Question 1

Montoya Manufacturing has fixed costs of $3000000 and variable costs are 40% of sales.What are the required sales if Montoya desires net income of $300000?

Accepted Answer

A) $5500000 
B) $5000000 
C) $8250000 
D) $7500000 
A) $5500000 
B) $5000000 
C) $8250000 
D) $7500000

Question 2

For planning purposes mixed costs are generally grouped with fixed costs.

Accepted Answer

A) True 
 B)False

Question 3

For analysis purposes the high-low method usually produces a(n)

Accepted Answer

A) reasonable estimate. 
B) precise estimate. 
C) overstated estimate. 
D) understated estimate. 
A) reasonable estimate. 
B) precise estimate. 
C) overstated estimate. 
D) understated estimate.

Question 4

April Industries sells a product with a contribution margin of $12 per unit fixed costs of $223200 and sales for the current year of $300000.How much is April's break-even point?

Accepted Answer

A) 13800 units 
B) $76800 
C) 18600 units 
D) 6400 units 
A) 13800 units 
B) $76800 
C) 18600 units 
D) 6400 units

Question 5

Wendy Industries produces only one product.Monthly fixed expenses are $12000 monthly unit sales are 4000 and the unit contribution margin is $10.How much is monthly net income?

Accepted Answer

A) $40000 
B) $52000 
C) $0 
D) $28000 
A) $40000 
B) $52000 
C) $0 
D) $28000

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The margin of safety is the difference between contribution margin and fixed costs.

Accepted Answer

A) True 
 B)False

Question 8

Vintage Wines has fixed costs of $20000 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) $16000 
B) $4000 
C) $25000 
D) $100000 
A) $16000 
B) $4000 
C) $25000 
D) $100000

Question 9

A company requires $1700000 in sales to meet its net income target.Its contribution margin is 30% and fixed costs are $300000.What is the target net income?

Accepted Answer

A) $510000 
B) $390000 
C) $700000 
D) $210000 
A) $510000 
B) $390000 
C) $700000 
D) $210000

Question 10

Which of the following is not an underlying assumption of CVP analysis?

Accepted Answer

A) Changes in activity are the only factors that affect costs. 
B) Cost classifications are reasonably accurate. 
C) Beginning inventory is larger than ending inventory. 
D) Sales mix is constant. 
A) Changes in activity are the only factors that affect costs. 
B) Cost classifications are reasonably accurate. 
C) Beginning inventory is larger than ending inventory. 
D) Sales mix is constant.

Question 11

If volume increases all costs will increase.

Accepted Answer

A) True 
 B)False

Question 12

Hollis Industries produces flash drives for computers which it sells for $20 each.Each flash drive costs $13 of variable costs to make.During April 1000 drives were sold.Fixed costs for March were $2 per unit for a total of $1000 for the month.How much is the contribution margin ratio?

Accepted Answer

A) 25% 
B) 35% 
C) 65% 
D) 75% 
A) 25% 
B) 35% 
C) 65% 
D) 75%

Question 13

Which of the following is not true about the graph of a mixed cost?

Accepted Answer

A) It is possible to determine the amount of the fixed cost from the graph. 
B) There is a total cost line on the graph. 
C) The fixed cost portion of the graph is the same amount at all levels of activity. 
D) The variable cost portion of the graph is rectangular in shape. 
A) It is possible to determine the amount of the fixed cost from the graph. 
B) There is a total cost line on the graph. 
C) The fixed cost portion of the graph is the same amount at all levels of activity. 
D) The variable cost portion of the graph is rectangular in shape.

Question 14

Gall Manufacturing sells a product for $50 per unit.The fixed costs are $840000 and the variable costs are 60% of the selling price.As a result of new automated equipment it is anticipated that fixed costs will increase by $200000 and variable costs will be 50% of the selling price.The new break-even point in units is:

Accepted Answer

A) 42000. 
B) 41600. 
C) 41200. 
D) 33600. 
A) 42000. 
B) 41600. 
C) 41200. 
D) 33600.

Question 15

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 16

An increase in the level of activity will have the following effects on unit costs for variable and fixed costs: $\begin{array}{ll}
&\text { Unit Variable Cost } & \text { Unit Fixed Cost } \
A.&\text { Increases } & \text { Decreases } \
B.&\text { Remains constant } & \text { Remains constant } \
C.&\text { Decreases } & \text { Remains constant } \
D.&\text { Remains constant } & \text { Decreases }
\end{array}$

Accepted Answer

The answer of An increase in the level of activity...

Question 17

Zehms Inc.has a unit contribution margin of $30 and a contribution margin ratio of 60%.How much is the selling price of each unit?

Accepted Answer

A) $50 
B) $75 
C) $18 
D) Cannot be determined without more information. 
A) $50 
B) $75 
C) $18 
D) Cannot be determined without more information.

Question 18

CVP analysis does not consider

Accepted Answer

A) level of activity. 
B) fixed cost per unit. 
C) variable cost per unit. 
D) sales mix. 
A) level of activity. 
B) fixed cost per unit. 
C) variable cost per unit. 
D) sales mix.

Question 19

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 20

In CVP analysis the term "cost"

Accepted Answer

A) includes only manufacturing costs. 
B) means cost of goods sold. 
C) includes manufacturing costs plus selling and administrative expenses. 
D) excludes all fixed manufacturing costs. 
A) includes only manufacturing costs. 
B) means cost of goods sold. 
C) includes manufacturing costs plus selling and administrative expenses. 
D) excludes all fixed manufacturing costs.

Montoya Manufacturing has fixed costs of $3000000 and variable costs are 40% of sales.What are the required sales if Montoya desires net income of $300000?

For planning purposes mixed costs are generally grouped with fixed costs.

For analysis purposes the high-low method usually produces a(n)

April Industries sells a product with a contribution margin of $12 per unit fixed costs of $223200 and sales for the current year of $300000.How much is April's break-even point?

Wendy Industries produces only one product.Monthly fixed expenses are $12000 monthly unit sales are 4000 and the unit contribution margin is $10.How much is monthly net income?

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

The margin of safety is the difference between contribution margin and fixed costs.

Vintage Wines has fixed costs of $20000 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?

A company requires $1700000 in sales to meet its net income target.Its contribution margin is 30% and fixed costs are $300000.What is the target net income?

Which of the following is not an underlying assumption of CVP analysis?

If volume increases all costs will increase.

Hollis Industries produces flash drives for computers which it sells for $20 each.Each flash drive costs $13 of variable costs to make.During April 1000 drives were sold.Fixed costs for March were $2 per unit for a total of $1000 for the month.How much is the contribution margin ratio?

Which of the following is not true about the graph of a mixed cost?

The high-low method is criticized because it

An increase in the level of activity will have the following effects on unit costs for variable and fixed costs: Unit Variable Cost Unit Fixed Cost A. Increases Decreases B. Remains constant Remains constant C. Decreases Remains constant D. Remains constant Decreases

Zehms Inc.has a unit contribution margin of $30 and a contribution margin ratio of 60%.How much is the selling price of each unit?

CVP analysis does not consider

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

In CVP analysis the term "cost"

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

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Exam 12: Budgetary Planning

Montoya Manufacturing has fixed costs of $3000000 and variable costs are 40% of sales.What are the required sales if Montoya desires net income of $300000?

For planning purposes mixed costs are generally grouped with fixed costs.

For analysis purposes the high-low method usually produces a(n)

April Industries sells a product with a contribution margin of $12 per unit fixed costs of $223200 and sales for the current year of $300000.How much is April's break-even point?

Wendy Industries produces only one product.Monthly fixed expenses are $12000 monthly unit sales are 4000 and the unit contribution margin is $10.How much is monthly net income?

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

The margin of safety is the difference between contribution margin and fixed costs.

Vintage Wines has fixed costs of $20000 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?

A company requires $1700000 in sales to meet its net income target.Its contribution margin is 30% and fixed costs are $300000.What is the target net income?

Which of the following is not an underlying assumption of CVP analysis?

If volume increases all costs will increase.

Hollis Industries produces flash drives for computers which it sells for $20 each.Each flash drive costs $13 of variable costs to make.During April 1000 drives were sold.Fixed costs for March were $2 per unit for a total of $1000 for the month.How much is the contribution margin ratio?

Which of the following is not true about the graph of a mixed cost?

The high-low method is criticized because it

An increase in the level of activity will have the following effects on unit costs for variable and fixed costs: Unit Variable Cost Unit Fixed Cost A. Increases Decreases B. Remains constant Remains constant C. Decreases Remains constant D. Remains constant Decreases

Zehms Inc.has a unit contribution margin of $30 and a contribution margin ratio of 60%.How much is the selling price of each unit?

CVP analysis does not consider

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

In CVP analysis the term "cost"

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