Question 1

A cost which remains constant per unit at various levels of activity is a

Accepted Answer

A) variable cost. 
B) fixed cost. 
C) mixed cost. 
D) manufacturing cost. 
A) variable cost. 
B) fixed cost. 
C) mixed cost. 
D) manufacturing cost.

Question 2

The break-even point is equal to the fixed costs plus net income.

Accepted Answer

A) True 
 B)False

Question 3

Reliable Manufacturing wants to sell a sufficient quantity of products to earn a profit of $100000.If the unit sales price is $10 unit variable cost is $8 and total fixed costs are $200000 how many units must be sold to earn income of $100000?

Accepted Answer

A) 150000 units 
B) 100000 units 
C) 37500 units 
D) 1500000 units 
A) 150000 units 
B) 100000 units 
C) 37500 units 
D) 1500000 units

Question 4

A division sold 200000 calculators during 2022: $$\begin{array} { l r r } 
\text { Sales } & & \$ 2,000,000 \
\text { Variable costs: } && \
\text { Materials } & \$ 380,000   \
\text { Order processing } &150,000   \
\text { Billing labor } &  110,000 \
\text { Selling expenses } &60,000  \
\text { Total variable costs } && 700,000 \
\text { Fixed costs }&& 1,000,000
\end{array}$$ How much is the unit contribution margin?

Accepted Answer

A) $1.00 
B) $3.50 
C) $8.50 
D) $6.50 
A) $1.00 
B) $3.50 
C) $8.50 
D) $6.50

Question 5

If the activity index decreases total variable costs will decrease proportionately.

Accepted Answer

A) True 
 B)False

Question 6

Sales are $500000 and variable costs are $330000.What is the contribution margin ratio?

Accepted Answer

A) 52% 
B) 34% 
C) 66% 
D) Cannot be determined because amounts are not expressed per unit. 
A) 52% 
B) 34% 
C) 66% 
D) Cannot be determined because amounts are not expressed per unit.

Question 7

Fixed costs are $900000 and the variable costs are 75% of the unit selling price.What is the break-even point in dollars?

Accepted Answer

A) $2100000 
B) $2700000 
C) $3600000 
D) $1200000 
A) $2100000 
B) $2700000 
C) $3600000 
D) $1200000

Question 8

If the activity level increases 10% total variable costs will

Accepted Answer

A) remain the same. 
B) increase by more than 10%. 
C) decrease by less than 10%. 
D) increase 10%. 
A) remain the same. 
B) increase by more than 10%. 
C) decrease by less than 10%. 
D) increase 10%.

Question 9

The contribution margin ratio is calculated by multiplying the unit contribution margin by the unit sales price.

Accepted Answer

A) True 
 B)False

Question 10

How much sales are required to earn a target income of $240000 if total fixed costs are $300000 and the contribution margin ratio is 40%?

Accepted Answer

A) $900000 
B) $600000 
C) $1350000 
D) $990000 
A) $900000 
B) $600000 
C) $1350000 
D) $990000

Question 11

A company desires to sell a sufficient quantity of products to earn a profit of $400000.If the unit sales price is $20 unit variable cost is $12 and total fixed costs are $800000 how many units must be sold to earn net income of $400000?

Accepted Answer

A) 225000 units 
B) 150000 units 
C) 120000 units 
D) 90000 units 
A) 225000 units 
B) 150000 units 
C) 120000 units 
D) 90000 units

Question 12

Walters Corporation sells radios for $50 per unit.The fixed costs are $525000 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 $125000 and variable costs will be 50% of the selling price.The new break-even point in units is:

Accepted Answer

A) 26250 
B) 26000 
C) 25750 
D) 21000 
A) 26250 
B) 26000 
C) 25750 
D) 21000

Question 13

The following information is available for Wade Corp.: $$\begin{array} { l r l } 
\text { Sales } & \$ 580,000 & \text { Total fixed expenses } \$ 150,000 \
\text { Cost of goods sold } & 390,000 & \text { Total variable expenses } 360,000
\end{array}$$ A CVP income statement would report

Accepted Answer

A) gross profit of $190000. 
B) contribution margin of $430000. 
C) gross profit of $220000. 
D) contribution margin of $220000. 
A) gross profit of $190000. 
B) contribution margin of $430000. 
C) gross profit of $220000. 
D) contribution margin of $220000.

Question 14

The equation which reflects a CVP income statement is

Accepted Answer

A) Sales = Cost of goods sold + Operating expenses + Net income. 
B) Sales + Fixed costs = Variable costs + Net income. 
C) Sales - Variable costs + Fixed costs = Net income. 
D) Sales - Variable costs - Fixed costs = Net income. 
A) Sales = Cost of goods sold + Operating expenses + Net income. 
B) Sales + Fixed costs = Variable costs + Net income. 
C) Sales - Variable costs + Fixed costs = Net income. 
D) Sales - Variable costs - Fixed costs = Net income.

Question 15

The contribution margin ratio of 40% means that 60 cents of each sales dollar is available to cover fixed costs and to produce a profit.

Accepted Answer

A) True 
 B)False

Question 16

Sweet Manufacturing is planning to sell 400000 hammers for $6 per unit.The contribution margin ratio is 20%.If Sweet will break even at this level of sales what are the fixed costs?

Accepted Answer

A) $480000 
B) $1120000 
C) $1600000 
D) $1920000 
A) $480000 
B) $1120000 
C) $1600000 
D) $1920000

Question 17

Target net income is the income objective for an individual product line.

Accepted Answer

A) True 
 B)False

Question 18

A company sells a product which has a unit sales price of $5 unit variable cost of $3 and total fixed costs of $240000.The number of units the company must sell to break even is

Accepted Answer

A) 120000 units. 
B) 48000 units. 
C) 480000 units. 
D) 80000 units. 
A) 120000 units. 
B) 48000 units. 
C) 480000 units. 
D) 80000 units.

Question 19

Danny's Lawn Equipment has actual sales of $800000 and a break-even point of $520000.How much is its margin of safety ratio?

Accepted Answer

A) 35% 
B) 46% 
C) 54% 
D) 65% 
A) 35% 
B) 46% 
C) 54% 
D) 65%

Question 20

Chung Inc.sells 100000 wrenches for $24 per unit.Fixed costs are $700000 and net income is $500000.What should be reported as variable expenses in the CVP income statement?

Accepted Answer

A) $1080000 
B) $1200000 
C) $1900000 
D) $1700000 
A) $1080000 
B) $1200000 
C) $1900000 
D) $1700000

A cost which remains constant per unit at various levels of activity is a

The break-even point is equal to the fixed costs plus net income.

Reliable Manufacturing wants to sell a sufficient quantity of products to earn a profit of $100000.If the unit sales price is $10 unit variable cost is $8 and total fixed costs are $200000 how many units must be sold to earn income of $100000?

A division sold 200000 calculators during 2022: Sales \ 2,000,000 Variable costs: Materials \ 380,000 Order processing 150,000 Billing labor 110,000 Selling expenses 60,000 Total variable costs 700,000 Fixed costs 1,000,000 How much is the unit contribution margin?

If the activity index decreases total variable costs will decrease proportionately.

Sales are $500000 and variable costs are $330000.What is the contribution margin ratio?

Fixed costs are $900000 and the variable costs are 75% of the unit selling price.What is the break-even point in dollars?

If the activity level increases 10% total variable costs will

The contribution margin ratio is calculated by multiplying the unit contribution margin by the unit sales price.

How much sales are required to earn a target income of $240000 if total fixed costs are $300000 and the contribution margin ratio is 40%?

A company desires to sell a sufficient quantity of products to earn a profit of $400000.If the unit sales price is $20 unit variable cost is $12 and total fixed costs are $800000 how many units must be sold to earn net income of $400000?

The following information is available for Wade Corp.: Sales \ 580,000 Total fixed expenses \ 150,000 Cost of goods sold 390,000 Total variable expenses 360,000 A CVP income statement would report

The equation which reflects a CVP income statement is

The contribution margin ratio of 40% means that 60 cents of each sales dollar is available to cover fixed costs and to produce a profit.

Sweet Manufacturing is planning to sell 400000 hammers for $6 per unit.The contribution margin ratio is 20%.If Sweet will break even at this level of sales what are the fixed costs?

Target net income is the income objective for an individual product line.

A company sells a product which has a unit sales price of $5 unit variable cost of $3 and total fixed costs of $240000.The number of units the company must sell to break even is

Danny's Lawn Equipment has actual sales of $800000 and a break-even point of $520000.How much is its margin of safety ratio?

Chung Inc.sells 100000 wrenches for $24 per unit.Fixed costs are $700000 and net income is $500000.What should be reported as variable expenses in the CVP income statement?

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

A cost which remains constant per unit at various levels of activity is a

The break-even point is equal to the fixed costs plus net income.

Reliable Manufacturing wants to sell a sufficient quantity of products to earn a profit of $100000.If the unit sales price is $10 unit variable cost is $8 and total fixed costs are $200000 how many units must be sold to earn income of $100000?

A division sold 200000 calculators during 2022: Sales \ 2,000,000 Variable costs: Materials \ 380,000 Order processing 150,000 Billing labor 110,000 Selling expenses 60,000 Total variable costs 700,000 Fixed costs 1,000,000 How much is the unit contribution margin?

If the activity index decreases total variable costs will decrease proportionately.

Sales are $500000 and variable costs are $330000.What is the contribution margin ratio?

Fixed costs are $900000 and the variable costs are 75% of the unit selling price.What is the break-even point in dollars?

If the activity level increases 10% total variable costs will

The contribution margin ratio is calculated by multiplying the unit contribution margin by the unit sales price.

How much sales are required to earn a target income of $240000 if total fixed costs are $300000 and the contribution margin ratio is 40%?

A company desires to sell a sufficient quantity of products to earn a profit of $400000.If the unit sales price is $20 unit variable cost is $12 and total fixed costs are $800000 how many units must be sold to earn net income of $400000?

The following information is available for Wade Corp.: Sales \ 580,000 Total fixed expenses \ 150,000 Cost of goods sold 390,000 Total variable expenses 360,000 A CVP income statement would report

The equation which reflects a CVP income statement is

The contribution margin ratio of 40% means that 60 cents of each sales dollar is available to cover fixed costs and to produce a profit.

Sweet Manufacturing is planning to sell 400000 hammers for $6 per unit.The contribution margin ratio is 20%.If Sweet will break even at this level of sales what are the fixed costs?

Target net income is the income objective for an individual product line.

A company sells a product which has a unit sales price of $5 unit variable cost of $3 and total fixed costs of $240000.The number of units the company must sell to break even is

Danny's Lawn Equipment has actual sales of $800000 and a break-even point of $520000.How much is its margin of safety ratio?

Chung Inc.sells 100000 wrenches for $24 per unit.Fixed costs are $700000 and net income is $500000.What should be reported as variable expenses in the CVP income statement?

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