Question 1

What is the company's margin of safety in dollars?

Accepted Answer

A) $880,000. 
B) $600,000. 
C) $120,000. 
D) $400,000. 
A) $880,000. 
B) $600,000. 
C) $120,000. 
D) $400,000.

Question 2

Break-even analysis assumes which of the following to be true

Accepted Answer

A) Total costs are unchanged. 
B) Variable expenses are nonlinear. 
C) Unit fixed expenses are unchanged. 
D) Unit variable expenses are unchanged. 
A) Total costs are unchanged. 
B) Variable expenses are nonlinear. 
C) Unit fixed expenses are unchanged. 
D) Unit variable expenses are unchanged.

Question 3

Reference: 08-12
Junsin Corporation's budget for next year appears below. The budget assumes the company will sell 30,000 units. $$\begin{array} { | c | c | c | } 
\hline \text { Sales } & & \$ 600,000 \
\hline \text { Less expenses: } & & \
\hline \text { Variable } & \$ 390,000 & \
\hline \text { Fixed } & 140,000 & 530,000 \
\hline \text { Net income } & & \$ 70,000 \
\hline
\end{array}$$
-The company's margin of safety as a percentage of sales (rounded to the nearest whole percent)is:

Accepted Answer

A) 33%. 
B) 67%. 
C) 12%. 
D) 50%. 
A) 33%. 
B) 67%. 
C) 12%. 
D) 50%.

Question 4

Reference: 08-02
The following is Allison Corporation's contribution format income statement for last month: $$\begin{array} { | l | c | } 
\hline \text { Sales } & \$ 800,000 \
\hline \text { Less variable expenses } & 300,000 \
\hline \text { Contribution margin } & 500,000 \
\hline \text { Less fixed expenses } & 400,000 \
\hline \text { Net income } & \$ 100,000 \
\hline
\end{array}$$ The company has no beginning or ending inventories. The company produced and sold 10,000 units last month.
-If the number of units sold increases by 10%, how much will net income increase

Accepted Answer

A) $10,000. 
B) $20,000. 
C) $5,000. 
D) $50,000. 
A) $10,000. 
B) $20,000. 
C) $5,000. 
D) $50,000.

Question 5

Koby Co. has sales of $200,000 with variable expenses of $150,000, fixed expenses of $60,000, and a net loss of $10,000. How much would Koby have to sell in order to achieve a net income of 10% of sales?

Accepted Answer

A) $431,000. 
B) $451,000. 
C) $375,000. 
D) $400,000. 
A) $431,000. 
B) $451,000. 
C) $375,000. 
D) $400,000.

Question 6

Goodman Company has sales of 3,000 units at $80 per unit.

Accepted Answer

A) 0.93. 
B) 2.67. 
C) 1.73. 
D) 0.79. 
A) 0.93. 
B) 2.67. 
C) 1.73. 
D) 0.79.

Question 7

If fixed expenses increase by $10,000 per year, then the level of sales needed to break even will also increase by $10,000.

Accepted Answer

A) True 
 B)False

Question 8

Green Company's variable expenses are 75% of sales. At a sales level of $400,000, the company's degree of operating leverage is 8. At this sales level, fixed expenses equal?

Accepted Answer

A) $87,500. 
B) $75,000. 
C) $100,000. 
D) $50,000. 
A) $87,500. 
B) $75,000. 
C) $100,000. 
D) $50,000.

Question 9

A product sells for $20 per unit and has a contribution margin ratio of 40%. Fixed expenses total $240,000 annually. How many units of the product must be sold to yield a profit of $60,000?

Accepted Answer

A) 65,000 units. 
B) 37,500 units. 
C) 40,000 units. 
D) 30,000 units. 
A) 65,000 units. 
B) 37,500 units. 
C) 40,000 units. 
D) 30,000 units.

Question 10

Reference: 08-05
Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800.
-If the selling price is reduced by 5%, variable expenses reduced by $1.00, and fixe? expenses increased to a total of $38,400, how many units would need to be sold to earn a net income of $21,000?

Accepted Answer

A) 2,950 units. 
B) 1,700 units. 
C) 1,000 units. 
D) 2,700 units. 
A) 2,950 units. 
B) 1,700 units. 
C) 1,000 units. 
D) 2,700 units.

Question 11

The following is last month's contribution format income statement: $$\begin{array} { | l | c | } 
\hline \text { Sales } ( 15,000 \text { units } ) & \$ 1,500,000 \
\hline \text { Less variable expenses } & 900,000 \
\hline \text { Contribution margin } & 600,000 \
\hline \text { Less fixed expenses } & 500,000 \
\hline \text { Net income } & \$ 100,000 \
\hline
\end{array}$$ What is the company's margin of safety in dollars?

Accepted Answer

A) $1,500,000. 
B) $250,000. 
C) $100,000. 
D) $600,000. 
A) $1,500,000. 
B) $250,000. 
C) $100,000. 
D) $600,000.

Question 12

A company has provided the following data: $$\begin{array} { | l | l | } 
\hline \text { Sales } & 3,000 \text { units } \
\hline \text { Sales price } & \$ 70 \text { per unit } \
\hline \text { Variable cost } & \$ 50 \text { per unit } \
\hline \text { Fixed cost } & \$ 25,000 \
\hline
\end{array}$$ If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net income will:

Accepted Answer

A) decrease by $15,000. 
B) decrease by $3,125. 
C) decrease by $31,875. 
D) increase by $20,625. 
A) decrease by $15,000. 
B) decrease by $3,125. 
C) decrease by $31,875. 
D) increase by $20,625.

Question 13

In determining the selling price of a special order that can be completed using existing capacity, the fixed costs per unit should be included in the consideration of the costs of the special order.

Accepted Answer

A) True 
 B)False

Question 14

The amount by which a company's sales can decline before losses are incurred is called the:

Accepted Answer

A) contribution margin. 
B) break-even point. 
C) degree of operating leverage. 
D) margin of safety. 
A) contribution margin. 
B) break-even point. 
C) degree of operating leverage. 
D) margin of safety.

Question 15

The following data pertain to last month's operations: $$\begin{array} { | l | l | } 
\hline \text { Selling price } & \$ 30 \text { per unit } \
\hline \text { Variable production cost } & \$ 15 \text { per unit } \
\hline \text { Fixed production cost } & \$ 80,000 \
\hline \text { Variable selling \& admin. expense } & \$ 3 \text { per unit } \
\hline \text { Fixed selling \& admin. expenses } & \$ 40,000 \
\hline
\end{array}$$ The break-even point in dollars is:

Accepted Answer

A) $160,000. 
B) $300,000. 
C) $200,000. 
D) $240,000. 
A) $160,000. 
B) $300,000. 
C) $200,000. 
D) $240,000.

Question 16

Reference: 08-05
Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800.
-The variable expense per unit is?

Accepted Answer

A) $36.00. 
B) $24.00. 
C) $28.80. 
D) $31.20. 
A) $36.00. 
B) $24.00. 
C) $28.80. 
D) $31.20.

Question 17

If sales increase by 200 units, by how much should net income increase

Accepted Answer

A) $6,000. 
B) $2,000. 
C) $5,000. 
D) $10,000. 
A) $6,000. 
B) $2,000. 
C) $5,000. 
D) $10,000.

Question 18

Reference: 08-05
Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800.
-If Dorian Company desires a monthly net income equal to 10% of sales, monthly sales will have to be:

Accepted Answer

A) $120,000. 
B) $96,000. 
C) $45,600. 
D) $90,000. 
A) $120,000. 
B) $96,000. 
C) $45,600. 
D) $90,000.

Question 19

The break-even point in unit sales increases when variable expenses:

Accepted Answer

A) remain unchanged and the selling price increases. 
B) decrease and the selling price remains unchanged. 
C) increase and the selling price remains unchanged. 
D) decrease and the selling price increases. 
A) remain unchanged and the selling price increases. 
B) decrease and the selling price remains unchanged. 
C) increase and the selling price remains unchanged. 
D) decrease and the selling price increases.

Question 20

In an absorption costing income statement, all manufacturing costs are deducted to get to
gross margin.

Accepted Answer

A) True 
 B)False

What is the company's margin of safety in dollars?

Break-even analysis assumes which of the following to be true

Koby Co. has sales of $200,000 with variable expenses of $150,000, fixed expenses of $60,000, and a net loss of $10,000. How much would Koby have to sell in order to achieve a net income of 10% of sales?

Goodman Company has sales of 3,000 units at $80 per unit.

If fixed expenses increase by $10,000 per year, then the level of sales needed to break even will also increase by $10,000.

Green Company's variable expenses are 75% of sales. At a sales level of $400,000, the company's degree of operating leverage is 8. At this sales level, fixed expenses equal?

A product sells for $20 per unit and has a contribution margin ratio of 40%. Fixed expenses total $240,000 annually. How many units of the product must be sold to yield a profit of $60,000?

The following is last month's contribution format income statement: Sales (15,000 units ) \ 1,500,000 Less variable expenses 900,000 Contribution margin 600,000 Less fixed expenses 500,000 Net income \ 100,000 What is the company's margin of safety in dollars?

A company has provided the following data: Sales 3,000 units Sales price \ 70 per unit Variable cost \ 50 per unit Fixed cost \ 25,000 If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net income will:

In determining the selling price of a special order that can be completed using existing capacity, the fixed costs per unit should be included in the consideration of the costs of the special order.

The amount by which a company's sales can decline before losses are incurred is called the:

The following data pertain to last month's operations: Selling price \ 30 per unit Variable production cost \ 15 per unit Fixed production cost \ 80,000 Variable selling \& admin. expense \ 3 per unit Fixed selling \& admin. expenses \ 40,000 The break-even point in dollars is:

Reference: 08-05 Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800. -The variable expense per unit is?

If sales increase by 200 units, by how much should net income increase

Reference: 08-05 Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800. -If Dorian Company desires a monthly net income equal to 10% of sales, monthly sales will have to be:

The break-even point in unit sales increases when variable expenses:

In an absorption costing income statement, all manufacturing costs are deducted to get to gross margin.

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

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Exam 8: Cost-Volume-Profit Relationships

What is the company's margin of safety in dollars?

Break-even analysis assumes which of the following to be true

Koby Co. has sales of $200,000 with variable expenses of $150,000, fixed expenses of $60,000, and a net loss of $10,000. How much would Koby have to sell in order to achieve a net income of 10% of sales?

Goodman Company has sales of 3,000 units at $80 per unit.

If fixed expenses increase by $10,000 per year, then the level of sales needed to break even will also increase by $10,000.

Green Company's variable expenses are 75% of sales. At a sales level of $400,000, the company's degree of operating leverage is 8. At this sales level, fixed expenses equal?

A product sells for $20 per unit and has a contribution margin ratio of 40%. Fixed expenses total $240,000 annually. How many units of the product must be sold to yield a profit of $60,000?

The following is last month's contribution format income statement: Sales (15,000 units ) \ 1,500,000 Less variable expenses 900,000 Contribution margin 600,000 Less fixed expenses 500,000 Net income \ 100,000 What is the company's margin of safety in dollars?

A company has provided the following data: Sales 3,000 units Sales price \ 70 per unit Variable cost \ 50 per unit Fixed cost \ 25,000 If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net income will:

In determining the selling price of a special order that can be completed using existing capacity, the fixed costs per unit should be included in the consideration of the costs of the special order.

The amount by which a company's sales can decline before losses are incurred is called the:

The following data pertain to last month's operations: Selling price \ 30 per unit Variable production cost \ 15 per unit Fixed production cost \ 80,000 Variable selling \& admin. expense \ 3 per unit Fixed selling \& admin. expenses \ 40,000 The break-even point in dollars is:

Reference: 08-05 Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800. -The variable expense per unit is?

If sales increase by 200 units, by how much should net income increase

Reference: 08-05 Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800. -If Dorian Company desires a monthly net income equal to 10% of sales, monthly sales will have to be:

The break-even point in unit sales increases when variable expenses:

In an absorption costing income statement, all manufacturing costs are deducted to get to gross margin.

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

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