Question 1

Costs that remain constant in total dollar amount as the level of activity changes are called

Accepted Answer

A)  fixed costs 
B)  mixed costs 
C)  product costs 
D)  variable costs 
A)  fixed costs 
B)  mixed costs 
C)  product costs 
D)  variable costs

Question 2

Companies with large amounts of fixed costs will generally have a high operating leverage.

Accepted Answer

A) True 
 B)False

Question 3

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

Accepted Answer

A) True 
 B)False

Question 4

Penny Company sells 25,000 units at $59 per unit. Variable costs are $29 per unit, and loss from operations is $(50,000). Determine:
(a) unit contribution margin 
(b) contribution margin ratio
(c) fixed costs per unit at production of 25,000 units.

Accepted Answer

a.  $59 - $29 = $30

Question 5

If yearly insurance premiums are increased, this change in fixed costs will result in an increase in the break-even point.

Accepted Answer

A) True 
 B)False

Question 6

A business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a break-even point of $960,000, and operating income of $60,000 for the current year.  Calculate the current year's sales.

Accepted Answer

$960,000/8

Question 7

As production increases, variable costs per unit

Accepted Answer

A)  stay the same 
B)  increase 
C)  decrease 
D)  either increase or decrease, depending on the fixed costs 
A)  stay the same 
B)  increase 
C)  decrease 
D)  either increase or decrease, depending on the fixed costs

Question 8

Carter Co. sells two products, Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are:   What was Carter Co.'s unit selling price of E, with E representing one overall "enterprise" product?

Accepted Answer

A)  $200 
B)  $100 
C)  $80 
D)  $88 
A)  $200 
B)  $100 
C)  $80 
D)  $88

Question 9

If employees accept a wage contract that increases the unit contribution margin, the break-even point will decrease.

Accepted Answer

A) True 
 B)False

Question 10

If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio?

Accepted Answer

A)  38% 
B)  26.8% 
C)  11.8% 
D)  62% 
A)  38% 
B)  26.8% 
C)  11.8% 
D)  62%

Question 11

For the current year ending January 31, Harp Company expects fixed costs of $188,500 and a unit variable cost of $51.50. For the coming year, a new wage contract will increase the unit variable cost to $55.50. The selling price of $70.00 per unit is expected to remain the same. 
(a) Compute the break-even sales (units) for the current year. Round your answer to the nearest whole number. 
(b) Compute the anticipated break-even sales (units) for the coming year, assuming the new wage contract is signed.

Accepted Answer

(a) $188,500/($70.00

Question 12

If the unit selling price is $40, the volume of sales is $3,000,000, sales at the break-even point amount to $2,500,000, and the maximum possible sales are $3,300,000, the margin of safety is 11,500 units.

Accepted Answer

A) True 
 B)False

Question 13

The point in operations at which revenues and expenses are exactly equal is called the break-even point.

Accepted Answer

A) True 
 B)False

Question 14

Even if a business sells six products, it is possible to estimate the break-even point.

Accepted Answer

A) True 
 B)False

Question 15

If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?

Accepted Answer

A)  $1,250,000 
B)  $450,000 
C)  $1,875,000 
D)  $300,000 
A)  $1,250,000 
B)  $450,000 
C)  $1,875,000 
D)  $300,000

Question 16

If a business had sales of $4,000,000 and a margin of safety of 25%, the break-even point was

Accepted Answer

A)  $5,000,000 
B)  $3,000,000 
C)  $12,000,000 
D)  $1,000,000 
A)  $5,000,000 
B)  $3,000,000 
C)  $12,000,000 
D)  $1,000,000

Question 17

Charlotte Co. has budgeted salary increases to factory supervisors totaling 9%. If selling prices and all other cost relationships are held constant, next year's break-even point

Accepted Answer

A)  will decrease by 9% 
B)  will increase by 9% 
C)  cannot be determined from the data given 
D)  will increase at a rate greater than 9% 
A)  will decrease by 9% 
B)  will increase by 9% 
C)  cannot be determined from the data given 
D)  will increase at a rate greater than 9%

Question 18

A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost.

Accepted Answer

A) True 
 B)False

Question 19

A cost that has characteristics of both a variable cost and a fixed cost is called a

Accepted Answer

A)  variable/fixed cost 
B)  mixed cost 
C)  discretionary cost 
D)  sunk cost 
A)  variable/fixed cost 
B)  mixed cost 
C)  discretionary cost 
D)  sunk cost

Question 20

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

Accepted Answer

A)  electricity per KWH to operate factory equipment 
B)  direct materials cost 
C)  straight-line depreciation on factory equipment 
D)  wages of assembly worker 
A)  electricity per KWH to operate factory equipment 
B)  direct materials cost 
C)  straight-line depreciation on factory equipment 
D)  wages of assembly worker

Costs that remain constant in total dollar amount as the level of activity changes are called

Companies with large amounts of fixed costs will generally have a high operating leverage.

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

Penny Company sells 25,000 units at $59 per unit. Variable costs are $29 per unit, and loss from operations is $(50,000). Determine: (a) unit contribution margin (b) contribution margin ratio (c) fixed costs per unit at production of 25,000 units.

If yearly insurance premiums are increased, this change in fixed costs will result in an increase in the break-even point.

A business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a break-even point of $960,000, and operating income of $60,000 for the current year. Calculate the current year's sales.

As production increases, variable costs per unit

Carter Co. sells two products, Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are: What was Carter Co.'s unit selling price of E, with E representing one overall "enterprise" product?

If employees accept a wage contract that increases the unit contribution margin, the break-even point will decrease.

If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio?

If the unit selling price is $40, the volume of sales is $3,000,000, sales at the break-even point amount to $2,500,000, and the maximum possible sales are $3,300,000, the margin of safety is 11,500 units.

The point in operations at which revenues and expenses are exactly equal is called the break-even point.

Even if a business sells six products, it is possible to estimate the break-even point.

If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?

If a business had sales of $4,000,000 and a margin of safety of 25%, the break-even point was

Charlotte Co. has budgeted salary increases to factory supervisors totaling 9%. If selling prices and all other cost relationships are held constant, next year's break-even point

A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost.

A cost that has characteristics of both a variable cost and a fixed cost is called a

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity Based Costing

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

Statement of Cash Flows

Financial Statement Analysis

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Exam 5: Cost Volume Profit Analysis

Costs that remain constant in total dollar amount as the level of activity changes are called

Companies with large amounts of fixed costs will generally have a high operating leverage.

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

Penny Company sells 25,000 units at $59 per unit. Variable costs are $29 per unit, and loss from operations is $(50,000). Determine: (a) unit contribution margin (b) contribution margin ratio (c) fixed costs per unit at production of 25,000 units.

If yearly insurance premiums are increased, this change in fixed costs will result in an increase in the break-even point.

A business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a break-even point of $960,000, and operating income of $60,000 for the current year. Calculate the current year's sales.

As production increases, variable costs per unit

Carter Co. sells two products, Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are: What was Carter Co.'s unit selling price of E, with E representing one overall "enterprise" product?

If employees accept a wage contract that increases the unit contribution margin, the break-even point will decrease.

If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio?

If the unit selling price is $40, the volume of sales is $3,000,000, sales at the break-even point amount to $2,500,000, and the maximum possible sales are $3,300,000, the margin of safety is 11,500 units.

The point in operations at which revenues and expenses are exactly equal is called the break-even point.

Even if a business sells six products, it is possible to estimate the break-even point.

If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?

If a business had sales of $4,000,000 and a margin of safety of 25%, the break-even point was

Charlotte Co. has budgeted salary increases to factory supervisors totaling 9%. If selling prices and all other cost relationships are held constant, next year's break-even point

A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost.

A cost that has characteristics of both a variable cost and a fixed cost is called a

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity Based Costing

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

Statement of Cash Flows

Financial Statement Analysis

Filters