Question 1

Variable costs for Abbey Inc.are 25% of sales.Its selling price is $100 per unit.If Abbey sells one unit more than break-even units how much will profit increase?

Accepted Answer

A) $75 
B) $25 
C) $50 
D) $400 
A) $75 
B) $25 
C) $50 
D) $400 A

Question 2

Aero Inc.requires sales of $2000000 to cover its fixed costs of $600000 and to earn net income of $500000.What percent are variable costs of sales?

Accepted Answer

A) 25% 
B) 45% 
C) 30% 
D) 55% 
A) 25% 
B) 45% 
C) 30% 
D) 55% B

Question 3

Dunbar Manufacturing's variable costs are 30% of sales.The company is contemplating an advertising campaign that will cost $55000.If sales are expected to increase $100000 by how much will the company's net income increase?

Accepted Answer

A) $45000 
B) $70000 
C) $30000 
D) $15000 
A) $45000 
B) $70000 
C) $30000 
D) $15000 D

Question 4

A variable cost is a cost that

Accepted Answer

A) varies per unit at every level of activity. 
B) occurs at various times during the year. 
C) varies in total in proportion to changes in the level of activity. 
D) may or may not be incurred depending on management's discretion. 
A) varies per unit at every level of activity. 
B) occurs at various times during the year. 
C) varies in total in proportion to changes in the level of activity. 
D) may or may not be incurred depending on management's discretion.

Question 5

If variable costs per unit are 70% of sales fixed costs are $290000 and target net income is $70000 required sales are $1200000.

Accepted Answer

A) True 
 B)False

Question 6

A company has a unit contribution margin of $120 and a contribution margin ratio of 40%.What is the unit selling price?

Accepted Answer

A) $200 
B) $300 
C) $48 
D) Cannot be determined. 
A) $200 
B) $300 
C) $48 
D) Cannot be determined.

Question 7

In applying the high-low method which months are relevant? $\begin{array}{llr}
\text { Month } & \text { Miles } & \text { Total Cost } \
\text { January } & 80,000 & \$ 192,000 \
\text { February } & 50,000 & 160,000 \
\text { March } & 70,000 & 188,000 \
\text { April } & 90,000 & 260,000
\end{array}$

Accepted Answer

A) January and February 
B) January and April 
C) February and April 
D) February and March 
A) January and February 
B) January and April 
C) February and April 
D) February and March

Question 8

At the high level of activity in November 7000 machine hours were run and power costs were $18000.In April a month of low activity 2000 machine hours were run and power costs amounted to $9000.Using the high-low method the estimated fixed cost element of power costs is

Accepted Answer

A) $18000. 
B) $9000. 
C) $5400. 
D) $12600. 
A) $18000. 
B) $9000. 
C) $5400. 
D) $12600.

Question 9

Wilton Co.reported the following results from the sale of 5000 hammers in May: sales $200000 variable costs $120000 fixed costs $60000 and net income $20000.Assume that Wilton increases the selling price of hammers by 10% on June 1.How many hammers will have to be sold in June to maintain the same level of net income?

Accepted Answer

A) 4000 
B) 4300 
C) 4500 
D) 5000 
A) 4000 
B) 4300 
C) 4500 
D) 5000

Question 10

A company has total fixed costs of $240000 and a contribution margin ratio of 20%.The total sales necessary to break even are

Accepted Answer

A) $960000. 
B) $1200000. 
C) $300000. 
D) $288000. 
A) $960000. 
B) $1200000. 
C) $300000. 
D) $288000.

Question 11

Which of the following is not a fixed cost?

Accepted Answer

A) Direct materials 
B) Depreciation 
C) Lease charge 
D) Property taxes 
A) Direct materials 
B) Depreciation 
C) Lease charge 
D) Property taxes

Question 12

Farmers' Industries has fixed costs of $600000 and variable costs are 60% of sales.How much will Farmers report as sales when its net income equals $60000?

Accepted Answer

A) $1650000 
B) $1100000 
C) $1560000 
D) $396000 
A) $1650000 
B) $1100000 
C) $1560000 
D) $396000

Question 13

Bruno & Court is a nonprofit organization that captures stray deer bewildered within residential communities.Fixed costs are $20000.The variable cost of capturing each deer is $10 each.Bruno & Court is funded by a local philanthropy in the amount of $64000 for 2022.How many deer can Bruno & Court capture during 2022?

Accepted Answer

A) 4400 
B) 6400 
C) 8400 
D) 4000 
A) 4400 
B) 6400 
C) 8400 
D) 4000

Question 14

Which of the following would not be an acceptable way to express contribution margin?

Accepted Answer

A) Sales minus variable costs 
B) Sales minus unit costs 
C) Unit selling price minus unit variable costs 
D) Unit contribution margin divided by unit selling price 
A) Sales minus variable costs 
B) Sales minus unit costs 
C) Unit selling price minus unit variable costs 
D) Unit contribution margin divided by unit selling price

Question 15

Murphy Company produces flash drives for computers which it sells for $20 each.Each flash drive costs $6 of variable costs to make.During April 700 drives were sold.Fixed costs for April were $4 per unit for a total of $2800 for the month.How much does Murphy's operating income increase for each $1000 increase in revenue per month?

Accepted Answer

A) $700 
B) $500 
C) $14000 
D) Not enough information to determine the answer. 
A) $700 
B) $500 
C) $14000 
D) Not enough information to determine the answer.

Question 16

The fixed cost element of a mixed cost is the cost of having a service available.

Accepted Answer

A) True 
 B)False

Question 17

Stephanie Inc.sells its product for $40.The variable costs are $18 per unit.Fixed costs are $16000.The company is considering the purchase of an automated machine that will result in a $2 reduction in unit variable costs and an increase of $5000 in fixed costs.Which of the following is true about the break-even point in units?

Accepted Answer

A) It will remain unchanged. 
B) It will decrease. 
C) It will increase. 
D) It cannot be determined from the information provided. 
A) It will remain unchanged. 
B) It will decrease. 
C) It will increase. 
D) It cannot be determined from the information provided.

Question 18

The break-even point is where total sales equal total fixed costs.

Accepted Answer

A) True 
 B)False

Question 19

The break-even point is where total sales equal total variable costs.

Accepted Answer

A) True 
 B)False

Question 20

Boswell company reported the following information for the current year: Sales (50000 units) $1000000 direct materials and direct labor $500000 other variable costs $50000 and fixed costs $360000.What is Boswell's break-even point in units?

Accepted Answer

A) 32728. 
B) 40000. 
C) 51112. 
D) 56250. 
A) 32728. 
B) 40000. 
C) 51112. 
D) 56250.

Variable costs for Abbey Inc.are 25% of sales.Its selling price is $100 per unit.If Abbey sells one unit more than break-even units how much will profit increase?

Aero Inc.requires sales of $2000000 to cover its fixed costs of $600000 and to earn net income of $500000.What percent are variable costs of sales?

Dunbar Manufacturing's variable costs are 30% of sales.The company is contemplating an advertising campaign that will cost $55000.If sales are expected to increase $100000 by how much will the company's net income increase?

A variable cost is a cost that

If variable costs per unit are 70% of sales fixed costs are $290000 and target net income is $70000 required sales are $1200000.

A company has a unit contribution margin of $120 and a contribution margin ratio of 40%.What is the unit selling price?

In applying the high-low method which months are relevant? Month Miles Total Cost January 80,000 \ 192,000 February 50,000 160,000 March 70,000 188,000 April 90,000 260,000

At the high level of activity in November 7000 machine hours were run and power costs were $18000.In April a month of low activity 2000 machine hours were run and power costs amounted to $9000.Using the high-low method the estimated fixed cost element of power costs is

A company has total fixed costs of $240000 and a contribution margin ratio of 20%.The total sales necessary to break even are

Which of the following is not a fixed cost?

Farmers' Industries has fixed costs of $600000 and variable costs are 60% of sales.How much will Farmers report as sales when its net income equals $60000?

Which of the following would not be an acceptable way to express contribution margin?

The fixed cost element of a mixed cost is the cost of having a service available.

The break-even point is where total sales equal total fixed costs.

The break-even point is where total sales equal total variable costs.

Boswell company reported the following information for the current year: Sales (50000 units) $1000000 direct materials and direct labor $500000 other variable costs $50000 and fixed costs $360000.What is Boswell's break-even point in units?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters

Exam 12: Budgetary Planning

Variable costs for Abbey Inc.are 25% of sales.Its selling price is $100 per unit.If Abbey sells one unit more than break-even units how much will profit increase?

Aero Inc.requires sales of $2000000 to cover its fixed costs of $600000 and to earn net income of $500000.What percent are variable costs of sales?

Dunbar Manufacturing's variable costs are 30% of sales.The company is contemplating an advertising campaign that will cost $55000.If sales are expected to increase $100000 by how much will the company's net income increase?

A variable cost is a cost that

If variable costs per unit are 70% of sales fixed costs are $290000 and target net income is $70000 required sales are $1200000.

A company has a unit contribution margin of $120 and a contribution margin ratio of 40%.What is the unit selling price?

In applying the high-low method which months are relevant? Month Miles Total Cost January 80,000 \ 192,000 February 50,000 160,000 March 70,000 188,000 April 90,000 260,000

At the high level of activity in November 7000 machine hours were run and power costs were $18000.In April a month of low activity 2000 machine hours were run and power costs amounted to $9000.Using the high-low method the estimated fixed cost element of power costs is

A company has total fixed costs of $240000 and a contribution margin ratio of 20%.The total sales necessary to break even are

Which of the following is not a fixed cost?

Farmers' Industries has fixed costs of $600000 and variable costs are 60% of sales.How much will Farmers report as sales when its net income equals $60000?

Which of the following would not be an acceptable way to express contribution margin?

The fixed cost element of a mixed cost is the cost of having a service available.

The break-even point is where total sales equal total fixed costs.

The break-even point is where total sales equal total variable costs.

Boswell company reported the following information for the current year: Sales (50000 units) $1000000 direct materials and direct labor $500000 other variable costs $50000 and fixed costs $360000.What is Boswell's break-even point in units?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters