Question 1

A recent income statement of Carson Corporation reported the following data:
 
If these data are based on the sale of 5,000 units, the break-even sales would be:

Accepted Answer

A)  $2,000,000. 
B)  $2,206,000. 
C)  $2,500,000. 
D)  $10,000,000. 
E)  None of the answers is correct. 
A)  $2,000,000. 
B)  $2,206,000. 
C)  $2,500,000. 
D)  $10,000,000. 
E)  None of the answers is correct.

Question 2

Use the following information to answer the following Questions
Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the company has fixed costs that amount to $400,000. Current sales total 16,000 units.
-In order to produce a target profit of $22,000, Narchie's dollar sales must total:

Accepted Answer

A)  $8,440. 
B)  $21,100. 
C)  $1,000,000. 
D)  $1,055,000. 
E)  None of the answers is correct. 
A)  $8,440. 
B)  $21,100. 
C)  $1,000,000. 
D)  $1,055,000. 
E)  None of the answers is correct.

Question 3

Use the following information to answer the following Questions
 
-Refer to the figure above. The triangular area between the horizontal axis and Line A, to the left of 4,000, represents:

Accepted Answer

A)  fixed cost. 
B)  variable cost. 
C)  profit. 
D)  loss. 
E)  sales revenue. 
A)  fixed cost. 
B)  variable cost. 
C)  profit. 
D)  loss. 
E)  sales revenue.

Question 4

A recent income statement of Benton Corporation reported the following data:
 
-
If these data are based on the sale of 20,000 units, the contribution margin per unit would be:

Accepted Answer

A)  $40. 
B)  $150. 
C)  $290. 
D)  $360. 
E)  None of the answers is correct. 
A)  $40. 
B)  $150. 
C)  $290. 
D)  $360. 
E)  None of the answers is correct.

Question 5

When a firm is required to pay taxes on income, it is important to distinguish between after-tax (AT) income and before-tax (BT) income.

Accepted Answer

A) True 
 B)False

Question 6

At a volume of 20,000 units, Almount Industries reported sales revenues of $1,000,000, variable costs of $300,000, and fixed costs of $260,000. The company's contribution margin per unit is:

Accepted Answer

A)  $22. 
B)  $28. 
C)  $35. 
D)  $37. 
E)  None of the answers is correct. 
A)  $22. 
B)  $28. 
C)  $35. 
D)  $37. 
E)  None of the answers is correct.

Question 7

Samuels, Inc. is subject to a 40% income tax rate. The following data pertain to the period just ended when the company produced and sold 45,000 units:
 
How many units must Samuels sell to earn an after-tax profit of $180,000?

Accepted Answer

A)  42,000. 
B)  45,000. 
C)  51,000. 
D)  61,000. 
E)  None of the answers is correct. 
A)  42,000. 
B)  45,000. 
C)  51,000. 
D)  61,000. 
E)  None of the answers is correct.

Question 8

A recent income statement of Benton Corporation reported the following data:
 
-
If these data are based on the sale of 20,000 units, the break-even point would be:

Accepted Answer

A)  9,565 units (rounded). 
B)  11,000 units (rounded). 
C)  7,586 units (rounded). 
D)  14,667 units (rounded). 
E)  None of the answers is correct. 
A)  9,565 units (rounded). 
B)  11,000 units (rounded). 
C)  7,586 units (rounded). 
D)  14,667 units (rounded). 
E)  None of the answers is correct.

Question 9

Use the following information to answer the following Questions
 
-Refer to the figure above. Line C represents the level of:

Accepted Answer

A)  fixed cost. 
B)  variable cost. 
C)  semivariable cost. 
D)  total cost. 
E)  mixed cost. 
A)  fixed cost. 
B)  variable cost. 
C)  semivariable cost. 
D)  total cost. 
E)  mixed cost.

Question 10

Sensitivity analysis has become relatively easy to perform with the advent of personal computers and spreadsheet software.

Accepted Answer

A) True 
 B)False

Question 11

A company that desires to lower its break-even point should strive to:

Accepted Answer

A)  decrease selling prices. 
B)  reduce variable costs. 
C)  increase fixed costs. 
D)  sell more units. 
E)  achieve more than one of the answers listed. 
A)  decrease selling prices. 
B)  reduce variable costs. 
C)  increase fixed costs. 
D)  sell more units. 
E)  achieve more than one of the answers listed.

Question 12

Randy's Pizza delivers pizzas to dormitories and apartments near a major state university. The company's annual fixed costs are $48,000. The sales price averages $9, and it costs the firm $3 to make and deliver each pizza.
Required: 
A. How many pizzas must Randy's sell to break even?
B. How many pizzas must the company sell to earn a target profit of $54,000?
C. If budgeted sales total 9,900 pizzas, how much is the company's safety margin in dollars?
D. Tony's assistant manager, an accounting major, has suggested that the firm should try to increase the contribution margin per pizza. Explain the meaning of "contribution margin" in layman's terms.

Accepted Answer

A.
 @#IMG-DLM& B. Pizzas to earn $54,000: ($48,000

Question 13

The assumptions on which cost-volume-profit analysis is based appear to be most valid for businesses:

Accepted Answer

A)  over the short run. 
B)  over the long run. 
C)  over both the short run and the long run. 
D)  in periods of sustained profits. 
E)  in periods of increasing sales. 
A)  over the short run. 
B)  over the long run. 
C)  over both the short run and the long run. 
D)  in periods of sustained profits. 
E)  in periods of increasing sales.

Question 14

At a volume of 20,000 units, Almount Industries reported sales revenues of $1,000,000, variable costs of $300,000, and fixed costs of $260,000. The company's break-even point in units is:

Accepted Answer

A)  7,027 (rounded). 
B)  8,667 (rounded). 
C)  9,286 (rounded). 
D)  7,429 (rounded). 
E)  None of the answers is correct. 
A)  7,027 (rounded). 
B)  8,667 (rounded). 
C)  9,286 (rounded). 
D)  7,429 (rounded). 
E)  None of the answers is correct.

Question 15

The information that follows was obtained from the accounting records of Portofino Manufacturing during a period when the company sold 100,000 units.
   
Required: 
A. Compute the company's per-unit contribution margin and break-even point in units.
B. How many units must Portofino sell to produce a target profit of $550,400?
C. Assume that Portofino was able to reduce the variable cost per unit by $4. What selling price could management charge if it desired to maintain the current break-even point?
D. Depreciation charges of $640,000 are included in the firm's fixed costs of $6,016,000. If these charges were to increase by 10%, what effect, if any, would this cost increase have on the company's contribution margin?

Accepted Answer

The answer of The information that follows was obtained from...

Question 16

The difference between budgeted sales revenue and break-even sales revenue is the operating leverage.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following underlying assumptions form(s) the basis for cost-volume-profit analysis?

Accepted Answer

A)  Revenues and costs behave in a linear manner. 
B)  Costs can be categorized as variable, fixed, or semivariable. 
C)  Worker efficiency and productivity remain constant. 
D)  In multiproduct organizations, the sales mix remains constant. 
E)  All the answers are assumptions that underlie cost-volume-profit analysis. 
A)  Revenues and costs behave in a linear manner. 
B)  Costs can be categorized as variable, fixed, or semivariable. 
C)  Worker efficiency and productivity remain constant. 
D)  In multiproduct organizations, the sales mix remains constant. 
E)  All the answers are assumptions that underlie cost-volume-profit analysis.

Question 18

The contribution-margin ratio is calculated as unit contribution margin divided by the selling price per unit.

Accepted Answer

A) True 
 B)False

Question 19

Use the following information to answer the following Questions
Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the company has fixed costs that amount to $400,000. Current sales total 16,000 units.
-If Narchie sells 24,000 units, its safety margin will be:

Accepted Answer

A)  $200,000. 
B)  $400,000. 
C)  $1,000,000. 
D)  $1,200,000. 
E)  None of the answers is correct. 
A)  $200,000. 
B)  $400,000. 
C)  $1,000,000. 
D)  $1,200,000. 
E)  None of the answers is correct.

Question 20

Finn's budget for the upcoming year revealed the following figures:
 
If the company's break-even sales total $750,000, Finn's safety margin would be:

Accepted Answer

A)  $(90,000). 
B)  $90,000. 
C)  $246,000. 
D)  $336,000. 
E)  $696,000. 
A)  $(90,000). 
B)  $90,000. 
C)  $246,000. 
D)  $336,000. 
E)  $696,000.

A recent income statement of Carson Corporation reported the following data: If these data are based on the sale of 5,000 units, the break-even sales would be:

Use the following information to answer the following Questions -Refer to the figure above. The triangular area between the horizontal axis and Line A, to the left of 4,000, represents:

A recent income statement of Benton Corporation reported the following data: - If these data are based on the sale of 20,000 units, the contribution margin per unit would be:

When a firm is required to pay taxes on income, it is important to distinguish between after-tax (AT) income and before-tax (BT) income.

At a volume of 20,000 units, Almount Industries reported sales revenues of $1,000,000, variable costs of $300,000, and fixed costs of $260,000. The company's contribution margin per unit is:

Samuels, Inc. is subject to a 40% income tax rate. The following data pertain to the period just ended when the company produced and sold 45,000 units: How many units must Samuels sell to earn an after-tax profit of $180,000?

A recent income statement of Benton Corporation reported the following data: - If these data are based on the sale of 20,000 units, the break-even point would be:

Use the following information to answer the following Questions -Refer to the figure above. Line C represents the level of:

Sensitivity analysis has become relatively easy to perform with the advent of personal computers and spreadsheet software.

A company that desires to lower its break-even point should strive to:

The assumptions on which cost-volume-profit analysis is based appear to be most valid for businesses:

At a volume of 20,000 units, Almount Industries reported sales revenues of $1,000,000, variable costs of $300,000, and fixed costs of $260,000. The company's break-even point in units is:

The difference between budgeted sales revenue and break-even sales revenue is the operating leverage.

Which of the following underlying assumptions form(s) the basis for cost-volume-profit analysis?

The contribution-margin ratio is calculated as unit contribution margin divided by the selling price per unit.

Use the following information to answer the following Questions Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the company has fixed costs that amount to $400,000. Current sales total 16,000 units. -If Narchie sells 24,000 units, its safety margin will be:

Finn's budget for the upcoming year revealed the following figures: If the company's break-even sales total $750,000, Finn's safety margin would be:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters

Exam 7: Cost-Volume-Profit Analysis

A recent income statement of Carson Corporation reported the following data: If these data are based on the sale of 5,000 units, the break-even sales would be:

Use the following information to answer the following Questions -Refer to the figure above. The triangular area between the horizontal axis and Line A, to the left of 4,000, represents:

A recent income statement of Benton Corporation reported the following data: - If these data are based on the sale of 20,000 units, the contribution margin per unit would be:

When a firm is required to pay taxes on income, it is important to distinguish between after-tax (AT) income and before-tax (BT) income.

At a volume of 20,000 units, Almount Industries reported sales revenues of $1,000,000, variable costs of $300,000, and fixed costs of $260,000. The company's contribution margin per unit is:

Samuels, Inc. is subject to a 40% income tax rate. The following data pertain to the period just ended when the company produced and sold 45,000 units: How many units must Samuels sell to earn an after-tax profit of $180,000?

A recent income statement of Benton Corporation reported the following data: - If these data are based on the sale of 20,000 units, the break-even point would be:

Use the following information to answer the following Questions -Refer to the figure above. Line C represents the level of:

Sensitivity analysis has become relatively easy to perform with the advent of personal computers and spreadsheet software.

A company that desires to lower its break-even point should strive to:

The assumptions on which cost-volume-profit analysis is based appear to be most valid for businesses:

At a volume of 20,000 units, Almount Industries reported sales revenues of $1,000,000, variable costs of $300,000, and fixed costs of $260,000. The company's break-even point in units is:

The difference between budgeted sales revenue and break-even sales revenue is the operating leverage.

Which of the following underlying assumptions form(s) the basis for cost-volume-profit analysis?

The contribution-margin ratio is calculated as unit contribution margin divided by the selling price per unit.

Use the following information to answer the following Questions Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the company has fixed costs that amount to $400,000. Current sales total 16,000 units. -If Narchie sells 24,000 units, its safety margin will be:

Finn's budget for the upcoming year revealed the following figures: If the company's break-even sales total $750,000, Finn's safety margin would be:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters