Question 1

If a business sells four products, it is not possible to estimate the break-even point.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

If fixed costs are $300,000 and variable costs are 70% of break-even sales, profit is zero when sales revenue is $1,000,000.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is an example of a mixed cost?

Accepted Answer

A)  Depreciation on factory machinery 
B)  Direct material cost 
C)  Maintenance expense 
D)  Property tax 
A)  Depreciation on factory machinery 
B)  Direct material cost 
C)  Maintenance expense 
D)  Property tax

Question 5

If the contribution margin ratio for Harrison Company is 38%, sales were $425,000, and fixed costs were $100,000, what was the operating income?

Accepted Answer

A)  $163,500 
B)  $161,500 
C)  $54,730 
D)  $61,500 
A)  $163,500 
B)  $161,500 
C)  $54,730 
D)  $61,500

Question 6

Calculate the break-even sales when a business has sales of $824,000 and a margin of safety of 21%.

Accepted Answer

A)  $584,000 
B)  $650,960 
C)  $672,100 
D)  $710,000 
A)  $584,000 
B)  $650,960 
C)  $672,100 
D)  $710,000

Question 7

If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would:

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  increase or decrease, depending upon the percentage increase in wage rates. 
A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  increase or decrease, depending upon the percentage increase in wage rates.

Question 8

_____ analysis is used while selecting the mix of products to sell.

Accepted Answer

A)  Cost-volume-profit 
B)  Activity-based 
C)  Discounted 
D)  Receivables 
A)  Cost-volume-profit 
B)  Activity-based 
C)  Discounted 
D)  Receivables

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The graph of the variable costs when plotted against the activity level appears as a line parallel to horizontal axis.

Accepted Answer

A) True 
 B)False

Question 11

A change in fixed costs as a result of increase in the property tax rates will increase the break-even point.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service such as UPS?

Accepted Answer

A)  Number of trucks employed 
B)  Number of miles driven 
C)  Number of trucks in service 
D)  Number of packages delivered 
A)  Number of trucks employed 
B)  Number of miles driven 
C)  Number of trucks in service 
D)  Number of packages delivered

Question 13

A mixed cost has characteristics of both a variable cost and a fixed cost.

Accepted Answer

A) True 
 B)False

Question 14

If the volume of sales is $4,000,000 and sales at the break-even point amount to $3,200,000, the margin of safety will be 20%.

Accepted Answer

A) True 
 B)False

Question 15

If fixed costs are $850,000 and the unit contribution margin is $50, profit is zero when 15,000 units are sold.

Accepted Answer

A) True 
 B)False

Question 16

Monthly rent on a factory building is an example of a fixed cost.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A)  Increase in total fixed costs 
B)  Increase in unit selling price 
C)  Decrease in unit variable cost 
D)  Decrease in total fixed costs 
A)  Increase in total fixed costs 
B)  Increase in unit selling price 
C)  Decrease in unit variable cost 
D)  Decrease in total fixed costs

Question 18

What is the margin of safety (in sales) when a business has sales of $485,000, sales of $225,000 at break-even point, and unit selling price of $55?

Accepted Answer

A)  $710,000 
B)  $280,000 
C)  $260,000 
D)  $510,000 
A)  $710,000 
B)  $280,000 
C)  $260,000 
D)  $510,000

Question 19

Kennedy Co.sells two products, Arks and Bins.Last year, Kennedy sold 32,000 units of Arks and 18,000 units of Bins.Related data are: ?? $\begin{array}{rrrr}
& \text { Unit } & \text { Unit } & \text { Unit } \
& \text { Selling} & \text { Variable } & \text { Contribution } \
\text { Product } & \text { Price } & \text { Cost } & \text { Margin } \
\hline\text { Arks } & \$ 80 & \$ 20 & \$ 60 \
\text { Bins } & 120 & 40 & 80
\end{array}$ ?
What was Kennedy's sales mix last year?

Accepted Answer

A)  40% Arks, 60% Bins 
B)  43% Arks, 57% Bins 
C)  54% Arks, 46% Bins 
D)  64% Arks, 36% Bins 
A)  40% Arks, 60% Bins 
B)  43% Arks, 57% Bins 
C)  54% Arks, 46% Bins 
D)  64% Arks, 36% Bins

Question 20

If sales total $2,000,000, fixed costs total $600,000, and variable costs are 60% of the sales, the contribution margin ratio is 40%.

Accepted Answer

A) True 
 B)False

If a business sells four products, it is not possible to estimate the break-even point.

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

If fixed costs are $300,000 and variable costs are 70% of break-even sales, profit is zero when sales revenue is $1,000,000.

Which of the following is an example of a mixed cost?

If the contribution margin ratio for Harrison Company is 38%, sales were $425,000, and fixed costs were $100,000, what was the operating income?

Calculate the break-even sales when a business has sales of $824,000 and a margin of safety of 21%.

If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would:

_____ analysis is used while selecting the mix of products to sell.

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

The graph of the variable costs when plotted against the activity level appears as a line parallel to horizontal axis.

A change in fixed costs as a result of increase in the property tax rates will increase the break-even point.

Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service such as UPS?

A mixed cost has characteristics of both a variable cost and a fixed cost.

If the volume of sales is $4,000,000 and sales at the break-even point amount to $3,200,000, the margin of safety will be 20%.

If fixed costs are $850,000 and the unit contribution margin is $50, profit is zero when 15,000 units are sold.

Monthly rent on a factory building is an example of a fixed cost.

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

What is the margin of safety (in sales) when a business has sales of $485,000, sales of $225,000 at break-even point, and unit selling price of $55?

Kennedy Co.sells two products, Arks and Bins.Last year, Kennedy sold 32,000 units of Arks and 18,000 units of Bins.Related data are: ?? Unit Unit Unit Selling Variable Contribution Product Price Cost Margin Arks \ 80 \ 20 \ 60 Bins 120 40 80 ? What was Kennedy's sales mix last year?

If sales total $2,000,000, fixed costs total $600,000, and variable costs are 60% of the sales, the contribution margin ratio is 40%.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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Exam 11: Cost-Volume-Profit Analysis

If a business sells four products, it is not possible to estimate the break-even point.

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

If fixed costs are $300,000 and variable costs are 70% of break-even sales, profit is zero when sales revenue is $1,000,000.

Which of the following is an example of a mixed cost?

If the contribution margin ratio for Harrison Company is 38%, sales were $425,000, and fixed costs were $100,000, what was the operating income?

Calculate the break-even sales when a business has sales of $824,000 and a margin of safety of 21%.

If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would:

_____ analysis is used while selecting the mix of products to sell.

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

The graph of the variable costs when plotted against the activity level appears as a line parallel to horizontal axis.

A change in fixed costs as a result of increase in the property tax rates will increase the break-even point.

Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service such as UPS?

A mixed cost has characteristics of both a variable cost and a fixed cost.

If the volume of sales is $4,000,000 and sales at the break-even point amount to $3,200,000, the margin of safety will be 20%.

If fixed costs are $850,000 and the unit contribution margin is $50, profit is zero when 15,000 units are sold.

Monthly rent on a factory building is an example of a fixed cost.

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

What is the margin of safety (in sales) when a business has sales of $485,000, sales of $225,000 at break-even point, and unit selling price of $55?

Kennedy Co.sells two products, Arks and Bins.Last year, Kennedy sold 32,000 units of Arks and 18,000 units of Bins.Related data are: ?? Unit Unit Unit Selling Variable Contribution Product Price Cost Margin Arks \ 80 \ 20 \ 60 Bins 120 40 80 ? What was Kennedy's sales mix last year?

If sales total $2,000,000, fixed costs total $600,000, and variable costs are 60% of the sales, the contribution margin ratio is 40%.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters