Question 1

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 sales.

Accepted Answer

A) True 
 B)False

Question 2

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

Question 3

For the current year ending January 31, Harp Company expects fixed costs of $188,500 and a unit variable cost of $51.50. For the coming year, a new wage contract will increase the unit variable cost to $55.50. The selling price of $70.00 per unit is expected to remain the same.
a.Compute the break-even sales (units) for the current year. Round your answer to the nearest whole number.
b.Compute the anticipated break-even sales (units) for the coming year, assuming the new wage contract is signed.

Accepted Answer

a.$188,500 ÷ ($70.00

Question 4

Match each of the following costs with the graph (a-e) that best portrays its cost behavior as the number of units produced and sold increases.          
-Total direct labor cost
A)Graph 1
B)Graph 2
C)Graph 3
D)Graph 4
E)Graph 5

Accepted Answer

The answer of Match each of the following costs with...

Question 5

Spice Inc.'s unit selling price is $60, the unit variable costs are $35, fixed costs are $125,000, and current sales are 10,000 units. How much will operating income change if sales increase by 8,000 units?

Accepted Answer

A) $150,000 decrease 
B) $175,000 increase 
C) $200,000 increase 
D) $150,000 increase 
A) $150,000 decrease 
B) $175,000 increase 
C) $200,000 increase 
D) $150,000 increase

Question 6

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

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 7

Bryce Co. sales are $914,000, variable costs are $498,130, and operating income is $196,000. The contribution margin ratio is

Accepted Answer

A) 52.2% 
B) 28.4% 
C) 54.5% 
D) 45.5% 
A) 52.2% 
B) 28.4% 
C) 54.5% 
D) 45.5%

Question 8

Match each of the following costs of producing T-shirts with the appropriate classification (a-c).
-Warehouse rent of $8,000 per month plus $0.50 per square foot of storage used
A)Variable cost
B)Fixed cost
C)Mixed cost

Accepted Answer

The answer of Match each of the following costs of...

Question 9

Which of the following types of cost is shown in the cost data below?

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 10

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents the

Accepted Answer

A) maximum possible operating loss 
B) maximum possible operating income 
C) total fixed costs 
D) break-even point 
A) maximum possible operating loss 
B) maximum possible operating income 
C) total fixed costs 
D) break-even point

Question 11

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

Accepted Answer

A) direct labor 
B) salary of a factory supervisor 
C) units-of-production depreciation on factory equipment 
D) direct materials 
A) direct labor 
B) salary of a factory supervisor 
C) units-of-production depreciation on factory equipment 
D) direct materials

Question 12

Douglas Company has a contribution margin ratio of 30%. If Douglas has $336,420 in fixed costs, what amount of sales will need to be generated in order for the company to break even?

Accepted Answer

$336,420 ÷

Question 13

Cost-volume-profit analysis can be presented in both equation form and graphic form.

Accepted Answer

A) True 
 B)False

Question 14

Total variable costs change as the level of activity changes.

Accepted Answer

A) True 
 B)False

Question 15

Match each of the following descriptions with the appropriate term (a-e).
-A specific activity range over which the cost changes are of interest
A)Relevant range
B)Break-even point
C)Contribution margin
D)Fixed costs
E)Variable costs

Accepted Answer

The answer of Match each of the following descriptions with...

Question 16

As production increases, the fixed cost per unit

Accepted Answer

A) increases 
B) decreases 
C) remains the same 
D) either increases or decreases, depending on the variable costs 
A) increases 
B) decreases 
C) remains the same 
D) either increases or decreases, depending on the variable costs

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 as follows:   ​
-Carter Co.'s unit contribution margin of E was

Accepted Answer

A) $24 
B) $60 
C) $92 
D) $20 
A) $24 
B) $60 
C) $92 
D) $20

Question 19

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

Accepted Answer

A) True 
 B)False

Question 20

Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low method of cost estimation, total fixed costs

Accepted Answer

A) are $61,875 
B) are $33,875 
C) are $24,750 
D) cannot be determined from the data given 
A) are $61,875 
B) are $33,875 
C) are $24,750 
D) cannot be determined from the data given

Exam 20: Cost-Volume-Profit Analysis

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 sales.

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

Match each of the following costs with the graph (a-e) that best portrays its cost behavior as the number of units produced and sold increases. -Total direct labor cost A)Graph 1 B)Graph 2 C)Graph 3 D)Graph 4 E)Graph 5

Spice Inc.'s unit selling price is $60, the unit variable costs are $35, fixed costs are $125,000, and current sales are 10,000 units. How much will operating income change if sales increase by 8,000 units?

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

Bryce Co. sales are $914,000, variable costs are $498,130, and operating income is $196,000. The contribution margin ratio is

Match each of the following costs of producing T-shirts with the appropriate classification (a-c). -Warehouse rent of $8,000 per month plus $0.50 per square foot of storage used A)Variable cost B)Fixed cost C)Mixed cost

Which of the following types of cost is shown in the cost data below?

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents the

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

Douglas Company has a contribution margin ratio of 30%. If Douglas has $336,420 in fixed costs, what amount of sales will need to be generated in order for the company to break even?

Cost-volume-profit analysis can be presented in both equation form and graphic form.

Total variable costs change as the level of activity changes.

Match each of the following descriptions with the appropriate term (a-e). -A specific activity range over which the cost changes are of interest A)Relevant range B)Break-even point C)Contribution margin D)Fixed costs E)Variable costs

As production increases, the fixed cost per unit

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

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 as follows: ​ -Carter Co.'s unit contribution margin of E was

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low method of cost estimation, total fixed costs

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

The Accounting Cycle

Accounting for Retail Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Support Department and Joint Cost Allocation

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

The Balanced Scorecard and Corporate Social Responsibility

Investments

Filters

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 as follows: -Carter Co.'s unit contribution margin of E was