Question 1

If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break-even sales units)?

Accepted Answer

A)  3,425 units 
B)  2,381 units 
C)  2,000 units 
D)  4,808 units 
A)  3,425 units 
B)  2,381 units 
C)  2,000 units 
D)  4,808 units

Question 2

Currently, the unit selling price is $50, the variable cost, $34, and the total fixed costs, $108,000. A proposal is being evaluated to increase the selling price to $54.
a) Compute the current break-even sales units).
b) Compute the anticipated break-even sales units), assuming that the unit selling price is increased and all costs remain constant.

Accepted Answer

a) $108,000/$50 - $3

Question 3

Blane Company has the following data: $\begin{array}{ll}
\text { Total sales } & \$ 800,000 \
\text { Total variable costs } & \$ 300,000 \
\text { Fixed costs } & \$ 200,000 \
\text { Units sold } & 50,000 \text { units }
\end{array}$ What will operating income be if units sold double to 100,000 units?

Accepted Answer

Total sales
$1,600,000
Total variable co

Question 4

If the volume of sales is $6,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 25%.

Accepted Answer

A) True 
 B)False

Question 5

Variable costs as a percentage of sales are equal to 100% minus the contribution margin ratio.

Accepted Answer

A) True 
 B)False

Question 6

A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost.

Accepted Answer

A) True 
 B)False

Question 7

Payton Industries has fixed costs of $490,000, the unit selling price is $35, and the unit variable costs are $20. What is the break-even sale units) if fixed costs are reduced by $40,000?

Accepted Answer

A)  32,667 units 
B)  14,000 units 
C)  30,000 units 
D)  24,500 units 
A)  32,667 units 
B)  14,000 units 
C)  30,000 units 
D)  24,500 units

Question 8

The three most common cost behavior classifications are

Accepted Answer

A)  variable costs, product costs, and sunk costs 
B)  fixed costs, variable costs, and mixed costs 
C)  variable costs, period costs, and differential costs 
D)  variable costs, sunk costs, and opportunity costs 
A)  variable costs, product costs, and sunk costs 
B)  fixed costs, variable costs, and mixed costs 
C)  variable costs, period costs, and differential costs 
D)  variable costs, sunk costs, and opportunity costs

Question 9

If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?

Accepted Answer

A)  $1,250,000 
B)  $450,000 
C)  $1,875,000 
D)  $300,000 
A)  $1,250,000 
B)  $450,000 
C)  $1,875,000 
D)  $300,000

Question 10

If fixed costs are $450,000 and the unit contribution margin is $50, the sales necessary to earn an operating income of $50,000 are 10,000 units.

Accepted Answer

A) True 
 B)False

Question 11

The manufacturing cost of Calico Industries for three months of the year are provided below:   Using the high-low method, the variable cost per unit and the total fixed costs are

Accepted Answer

A)  $0.78 per unit and $4,000 
B)  $0.40 per unit and $8,000 
C)  $4.00 per unit and $800 
D)  $7.80 per unit and $4,000 
A)  $0.78 per unit and $4,000 
B)  $0.40 per unit and $8,000 
C)  $4.00 per unit and $800 
D)  $7.80 per unit and $4,000

Question 12

If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 40%.

Accepted Answer

A) True 
 B)False

Question 13

The Rocky Company reports the following data: Sales
$800,000
Variable costs
300,000
Fixed costs
120,000
Rocky Company's operating leverage is

Accepted Answer

A)  6.7 
B)  2.7 
C)  1.0 
D)  1.3 
A)  6.7 
B)  2.7 
C)  1.0 
D)  1.3

Question 14

Silver River Company sells Products S and T and has made the following estimates for the coming year:   Fixed costs are estimated at $202,400. Determine a) the estimated sales in units of the overall product necessary to reach the break-even point for the coming year, b) the estimated number of units of each product necessary to be sold to reach the break-even point for the coming year, and c) the estimated sales in units of the overall product necessary to realize an operating income of $119,600 for the coming year.

Accepted Answer

a) Unit selling price = $30 × 60%) + $70

Question 15

Absorption costing is required for financial reporting under generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 16

Match the following terms a-e) with their definitions.
-Graphically shows costs, sales, and operating profit or loss at various levels of units sold

Accepted Answer

A) Profit-volume chart 
B) Cost-volume-profit chart 
C) Sales mix 
D) Operating leverage 
E) Margin of safety 
A) Profit-volume chart 
B) Cost-volume-profit chart 
C) Sales mix 
D) Operating leverage 
E) Margin of safety

Question 17

Contribution margin is

Accepted Answer

A)  the excess of sales revenue over variable cost 
B)  another term for volume in the "cost-volume-profit" analysis 
C)  profit 
D)  the same as sales revenue 
A)  the excess of sales revenue over variable cost 
B)  another term for volume in the "cost-volume-profit" analysis 
C)  profit 
D)  the same as sales revenue

Question 18

The following is a list of various costs of producing T-shirts. Classify each cost as either a variable, fixed, or mixed cost for units produced and sold.
a) Ink used for screen printing
b) Warehouse rent of $8,000 per month plus $0.50 per square foot of storage used
c) Thread
d) Electricity costs of $0.038 per kilowatt-hour
e) Janitorial costs of $4,000 per month
f) Advertising costs of $12,000 per month
g) Accounting salaries
h) Color dyes for producing different colors of T-shirts
i) Salary of the production supervisor
j) Straight-line depreciation on sewing machines
k) Salaries of internal pattern designers
l) Hourly wages of sewing machine operators
m) Property taxes on factory, building, and equipment
n) Cotton and polyester cloth
o) Maintenance costs with sewing machine company the cost is $2,000 per year plus $0.001 for each machine hour of use.)

Accepted Answer

a) variable i) fixed
b) mixed

Question 19

Carter Co. sells two products, Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are: $$\begin{array} { l l l l } 
& \text { Unit Selling } & \text { Unit Variable } & \text { Unit Contribution } \
\text { Product } & \text { Price } & \text { Cost } & \text { Margin } \
\hline \text { Arks } & \$ 120 & \$ 80 & \$ 40 \
\text { Bins } & 80 & 60 & 20
\end{array}$$
-What was Carter Co.'s sales mix last year?

Accepted Answer

A)  20% Arks, 80% Bins 
B)  12% Arks, 28% Bins 
C)  70% Arks, 30% Bins 
D)  40% Arks, 20% Bins 
A)  20% Arks, 80% Bins 
B)  12% Arks, 28% Bins 
C)  70% Arks, 30% Bins 
D)  40% Arks, 20% Bins

Question 20

If sales are $400,000, variable costs are 80% of sales, and operating income is $40,000, what is the operating leverage?

Accepted Answer

A)  0.0 
B)  7.5 
C)  2.0 
D)  1.3 
A)  0.0 
B)  7.5 
C)  2.0 
D)  1.3

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

If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break-even sales units)?

Blane Company has the following data: Total sales \ 800,000 Total variable costs \ 300,000 Fixed costs \ 200,000 Units sold 50,000 units What will operating income be if units sold double to 100,000 units?

If the volume of sales is $6,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 25%.

Variable costs as a percentage of sales are equal to 100% minus the contribution margin ratio.

A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost.

Payton Industries has fixed costs of $490,000, the unit selling price is $35, and the unit variable costs are $20. What is the break-even sale units) if fixed costs are reduced by $40,000?

The three most common cost behavior classifications are

If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?

If fixed costs are $450,000 and the unit contribution margin is $50, the sales necessary to earn an operating income of $50,000 are 10,000 units.

The manufacturing cost of Calico Industries for three months of the year are provided below: Using the high-low method, the variable cost per unit and the total fixed costs are

If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 40%.

The Rocky Company reports the following data: Sales $800,000 Variable costs 300,000 Fixed costs 120,000 Rocky Company's operating leverage is

Absorption costing is required for financial reporting under generally accepted accounting principles.

Match the following terms a-e) with their definitions. -Graphically shows costs, sales, and operating profit or loss at various levels of units sold

Contribution margin is

Carter Co. sells two products, Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are: Unit Selling Unit Variable Unit Contribution Product Price Cost Margin Arks \ 120 \ 80 \ 40 Bins 80 60 20 -What was Carter Co.'s sales mix last year?

If sales are $400,000, variable costs are 80% of sales, and operating income is $40,000, what is the operating leverage?

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

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