Question 1

At the break-even point of 2000 units variable costs are $165000 and fixed costs are $96000.How much is the selling price per unit?

Accepted Answer

A) $130.50 
B) $34.50 
C) $48.00 
D) Not enough information 
A) $130.50 
B) $34.50 
C) $48.00 
D) Not enough information

Question 2

Unit contribution margin is the amount that each unit sold contributes towards the recovery of fixed costs and to income.

Accepted Answer

A) True 
 B)False

Question 3

Bolton Industries had actual sales of $1000000 when break-even sales were $600000.What is the margin of safety ratio?

Accepted Answer

A) 40% 
B) 33% 
C) 60% 
D) 67% 
A) 40% 
B) 33% 
C) 60% 
D) 67%

Question 4

Contribution margin

Accepted Answer

A) is always the same as gross profit margin. 
B) excludes variable selling costs from its calculation. 
C) is calculated by subtracting total manufacturing costs per unit from sales revenue per unit. 
D) equals sales revenue minus variable costs. 
A) is always the same as gross profit margin. 
B) excludes variable selling costs from its calculation. 
C) is calculated by subtracting total manufacturing costs per unit from sales revenue per unit. 
D) equals sales revenue minus variable costs.

Question 5

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

Accepted Answer

A) All units produced are sold. 
B) All costs are variable costs. 
C) Sales mix remains constant. 
D) The behavior of costs and revenues are linear within the relevant range. 
A) All units produced are sold. 
B) All costs are variable costs. 
C) Sales mix remains constant. 
D) The behavior of costs and revenues are linear within the relevant range.

Question 6

Changes in activity have a(n) _________ effect on fixed costs per unit.

Accepted Answer

A) positive 
B) negative 
C) inverse 
D) neutral 
A) positive 
B) negative 
C) inverse 
D) neutral

Question 7

The trend in most companies is to have more variable costs and fewer fixed costs.

Accepted Answer

A) True 
 B)False

Question 8

A target net income is calculated by taking actual sales minus the margin of safety.

Accepted Answer

A) True 
 B)False

Question 9

If Qualls Quality Airline cuts its domestic fares by 30%

Accepted Answer

A) its fixed costs will decrease. 
B) profit will increase by 30%. 
C) a profit can only be earned by decreasing the number of flights. 
D) a profit can be earned either by increasing the number of passengers or by decreasing variable costs. 
A) its fixed costs will decrease. 
B) profit will increase by 30%. 
C) a profit can only be earned by decreasing the number of flights. 
D) a profit can be earned either by increasing the number of passengers or by decreasing variable costs.

Question 10

If a company had a contribution margin of $1000000 and a contribution margin ratio of 40% total variable costs must have been

Accepted Answer

A) $1500000. 
B) $600000. 
C) $2500000. 
D) $400000. 
A) $1500000. 
B) $600000. 
C) $2500000. 
D) $400000.

Question 11

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 12

If graphed fixed costs that behave in a curvilinear fashion resemble a(n)

Accepted Answer

A) S-curve. 
B) inverted S-curve. 
C) straight line. 
D) stair-step pattern. 
A) S-curve. 
B) inverted S-curve. 
C) straight line. 
D) stair-step pattern.

Question 13

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 $42000; Actual sales for the month of June 4000 units.How much is the margin of safety for the company for June?

Accepted Answer

A) $70000 
B) $105000 
C) $63000 
D) $2500 
A) $70000 
B) $105000 
C) $63000 
D) $2500

Question 14

Why is identification of a relevant range important?

Accepted Answer

A) It is required under GAAP. 
B) Cost behavior outside of the relevant range is not linear which distorts CVP analysis. 
C) It directly impacts the number of units of product a customer buys. 
D) It is a cost that is incurred by a company that must be accounted for. 
A) It is required under GAAP. 
B) Cost behavior outside of the relevant range is not linear which distorts CVP analysis. 
C) It directly impacts the number of units of product a customer buys. 
D) It is a cost that is incurred by a company that must be accounted for.

Question 15

In the Restin Company maintenance costs are a mixed cost.At the low level of activity (80 direct labor hours) maintenance costs are $600.At the high level of activity (200 direct labor hours) maintenance costs are $1100.Using the high-low method what is the variable maintenance cost per unit and the total fixed maintenance cost? $$\begin{array} { l c c } 
& \text { Variable Cost PerUnit } & \text { Total Fixed Cost } \
\hline  \text { a. } & \$ 4.17 & \$ 267 \
\text { b. } & \$ 4.17 & \$ 500 \
\text { c. } & \$ 5.50 & \$ 220 \
\text { d. } & \$ 5.50 & \$ 400
\end{array}$$

Accepted Answer

The answer of In the Restin Company maintenance costs are...

Question 16

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 17

Firms operating at 100% capacity

Accepted Answer

A) are common. 
B) are the exception rather than the rule. 
C) have no fixed costs. 
D) have no variable costs. 
A) are common. 
B) are the exception rather than the rule. 
C) have no fixed costs. 
D) have no variable costs.

Question 18

The CVP income statement

Accepted Answer

A) is distributed internally and externally. 
B) classifies costs by functions. 
C) discloses contribution margin in the body of the statement. 
D) will reflect a different net income than the traditional income statement. 
A) is distributed internally and externally. 
B) classifies costs by functions. 
C) discloses contribution margin in the body of the statement. 
D) will reflect a different net income than the traditional income statement.

Question 19

A mixed cost contains

Accepted Answer

A) a variable element and a fixed element. 
B) both selling and administrative costs. 
C) both retailing and manufacturing costs. 
D) both operating and nonoperating costs. 
A) a variable element and a fixed element. 
B) both selling and administrative costs. 
C) both retailing and manufacturing costs. 
D) both operating and nonoperating costs.

Question 20

The high-low method is often employed in analyzing

Accepted Answer

A) fixed costs. 
B) mixed costs. 
C) variable costs. 
D) conversion costs. 
A) fixed costs. 
B) mixed costs. 
C) variable costs. 
D) conversion costs.

At the break-even point of 2000 units variable costs are $165000 and fixed costs are $96000.How much is the selling price per unit?

Unit contribution margin is the amount that each unit sold contributes towards the recovery of fixed costs and to income.

Bolton Industries had actual sales of $1000000 when break-even sales were $600000.What is the margin of safety ratio?

Contribution margin

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

Changes in activity have a(n) _________ effect on fixed costs per unit.

The trend in most companies is to have more variable costs and fewer fixed costs.

A target net income is calculated by taking actual sales minus the margin of safety.

If Qualls Quality Airline cuts its domestic fares by 30%

If a company had a contribution margin of $1000000 and a contribution margin ratio of 40% total variable costs must have been

In evaluating the margin of safety the

If graphed fixed costs that behave in a curvilinear fashion resemble a(n)

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 $42000; Actual sales for the month of June 4000 units.How much is the margin of safety for the company for June?

Why is identification of a relevant range important?

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

Firms operating at 100% capacity

The CVP income statement

A mixed cost contains

The high-low method is often employed in analyzing

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

At the break-even point of 2000 units variable costs are $165000 and fixed costs are $96000.How much is the selling price per unit?

Unit contribution margin is the amount that each unit sold contributes towards the recovery of fixed costs and to income.

Bolton Industries had actual sales of $1000000 when break-even sales were $600000.What is the margin of safety ratio?

Contribution margin

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

Changes in activity have a(n) _________ effect on fixed costs per unit.

The trend in most companies is to have more variable costs and fewer fixed costs.

A target net income is calculated by taking actual sales minus the margin of safety.

If Qualls Quality Airline cuts its domestic fares by 30%

If a company had a contribution margin of $1000000 and a contribution margin ratio of 40% total variable costs must have been

In evaluating the margin of safety the

If graphed fixed costs that behave in a curvilinear fashion resemble a(n)

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 $42000; Actual sales for the month of June 4000 units.How much is the margin of safety for the company for June?

Why is identification of a relevant range important?

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

Firms operating at 100% capacity

The CVP income statement

A mixed cost contains

The high-low method is often employed in analyzing

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