Question 1

Which one of the following is a name for the range over which a company expects to operate?

Accepted Answer

A)  Mixed range 
B)  Fixed range 
C)  Variable range 
D)  Relevant range 
A)  Mixed range 
B)  Fixed range 
C)  Variable range 
D)  Relevant range

Question 2

For purposes of CVP analysis, mixed costs must be classified into their fixed and variable elements.

Accepted Answer

A) True 
 B)False

Question 3

Both variable and fixed costs are included in calculating the contribution margin.

Accepted Answer

A) True 
 B)False

Question 4

If a firm increases its activity level,

Accepted Answer

A)  costs should remain the same. 
B)  most costs will rise. 
C)  no costs will remain the same. 
D)  some costs will change, others will remain the same. 
A)  costs should remain the same. 
B)  most costs will rise. 
C)  no costs will remain the same. 
D)  some costs will change, others will remain the same.

Question 5

A CVP income statement shows contribution margin instead of gross profit.

Accepted Answer

A) True 
 B)False

Question 6

In evaluating the margin of safety, the

Accepted Answer

A)  break-even point is not relevant. 
B)  higher the margin of safety ratio, the greater the margin of safety. 
C)  higher the dollar amount, the lower the margin of safety. 
D)  higher the margin of safety ratio, the lower the fixed costs. 
A)  break-even point is not relevant. 
B)  higher the margin of safety ratio, the greater the margin of safety. 
C)  higher the dollar amount, the lower the margin of safety. 
D)  higher the margin of safety ratio, the lower the fixed costs.

Question 7

The following monthly data are available for Seasons Company which produces only one product: Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $42,000; Actual sales for the month of June, 4,000 units. How much is the margin of safety for the company for June?

Accepted Answer

A)  $70,000 
B)  $105,000 
C)  $63,000 
D)  $2,500 
A)  $70,000 
B)  $105,000 
C)  $63,000 
D)  $2,500

Question 8

The margin of safety is the difference between sales at breakeven and sales at a determined activity level.

Accepted Answer

A) True 
 B)False

Question 9

A division sold 200,000 calculators during 2019: $\begin{array}{l}\text { Sales }&&\$2,000,000\
\text { Variable costs: }\
\text { Materials } & \$ 380,000 \
\text { Order processing } & 150,000 \
\text { Billing labor } & 110,000 \
\text { Selling expenses } & 60,000\
\text { Total variable costs }&&700,000\
\text { Fixed costs }&&1,000,000
\end{array}$ How much is the unit contribution margin?

Accepted Answer

A)  $1.00 
B)  $3.50 
C)  $8.50 
D)  $6.50 
A)  $1.00 
B)  $3.50 
C)  $8.50 
D)  $6.50

Question 10

The activity level is represented by an activity index such as direct labor hours, units of output, or sales dollars.

Accepted Answer

A) True 
 B)False

Question 11

Kaplan, Inc. produces flash drives for computers, which it sells for $27 each. The variable cost to make each flash drive is $13. During April, 700 drives were sold. Fixed costs for April were $2 per unit for a total of $1,400 for the month. How much is the monthly break-even level of sales in dollars for Kaplan?

Accepted Answer

A)  $100 
B)  $2,700 
C)  $14,000 
D)  $8,400 
A)  $100 
B)  $2,700 
C)  $14,000 
D)  $8,400

Question 12

At the break-even point of 2,000 units, variable costs are $55,000, and fixed costs are $35,000. How much is the selling price per unit?

Accepted Answer

A)  $45.00 
B)  $10.00 
C)  $17.50 
D)  $27.50 
A)  $45.00 
B)  $10.00 
C)  $17.50 
D)  $27.50

Question 13

Boswell company reported the following information for the current year: Sales (50,000 units) $1,000,000, direct materials and direct labor $500,000, other variable costs $50,000, and fixed costs $360,000. What is Boswell's contribution margin ratio?

Accepted Answer

A)  68%. 
B)  45%. 
C)  32%. 
D)  55%. 
A)  68%. 
B)  45%. 
C)  32%. 
D)  55%.

Question 14

Vintage Wines has fixed costs of $20,000 per year. Its warehouse sells wine with variable costs of 80% of its unit selling price. How much in sales does Vintage need to break even per year?

Accepted Answer

A)  $16,000 
B)  $4,000 
C)  $25,000 
D)  $100,000 
A)  $16,000 
B)  $4,000 
C)  $25,000 
D)  $100,000

Question 15

An assumption of CVP analysis is that all costs can be classified as either variable or fixed.

Accepted Answer

A) True 
 B)False

Question 16

The activity that causes changes in the behavior of costs is referred to as the activity

Accepted Answer

A)  index. 
B)  multiplier. 
C)  element. 
D)  correlation. 
A)  index. 
B)  multiplier. 
C)  element. 
D)  correlation.

Question 17

The graph of variable costs that behave in a curvilinear fashion will

Accepted Answer

A)  approximate a straight line within the relevant range. 
B)  be sharply kinked on both sides of the relevant range. 
C)  be downward sloping. 
D)  be a stair-step pattern. 
A)  approximate a straight line within the relevant range. 
B)  be sharply kinked on both sides of the relevant range. 
C)  be downward sloping. 
D)  be a stair-step pattern.

Question 18

The high-low method is criticized because it

Accepted Answer

A)  is not a graphical method. 
B)  is a mathematical method. 
C)  ignores much of the available data by concentrating on only the extreme points. 
D)  doesn't provide reasonable estimates. 
A)  is not a graphical method. 
B)  is a mathematical method. 
C)  ignores much of the available data by concentrating on only the extreme points. 
D)  doesn't provide reasonable estimates.

Question 19

Select the correct statement concerning the cost-volume-profit graph at right:

Accepted Answer

A)  The point identified by "B" is the break-even point. 
B)  Line F is the variable cost line. 
C)  At point B, profits equal total costs. 
D)  Line E is the total cost line. 
A)  The point identified by "B" is the break-even point. 
B)  Line F is the variable cost line. 
C)  At point B, profits equal total costs. 
D)  Line E is the total cost line.

Question 20

A fixed cost remains constant in total and on a per unit basis at various levels of activity.

Accepted Answer

A) True 
 B)False

Which one of the following is a name for the range over which a company expects to operate?

For purposes of CVP analysis, mixed costs must be classified into their fixed and variable elements.

Both variable and fixed costs are included in calculating the contribution margin.

If a firm increases its activity level,

A CVP income statement shows contribution margin instead of gross profit.

In evaluating the margin of safety, the

The following monthly data are available for Seasons Company which produces only one product: Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $42,000; Actual sales for the month of June, 4,000 units. How much is the margin of safety for the company for June?

The margin of safety is the difference between sales at breakeven and sales at a determined activity level.

A division sold 200,000 calculators during 2019: Sales \2 ,000,000 Variable costs: Materials \ 380,000 Order processing 150,000 Billing labor 110,000 Selling expenses 60,000 Total variable costs 700,000 Fixed costs 1,000,000 How much is the unit contribution margin?

The activity level is represented by an activity index such as direct labor hours, units of output, or sales dollars.

At the break-even point of 2,000 units, variable costs are $55,000, and fixed costs are $35,000. How much is the selling price per unit?

Boswell company reported the following information for the current year: Sales (50,000 units) $1,000,000, direct materials and direct labor $500,000, other variable costs $50,000, and fixed costs $360,000. What is Boswell's contribution margin ratio?

Vintage Wines has fixed costs of $20,000 per year. Its warehouse sells wine with variable costs of 80% of its unit selling price. How much in sales does Vintage need to break even per year?

An assumption of CVP analysis is that all costs can be classified as either variable or fixed.

The activity that causes changes in the behavior of costs is referred to as the activity

The graph of variable costs that behave in a curvilinear fashion will

The high-low method is criticized because it

Select the correct statement concerning the cost-volume-profit graph at right:

A fixed cost remains constant in total and on a per unit basis at various levels of activity.

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 5: Cost-Volume-Profit

Which one of the following is a name for the range over which a company expects to operate?

For purposes of CVP analysis, mixed costs must be classified into their fixed and variable elements.

Both variable and fixed costs are included in calculating the contribution margin.

If a firm increases its activity level,

A CVP income statement shows contribution margin instead of gross profit.

In evaluating the margin of safety, the

The following monthly data are available for Seasons Company which produces only one product: Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $42,000; Actual sales for the month of June, 4,000 units. How much is the margin of safety for the company for June?

The margin of safety is the difference between sales at breakeven and sales at a determined activity level.

A division sold 200,000 calculators during 2019: Sales \2 ,000,000 Variable costs: Materials \ 380,000 Order processing 150,000 Billing labor 110,000 Selling expenses 60,000 Total variable costs 700,000 Fixed costs 1,000,000 How much is the unit contribution margin?

The activity level is represented by an activity index such as direct labor hours, units of output, or sales dollars.

At the break-even point of 2,000 units, variable costs are $55,000, and fixed costs are $35,000. How much is the selling price per unit?

Boswell company reported the following information for the current year: Sales (50,000 units) $1,000,000, direct materials and direct labor $500,000, other variable costs $50,000, and fixed costs $360,000. What is Boswell's contribution margin ratio?

Vintage Wines has fixed costs of $20,000 per year. Its warehouse sells wine with variable costs of 80% of its unit selling price. How much in sales does Vintage need to break even per year?

An assumption of CVP analysis is that all costs can be classified as either variable or fixed.

The activity that causes changes in the behavior of costs is referred to as the activity

The graph of variable costs that behave in a curvilinear fashion will

The high-low method is criticized because it

Select the correct statement concerning the cost-volume-profit graph at right:

A fixed cost remains constant in total and on a per unit basis at various levels of activity.

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

Filters