to a company that produces and sells a travel guide that is updated monthly: \[\begin{array} { | l | l | } \hline \text { Fixed costs: } & \\ \hline \text { Copy editing } & \$ 6,000 \\ \hline \text { Art work } & 2,000 \\ \hline \text { Typesetting } & 72,000 \\ \hline & \\ \hline \text { Variable costs: } & \\ \hline \text { Printing and binding } & \$ 3.20 \text { per copy } \\ \hline \text { Bookstore discounts } & 4.00 \text { per copy } \\ \hline \text { Salespersons' commissions } & 0.50 \text { per copy } \\ \hline \text { Author's royalties } & 2.00 \text { per copy } \\ \hline \end{array}\] Each book sells for $20.00. The company sold 8,000 books in June and 10,000 books in July. -The degree of operating leverage for July is closest to (round your final answer to two decimal places.)

A) 3.48. B) 8.70. C) 4.22. D) 4.48. A) 3.48. B) 8.70. C) 4.22. D) 4.48. D

Reference: 08-07 Paxton Corp has provided the following data concerning its operations last month: \[\begin{array} { | l | l | } \hline \text { Sales } & \$ 400,000 \\ \hline \text { Variable expenses } & 250,000 \\ \hline \text { Fixed expenses } & 100,000 \\ \hline \end{array}\] Paxton Corp is a retailing organization. -The contribution margin ratio is?

A) 37.5%. B) 25.0%. C) 33.0%. D) 12.5%. A) 37.5%. B) 25.0%. C) 33.0%. D) 12.5%. A

Reference: 08-07 Paxton Corp has provided the following data concerning its operations last month: \[\begin{array} { | l | l | } \hline \text { Sales } & \$ 400,000 \\ \hline \text { Variable expenses } & 250,000 \\ \hline \text { Fixed expenses } & 100,000 \\ \hline \end{array}\] Paxton Corp is a retailing organization. -The break-even sales in dollars is (round your final answer to the nearest dollar):

A) $350,000. B) $148,148. C) $266,667. D) $333,333. A) $350,000. B) $148,148. C) $266,667. D) $333,333.

Reference: 08-04 The following data relate to a company that produces and sells a travel guide that is updated monthly: \[\begin{array} { | l | l | } \hline \text { Fixed costs: } & \\ \hline \text { Copy editing } & \$ 6,000 \\ \hline \text { Art work } & 2,000 \\ \hline \text { Typesetting } & 72,000 \\ \hline & \\ \hline \text { Variable costs: } & \\ \hline \text { Printing and binding } & \$ 3.20 \text { per copy } \\ \hline \text { Bookstore discounts } & 4.00 \text { per copy } \\ \hline \text { Salespersons' commissions } & 0.50 \text { per copy } \\ \hline \text { Author's royalties } & 2.00 \text { per copy } \\ \hline \end{array}\] Each book sells for $20.00. The company sold 8,000 books in June and 10,000 books in July. -The unit contribution margin per book is?

A) $8.30. B) $10.30. C) $14.30. D) $10.80. A) $8.30. B) $10.30. C) $14.30. D) $10.80.

The following monthly data are available for the Eager Company and its only product: \[\begin{array} { | l | l | } \hline \text { Unit sales price } & \$ 75 \\ \hline \text { Unit variable expenses } & \$ 30 \\ \hline \text { Total fixed expenses } & \$ 180,000 \\ \hline \text { Actual sales for the month of March } & 7,000 \text { units } \\ \hline \end{array}\] The margin of safety for the company for March was:

A) $225,000. B) $315,000. C) $495,000. D) $135,000. A) $225,000. B) $315,000. C) $495,000. D) $135,000.

Reference: 08-01 The following is Addison Corporation's contribution format income statement for last month: \[\begin{array} { | l | c | } \hline \text { Sales } & \$ 1,000,000 \\ \hline \text { Less variable expenses } & 700,000 \\ \hline \text { Contribution margin } & 300,000 \\ \hline \text { Less fixed expenses } & 180,000 \\ \hline \text { Net income } & \$ 120,000 \\ \hline \end{array}\] The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month. -What is the company's break-even point in units?

A) 20,000 units. B) 12,000 units. C) 18,000 units. D) 8,000 units. A) 20,000 units. B) 12,000 units. C) 18,000 units. D) 8,000 units.

Wilson Company prepared the following preliminary budget assuming no advertising expenditures: \[\begin{array} { | l | l | } \hline \text { Selling price } & \$ 10 \text { per unit } \\ \hline \text { Unit sales } & 100,000 \\ \hline \text { Variable expenses } & \$ 600,000 \\ \hline \text { Fixed expenses } & \$ 300,000 \\ \hline \end{array}\] Based on a market study, the company estimated that it could increase the unit selling price by 15% and increase the unit sales volume by 10% if $100,000 were spent on advertising. Assuming that these changes are incorporated in its budget, what should be the budgeted net income?

A) $190,000. B) $205,000. C) $175,000. D) $365,000. A) $190,000. B) $205,000. C) $175,000. D) $365,000.

Reference: 08-13 Hooper Corporation produces and sells two models of vacuum cleaners, Standard and Deluxe. The company records show the following monthly data relating to these two products: \[\begin{array} { | l | l | l | l | } \hline & \text { Standard } & & \text { Delwxe } \\ \hline \text { Selling price per unit } & \$ 150 & & \$ 165 \\ \hline \text { Variable production costs } & 120 & & 126 \\ \hline \text { Variable selling expense per unit } & 16 & & 13 \\ \hline \text { Expected monthly sales in units } & 600 && 1,200 \\ \hline \text { Total monthly fixed cost } & & \$ 15,000 & \\ \hline \end{array}\] -If the expected monthly sales in units were divided equally between the two models (900 Standard and 900 Deluxe), the break-even level of sales would be:

A) higher than with the expected sales mix. B) lower than with the expected sales mix. C) the same as with the expected sales mix. D) cannot be determined with the available data. A) higher than with the expected sales mix. B) lower than with the expected sales mix. C) the same as with the expected sales mix. D) cannot be determined with the available data.

Reference: 08-02 The following is Allison Corporation's contribution format income statement for last month: \[\begin{array} { | l | c | } \hline \text { Sales } & \$ 800,000 \\ \hline \text { Less variable expenses } & 300,000 \\ \hline \text { Contribution margin } & 500,000 \\ \hline \text { Less fixed expenses } & 400,000 \\ \hline \text { Net income } & \underline { \$ 100,000 } \\ \hline \end{array}\] The company has no beginning or ending inventories. The company produced and sold 10,000 units last month. -What is the company's margin of safety percentage?

A) 20%. B) 10%. C) 25%. D) 40%. A) 20%. B) 10%. C) 25%. D) 40%.

Reference: 08-10 Oslo Co.'s industrial photo-finishing division incurred the following expenses last year: \[\begin{array} { | l | l | l | } \hline & \text { Variable } & \text { Fixed } \\ \hline \text { Direct materials } & \$ 200,000 & \\ \hline \text { Direct labour } & 150,000 & \\ \hline \text { Factory overhead } & 70,000 & \$ 42,000 \\ \hline \text { Selling and administrative } & 30,000 & 48,000 \\ \hline \text { Total } & \underline { \$ 450,000 } & \underline { \$ 90,000 } \\ \hline \end{array}\] During the year, the division sold 300,000 photo-prints for $2.00 each. -If the division produces and sells 350,000 photo-prints, its total expenses would be

A) $525,000. B) $615,000. C) $540,000. D) $630,000. A) $525,000. B) $615,000. C) $540,000. D) $630,000.

Exam 8: Cost-Volume-Profit Relationships

A company increased the selling price for its product from $1.00 to $1.10 a unit when total fixed expenses increased from $400,000 to $480,000 and variable expense per unit remained unchanged. How would these changes affect the break-even point?

Free

(Multiple Choice)

4.8/5

(96)

Question 1

Correct Answer:

Verified

D

Reference: 08-04 The following data relate to a company that produces and sells a travel guide that is updated monthly: Fixed costs: Copy editing \ 6,000 Art work 2,000 Typesetting 72,000 Variable costs: Printing and binding \ 3.20 per copy Bookstore discounts 4.00 per copy Salespersons' commissions 0.50 per copy Author's royalties 2.00 per copy Each book sells for $20.00. The company sold 8,000 books in June and 10,000 books in July. -The degree of operating leverage for July is closest to (round your final answer to two decimal places.)

Free

(Multiple Choice)

4.9/5

(72)

Question 2

Correct Answer:

Verified

D

Reference: 08-07 Paxton Corp has provided the following data concerning its operations last month: Sales \ 400,000 Variable expenses 250,000 Fixed expenses 100,000 Paxton Corp is a retailing organization. -The contribution margin ratio is?

Free

(Multiple Choice)

4.9/5

(88)

Question 3

Correct Answer:

Verified

A

Reference: 08-08 Janet Company produces a game that sells for $17 per game. Variable expenses are $9 per game and fixed expenses total $172,000 annually. -The break-even point is closest to?

(Multiple Choice)

4.8/5

(93)

Question 4

What is the company's break-even sales in dollars?

(Multiple Choice)

4.8/5

(80)

Question 5

Reference: 08-07 Paxton Corp has provided the following data concerning its operations last month: Sales \ 400,000 Variable expenses 250,000 Fixed expenses 100,000 Paxton Corp is a retailing organization. -The break-even sales in dollars is (round your final answer to the nearest dollar):

(Multiple Choice)

4.7/5

(72)

Question 6

Reference: 08-04 The following data relate to a company that produces and sells a travel guide that is updated monthly: Fixed costs: Copy editing \ 6,000 Art work 2,000 Typesetting 72,000 Variable costs: Printing and binding \ 3.20 per copy Bookstore discounts 4.00 per copy Salespersons' commissions 0.50 per copy Author's royalties 2.00 per copy Each book sells for $20.00. The company sold 8,000 books in June and 10,000 books in July. -The unit contribution margin per book is?

(Multiple Choice)

4.9/5

(68)

Question 7

The following monthly data are available for the Eager Company and its only product: Unit sales price \ 75 Unit variable expenses \ 30 Total fixed expenses \ 180,000 Actual sales for the month of March 7,000 units The margin of safety for the company for March was:

(Multiple Choice)

4.8/5

(88)

Question 8

The total contribution margin decreases if sales volume remains the same and which of the following occurs?

(Multiple Choice)

4.9/5

(77)

Question 9

In a CVP graph, the break-even point is determined as the point that the total revenue line intersects with the total fixed expenses line.

(True/False)

4.8/5

(71)

Question 10

Reference: 08-01 The following is Addison Corporation's contribution format income statement for last month: Sales \ 1,000,000 Less variable expenses 700,000 Contribution margin 300,000 Less fixed expenses 180,000 Net income \ 120,000 The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month. -What is the company's break-even point in units?

(Multiple Choice)

4.9/5

(89)

Question 11

Reference: 08-08 Janet Company produces a game that sells for $17 per game. Variable expenses are $9 per game and fixed expenses total $172,000 annually. -The contribution margin ratio is closest to?

(Multiple Choice)

4.9/5

(87)

Question 12

Wilson Company prepared the following preliminary budget assuming no advertising expenditures: Selling price \ 10 per unit Unit sales 100,000 Variable expenses \ 600,000 Fixed expenses \ 300,000 Based on a market study, the company estimated that it could increase the unit selling price by 15% and increase the unit sales volume by 10% if $100,000 were spent on advertising. Assuming that these changes are incorporated in its budget, what should be the budgeted net income?

(Multiple Choice)

5.0/5

(66)

Question 13

What is the company's contribution margin ratio?

(Multiple Choice)

4.9/5

(80)

Question 14

Reference: 08-13 Hooper Corporation produces and sells two models of vacuum cleaners, Standard and Deluxe. The company records show the following monthly data relating to these two products: Standard Delwxe Selling price per unit \ 150 \ 165 Variable production costs 120 126 Variable selling expense per unit 16 13 Expected monthly sales in units 600 1,200 Total monthly fixed cost \ 15,000 -If the expected monthly sales in units were divided equally between the two models (900 Standard and 900 Deluxe), the break-even level of sales would be:

(Multiple Choice)

4.9/5

(81)

Question 15

Carver Company produces a product that sells for $30. Variable manufacturing costs are $15 per unit. Fixed manufacturing costs are $5 per unit based on the current level of activity, and fixed selling and administrative costs are $4 per unit. A selling commission of 10% of the selling price is paid on each unit sold. The contribution margin per unit is?

(Multiple Choice)

4.9/5

(95)

Question 16

Reference: 08-02 The following is Allison Corporation's contribution format income statement for last month: Sales \ 800,000 Less variable expenses 300,000 Contribution margin 500,000 Less fixed expenses 400,000 Net income The company has no beginning or ending inventories. The company produced and sold 10,000 units last month. -What is the company's margin of safety percentage?

(Multiple Choice)

4.9/5

(78)

Question 17

How many units would the company have to sell to attain target profits of $120,000

(Multiple Choice)

4.8/5

(90)

Question 18

The margin of safety percentage is computed as:

(Multiple Choice)

5.0/5

(83)

Question 19

Reference: 08-10 Oslo Co.'s industrial photo-finishing division incurred the following expenses last year: Variable Fixed Direct materials \ 200,000 Direct labour 150,000 Factory overhead 70,000 \ 42,000 Selling and administrative 30,000 48,000 Total During the year, the division sold 300,000 photo-prints for $2.00 each. -If the division produces and sells 350,000 photo-prints, its total expenses would be

(Multiple Choice)

4.8/5

(78)

Question 20

A company increased the selling price for its product from $1.00 to $1.10 a unit when total fixed expenses increased from $400,000 to $480,000 and variable expense per unit remained unchanged. How would these changes affect the break-even point?

Reference: 08-07 Paxton Corp has provided the following data concerning its operations last month: Sales \ 400,000 Variable expenses 250,000 Fixed expenses 100,000 Paxton Corp is a retailing organization. -The contribution margin ratio is?

Reference: 08-08 Janet Company produces a game that sells for $17 per game. Variable expenses are $9 per game and fixed expenses total $172,000 annually. -The break-even point is closest to?

What is the company's break-even sales in dollars?

Reference: 08-07 Paxton Corp has provided the following data concerning its operations last month: Sales \ 400,000 Variable expenses 250,000 Fixed expenses 100,000 Paxton Corp is a retailing organization. -The break-even sales in dollars is (round your final answer to the nearest dollar):

The following monthly data are available for the Eager Company and its only product: Unit sales price \ 75 Unit variable expenses \ 30 Total fixed expenses \ 180,000 Actual sales for the month of March 7,000 units The margin of safety for the company for March was:

The total contribution margin decreases if sales volume remains the same and which of the following occurs?

In a CVP graph, the break-even point is determined as the point that the total revenue line intersects with the total fixed expenses line.

Reference: 08-08 Janet Company produces a game that sells for $17 per game. Variable expenses are $9 per game and fixed expenses total $172,000 annually. -The contribution margin ratio is closest to?

What is the company's contribution margin ratio?

How many units would the company have to sell to attain target profits of $120,000

The margin of safety percentage is computed as:

An Introduction to Managerial Accounting

Cost Concepts

Systems Design: Job-Order Costing

Process Costing

Activity-Based Costing

Cost Behaviour: Analysis and Use

Budgeting

Relevant Costs: the Key to Decision Making

Capital Budgeting Decisions

Standard Costs and Variance Analysis

Organizational Structure and Performance Measurement

How Well Am I Doing Financial Statement Analysis Online

How Well Am I Doing Cash Flow Statement Online

Filters