Question 1

Given the following cost data, what type of cost is shown? $$\begin{array} { | l | l | } 
\hline  { \text { Total Cost } } & \text { Number of units } \
\hline \$ 20 & 1 \
\hline \$ 40 & 2 \
\hline \$ 60 & 3 \
\hline \$ 80 & 4 \
\hline
\end{array}$$

Accepted Answer

A)  mixed cost 
B)  variable cost 
C)  fixed cost 
D)  period cost 
A)  mixed cost 
B)  variable cost 
C)  fixed cost 
D)  period cost

Question 2

The range of activity over which changes in cost are of interest to management is called the relevant range.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following conditions would cause the break-even point to increase?

Accepted Answer

A)  Total fixed costs increase 
B)  Unit selling price increases 
C)  Unit variable cost decreases 
D)  Total fixed costs decrease 
A)  Total fixed costs increase 
B)  Unit selling price increases 
C)  Unit variable cost decreases 
D)  Total fixed costs decrease

Question 4

Assuming that last year's fixed costs totaled $960,000, what was Carter Co.'s break-even point in units?

Accepted Answer

A)  40,000 units 
B)  12,000 units 
C)  35,000 units 
D)  28,000 units 
A)  40,000 units 
B)  12,000 units 
C)  35,000 units 
D)  28,000 units

Question 5

Even if a business sells six products, it is possible to estimate the break-even point.

Accepted Answer

A) True 
 B)False

Question 6

Variable costs are costs that remain constant on a per-unit basis as the level of activity changes.

Accepted Answer

A) True 
 B)False

Question 7

The difference between the current sales revenue and the sales at the break-even point is called the

Accepted Answer

A)  contribution margin 
B)  margin of safety 
C)  price factor 
D)  operating leverage 
A)  contribution margin 
B)  margin of safety 
C)  price factor 
D)  operating leverage

Question 8

Connor Company's fixed costs are $400,000, the unit selling price is $25, and the unit variable costs are $15. What is the break-even sale units) if the variable costs are increased by $2?

Accepted Answer

A)  50,000 units 
B)  30,770 units 
C)  40,000 units 
D)  26,667 units 
A)  50,000 units 
B)  30,770 units 
C)  40,000 units 
D)  26,667 units

Question 9

The Waterfall Company sells a product for $150 per unit. The variable cost is $80 per unit, and fixed costs are $270,000.
Determine the a) break-even point in sales units, and b) break-even points in sales units if the company desires a target profit of $36,000. Round your answer to the nearest whole number.

Accepted Answer

a. $150 - $80 = $70

Question 10

If fixed costs are $300,000, the unit selling price is $31, and the unit variable costs are $22, what is the break-even sale units) if fixed costs are reduced by $30,000?

Accepted Answer

A)  30,000 units 
B)  8,710 units 
C)  12,273 units 
D)  20,000 units 
A)  30,000 units 
B)  8,710 units 
C)  12,273 units 
D)  20,000 units

Question 11

The data required for determining the break-even point for a business are the total estimated fixed costs for a period, stated as a percentage of net sales.

Accepted Answer

A) True 
 B)False

Question 12

The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed the contribution margin ratio.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is an example of a cost that varies in total as the number of units produced changes?

Accepted Answer

A)  salary of a production supervisor 
B)  direct materials cost 
C)  property taxes on factory buildings 
D)  straight-line depreciation on factory equipment 
A)  salary of a production supervisor 
B)  direct materials cost 
C)  property taxes on factory buildings 
D)  straight-line depreciation on factory equipment

Question 14

The relevant range is useful for analyzing cost behavior for management decision-making purposes.

Accepted Answer

A) True 
 B)False

Question 15

Johnson's Plumbing's fixed costs are $700,000 and the unit contribution margin is $17. What amount of units must be sold in order to realize an operating income of $100,000?

Accepted Answer

A)  5,000 
B)  41,176 
C)  47,059 
D)  58,882 
A)  5,000 
B)  41,176 
C)  47,059 
D)  58,882

Question 16

Given the following cost and activity observations for George Company's utilities, use the high­low method to calculate George's variable utilities costs per machine hour. $$\begin{array} { | l | l | r | } 
\hline & \text { Cost } & \text { Machine Hours } \
\hline \text { May } &\$16,500 & 105,000 \
\hline \text { June } & 18,000 & 120,000 \
\hline \text { July } & 16,000 & 100,000 \
\hline \text { August } & 17,500 & 117,000 \
\hline
\end{array}$$

Accepted Answer

A)  $100.00 
B)  $1.00 
C)  $10.00 
D)  $0.10 
A)  $100.00 
B)  $1.00 
C)  $10.00 
D)  $0.10

Question 17

The manufacturing cost of Carrie Industries for the first three months of the year are provided below:   Using the high-low method, determine the a) variable cost per unit, and b) the total fixed cost.

Accepted Answer

a) $115,500 - $79,50

Question 18

The point in operations at which revenues and expenses are exactly equal is called the break-even point.

Accepted Answer

A) True 
 B)False

Question 19

Harley Company has sales of $500,000, variable costs are 75% of sales, and operating income is $40,000. What is Harley's operating leverage?

Accepted Answer

A)  0.0 
B)  1.2 
C)  1.3 
D)  3.1 
A)  0.0 
B)  1.2 
C)  1.3 
D)  3.1

Question 20

Direct materials cost that varies with the number of units produced is an example of a fixed cost of production.

Accepted Answer

A) True 
 B)False

Exam 19: Cost Behavior and Cost-Volume-Profit Analysis

Given the following cost data, what type of cost is shown? Total Cost Number of units \ 20 1 \ 40 2 \ 60 3 \ 80 4

The range of activity over which changes in cost are of interest to management is called the relevant range.

Which of the following conditions would cause the break-even point to increase?

Assuming that last year's fixed costs totaled $960,000, what was Carter Co.'s break-even point in units?

Even if a business sells six products, it is possible to estimate the break-even point.

Variable costs are costs that remain constant on a per-unit basis as the level of activity changes.

The difference between the current sales revenue and the sales at the break-even point is called the

Connor Company's fixed costs are $400,000, the unit selling price is $25, and the unit variable costs are $15. What is the break-even sale units) if the variable costs are increased by $2?

If fixed costs are $300,000, the unit selling price is $31, and the unit variable costs are $22, what is the break-even sale units) if fixed costs are reduced by $30,000?

The data required for determining the break-even point for a business are the total estimated fixed costs for a period, stated as a percentage of net sales.

The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed the contribution margin ratio.

Which of the following is an example of a cost that varies in total as the number of units produced changes?

The relevant range is useful for analyzing cost behavior for management decision-making purposes.

Johnson's Plumbing's fixed costs are $700,000 and the unit contribution margin is $17. What amount of units must be sold in order to realize an operating income of $100,000?

Given the following cost and activity observations for George Company's utilities, use the high­low method to calculate George's variable utilities costs per machine hour. Cost Machine Hours May \1 6,500 105,000 June 18,000 120,000 July 16,000 100,000 August 17,500 117,000

The manufacturing cost of Carrie Industries for the first three months of the year are provided below: Using the high-low method, determine the a) variable cost per unit, and b) the total fixed cost.

The point in operations at which revenues and expenses are exactly equal is called the break-even point.

Harley Company has sales of $500,000, variable costs are 75% of sales, and operating income is $40,000. What is Harley's operating leverage?

Direct materials cost that varies with the number of units produced is an example of a fixed cost of production.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

Filters

Given the following cost and activity observations for George Company's utilities, use the highlow method to calculate George's variable utilities costs per machine hour. Cost Machine Hours May \1 6,500 105,000 June 18,000 120,000 July 16,000 100,000 August 17,500 117,000