Question 1

On a CVP graph, the total cost line intersects the total revenue line at which of the following points?

Accepted Answer

A) The breakeven point 
B) The level of the variable costs 
C) The level of the fixed costs 
D) None of the above 
A) The breakeven point 
B) The level of the variable costs 
C) The level of the fixed costs 
D) None of the above

Question 2

Bravo Company sells two products, green camouflage pants and orange camouflage pants. Bravo predicts that it will sell 1,000 pairs of green pants and 1,500 pairs of orange pants in the next period. The unit contribution margins for green pants and orange pants are $8.00 and $7.50, respectively. What is the weighted-average unit contribution margin?

Accepted Answer

A) $1.30 
B) $7.70 
C) $6.50 
D) $38.50 
A) $1.30 
B) $7.70 
C) $6.50 
D) $38.50

Question 3

A company's margin of safety can be stated

Accepted Answer

A) in units. 
B) in dollars. 
C) as a percentage of sales. 
D) any of the above. 
A) in units. 
B) in dollars. 
C) as a percentage of sales. 
D) any of the above.

Question 4

Jack's Toys sells kites for $20 each. Variable costs are $8 per refill. Fixed costs are $2,400 per month. What is the contribution margin per kite?

Accepted Answer

A) $1.67 
B) $ 0.60 
C) $8.00 
D) $12.00 
A) $1.67 
B) $ 0.60 
C) $8.00 
D) $12.00

Question 5

The lowest possible operating leverage factor for a company is:

Accepted Answer

A) zero. 
B) -1. 
C) +1. 
D) somewhere between zero and +1. 
A) zero. 
B) -1. 
C) +1. 
D) somewhere between zero and +1.

Question 6

To find the breakeven point using the shortcut formulas, you use

Accepted Answer

A) zero for the contribution margin per unit. 
B) zero for the fixed expenses. 
C) zero for the contribution margin ratio. 
D) zero for the operating income. 
A) zero for the contribution margin per unit. 
B) zero for the fixed expenses. 
C) zero for the contribution margin ratio. 
D) zero for the operating income.

Question 7

Washington Bottling Company provides the following information about its single product.   How many units must be sold to earn the targeted operating income?

Accepted Answer

A) 329,965 
B) 56,100 
C) 58,941 
D) 386,065 
A) 329,965 
B) 56,100 
C) 58,941 
D) 386,065

Question 8

Marie's Magic Shoppe provides the following information about its single product.   What is the contribution margin ratio?

Accepted Answer

A) 1.92 
B) 0.52 
C) 0.13 
D) 0.48 
A) 1.92 
B) 0.52 
C) 0.13 
D) 0.48

Question 9

Garfield Corporation is considering building a new plant in Canada. It predicts sales at the new plant to be 50,000 units at $5.00/unit. Below is a listing of estimated expenses.   A Canadian firm was contracted to sell the product and will receive a commission of 10% of the sales price. No U.S. home office expenses will be allocated to the new facility.
The contribution margin ratio for Garfield Corporation is

Accepted Answer

A) 28.00%. 
B) 38.00%. 
C) 172.00%. 
D) 72.00%. 
A) 28.00%. 
B) 38.00%. 
C) 172.00%. 
D) 72.00%.

Question 10

The higher the operating leverage factor, the

Accepted Answer

A) lesser the impact of volume on operating income. 
B) greater the impact of volume on operating income. 
C) more likely operating income is to stay constant. 
D) none of the above. 
A) lesser the impact of volume on operating income. 
B) greater the impact of volume on operating income. 
C) more likely operating income is to stay constant. 
D) none of the above.

Question 11

Matthew's Fish Fry has a monthly target operating income of $7,200. Variable expenses are 60% of sales and monthly fixed expenses are $1,800. What is the monthly margin of safety in dollars if the business achieves its operating income goal?

Accepted Answer

A) $22,500 
B) $18,000 
C) $27,000 
D) $13,500 
A) $22,500 
B) $18,000 
C) $27,000 
D) $13,500

Question 12

The fixed expenses of Greg's Snowboards are $800,000. The selling price for one snowboard is $150. The variable cost per unit is $68. If the company sells 9,300 snowboards, its operating income is a

Accepted Answer

A) gain of $1,227,400. 
B) loss of $167,600. 
C) loss of $37,400. 
D) gain of $1,562,600. 
A) gain of $1,227,400. 
B) loss of $167,600. 
C) loss of $37,400. 
D) gain of $1,562,600.

Question 13

When using the contribution margin ratio, managers project operating income based upon sales units.

Accepted Answer

A) True 
 B)False

Question 14

Contessa Corporation has fixed expenses of $200,000, and a unit sales price of $70. Its variable cost per unit is $50. If it sells 8,500 posters, its operating income is a

Accepted Answer

A) gain of $820,000. 
B) loss of $30,000. 
C) gain of $370,000. 
D) gain of $225,000. 
A) gain of $820,000. 
B) loss of $30,000. 
C) gain of $370,000. 
D) gain of $225,000.

Question 15

Wallace Industrial sells two products, large forklifts and small forklifts. A large forklift sells for $50,000 per unit with variable costs of $26,000 per unit. Small forklifts sell for $30,000 per unit with variable costs of $12,000 per unit. Total fixed costs for the company are $1,600,000. Wallace Industrial typically sells one large forklifts for every two smalls. What is the breakeven point in total units?

Accepted Answer

A) 80 units 
B) 400 units 
C) 30 units 
D) 27 units 
A) 80 units 
B) 400 units 
C) 30 units 
D) 27 units

Question 16

If the selling price per unit is $65, the variable expense per unit is $45, and total fixed expenses are $250,000, what will the breakeven sales in units be?

Accepted Answer

A) 12,500 
B) 5,556 
C) 2,273 
D) 3,846 
A) 12,500 
B) 5,556 
C) 2,273 
D) 3,846

Question 17

The margin of safety can be expressed in units, in sales dollars, or as a percentage.

Accepted Answer

A) True 
 B)False

Question 18

LaComedia Dinner Theater sells tickets for dinner and a show for $40 each. The cost of providing dinner is $26 per ticket and the fixed cost of operating the theater is $100,000 per month. The company can accommodate 12,000 patrons each month. What is the projected monthly income if 10,000 patrons visit the theater each month?

Accepted Answer

A) $68,000 
B) $140,000 
C) $240,000 
D) $40,000 
A) $68,000 
B) $140,000 
C) $240,000 
D) $40,000

Question 19

When using the income statement approach to finding breakeven, which of the following is true?

Accepted Answer

A) (variable expenses × number of units)- fixed expenses = operating income 
B) sales revenue - variable expenses - fixed expenses = operating income 
C) fixed expenses + variable expenses + sales revenue = operating income 
D) fixed expenses + variable expenses - sales revenue = operating income 
A) (variable expenses × number of units)- fixed expenses = operating income 
B) sales revenue - variable expenses - fixed expenses = operating income 
C) fixed expenses + variable expenses + sales revenue = operating income 
D) fixed expenses + variable expenses - sales revenue = operating income

Question 20

Madden Enterprises sells two products, Silver models and Gold models. Madden Enterprises predicts that it will sell 6,000 Silver models and 4,000 Gold models in the next period. The unit contribution margins for Silver models and Gold models are $75 and $150, respectively. What is the weighted-average unit contribution margin?

Accepted Answer

A) $0.01 
B) $37.50 
C) $105.00 
D) $525.00 
A) $0.01 
B) $37.50 
C) $105.00 
D) $525.00

On a CVP graph, the total cost line intersects the total revenue line at which of the following points?

A company's margin of safety can be stated

Jack's Toys sells kites for $20 each. Variable costs are $8 per refill. Fixed costs are $2,400 per month. What is the contribution margin per kite?

The lowest possible operating leverage factor for a company is:

To find the breakeven point using the shortcut formulas, you use

Washington Bottling Company provides the following information about its single product. How many units must be sold to earn the targeted operating income?

Marie's Magic Shoppe provides the following information about its single product. What is the contribution margin ratio?

The higher the operating leverage factor, the

Matthew's Fish Fry has a monthly target operating income of $7,200. Variable expenses are 60% of sales and monthly fixed expenses are $1,800. What is the monthly margin of safety in dollars if the business achieves its operating income goal?

The fixed expenses of Greg's Snowboards are $800,000. The selling price for one snowboard is $150. The variable cost per unit is $68. If the company sells 9,300 snowboards, its operating income is a

When using the contribution margin ratio, managers project operating income based upon sales units.

Contessa Corporation has fixed expenses of $200,000, and a unit sales price of $70. Its variable cost per unit is $50. If it sells 8,500 posters, its operating income is a

If the selling price per unit is $65, the variable expense per unit is $45, and total fixed expenses are $250,000, what will the breakeven sales in units be?

The margin of safety can be expressed in units, in sales dollars, or as a percentage.

When using the income statement approach to finding breakeven, which of the following is true?

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters

Exam 7: Cost-Volume-Profit Analysis

On a CVP graph, the total cost line intersects the total revenue line at which of the following points?

A company's margin of safety can be stated

Jack's Toys sells kites for $20 each. Variable costs are $8 per refill. Fixed costs are $2,400 per month. What is the contribution margin per kite?

The lowest possible operating leverage factor for a company is:

To find the breakeven point using the shortcut formulas, you use

Washington Bottling Company provides the following information about its single product. How many units must be sold to earn the targeted operating income?

Marie's Magic Shoppe provides the following information about its single product. What is the contribution margin ratio?

The higher the operating leverage factor, the

Matthew's Fish Fry has a monthly target operating income of $7,200. Variable expenses are 60% of sales and monthly fixed expenses are $1,800. What is the monthly margin of safety in dollars if the business achieves its operating income goal?

The fixed expenses of Greg's Snowboards are $800,000. The selling price for one snowboard is $150. The variable cost per unit is $68. If the company sells 9,300 snowboards, its operating income is a

When using the contribution margin ratio, managers project operating income based upon sales units.

Contessa Corporation has fixed expenses of $200,000, and a unit sales price of $70. Its variable cost per unit is $50. If it sells 8,500 posters, its operating income is a

If the selling price per unit is $65, the variable expense per unit is $45, and total fixed expenses are $250,000, what will the breakeven sales in units be?

The margin of safety can be expressed in units, in sales dollars, or as a percentage.

When using the income statement approach to finding breakeven, which of the following is true?

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters