Question 1

Martin Enterprises provides the following information about its single product.   What is the breakeven point in units?

Accepted Answer

A) 22,100 
B) 8,710 
C) 40,900 
D) 4,706 
A) 22,100 
B) 8,710 
C) 40,900 
D) 4,706

Question 2

Electric Jet Skis operates a jet ski rental business. Assume the jet skis rent for $55 for 6 hours. The variable costs are $33 per 6 hour rental, and its fixed costs are $80,000 each month. What is the contribution margin per 6 hour jet ski rental?

Accepted Answer

A) $33.00 
B) $0.40 
C) $22.00 
D) $2.50 
A) $33.00 
B) $0.40 
C) $22.00 
D) $2.50

Question 3

Tom's Taxidermy has a monthly target operating income of $25,000. Variable expenses are 75% of sales and monthly fixed expenses are $15,000. What is Tom's operating leverage factor at the target level of operating income?

Accepted Answer

A) 0.40 
B) 0.63 
C) 1.60 
D) 2.67 
A) 0.40 
B) 0.63 
C) 1.60 
D) 2.67

Question 4

If all other factors are constant, any decrease in fixed costs will decrease the breakeven point.

Accepted Answer

A) True 
 B)False

Question 5

The operating leverage factor indicates the percentage change in operating income that will occur from a 5% change in volume.

Accepted Answer

A) True 
 B)False

Question 6

I Scream For Ice Cream sells specialty ice cream in three flavors: Rocky Road, Peanut Butter, and Fruity Tooty. It sold 15,000 gallons last year. For every five gallons of ice cream sold, one pound is Fruity Tooty and the remainder is split evenly between Peanut Butter and Rocky Road. Fixed costs for I Scream For Ice Cream are $27,000 and additional information follows:   The sales mix percentage of Fruity Tooty based upon pounds is

Accepted Answer

A) 71%. 
B) 40%. 
C) 75%. 
D) 20%. 
A) 71%. 
B) 40%. 
C) 75%. 
D) 20%.

Question 7

Jackie's Snacks sells fudge, caramels, and popcorn. It sold 12,000 units last year. Popcorn outsold fudge by a margin of 2 to 1. Sales of caramels were the same as sales of popcorn. Fixed costs for Jackie's Snacks are $14,000. Additional information follows:   The breakeven sales volume in units for Jackie's Snacks is

Accepted Answer

A) 2,800. 
B) 6,000. 
C) 7,000. 
D) 1,250. 
A) 2,800. 
B) 6,000. 
C) 7,000. 
D) 1,250.

Question 8

The breakeven point represents the minimum number of units a company must sell before it earns a profit.

Accepted Answer

A) True 
 B)False

Question 9

Neeley Incorporated had the following fixed costs:
   The company also had the following variable costs:
Variable manufacturing costs $ 124,000
Variable marketing costs $ 30,000
Variable administrative costs $ 28,000
The company produced and sold 55,000 units of the product during the year at a selling price of $9.00 per unit. The company had no inventory at the beginning of the year.
Required: Prepare a contribution margin income statement for the year.

Accepted Answer

The answer of Neeley Incorporated had the following fixed costs:
...

Question 10

Which of the following is not an approach used to calculate the breakeven point?

Accepted Answer

A) The income statement approach 
B) The shortcut approach using the unit contribution margin 
C) The balance sheet approach 
D) The shortcut approach using the contribution margin ratio 
A) The income statement approach 
B) The shortcut approach using the unit contribution margin 
C) The balance sheet approach 
D) The shortcut approach using the contribution margin ratio

Question 11

If a unit sells for $12.50 and has a variable cost of $3.25, its contribution margin per unit is $9.25.

Accepted Answer

A) True 
 B)False

Question 12

Neeley Grocery has a monthly target operating income of $25,000. Variable expenses are 20% of sales and monthly fixed expenses are $15,000. What is the monthly margin of safety in dollars if the business achieves its operating income goal?

Accepted Answer

A) $ 50,000 
B) $ 31,250 
C) $ 68,750 
D) $ 12,500 
A) $ 50,000 
B) $ 31,250 
C) $ 68,750 
D) $ 12,500

Question 13

If a company sells 15 of Product A for every 2 of Product B that it sells, the sales mix can be stated as

Accepted Answer

A) 15:2. 
B) 15/17 A and 2/17 B. 
C) neither "15:2" nor " 15/17 A and 2/17 B" is correct. 
D) both "15:2" and " 15/17 A and 2/17 B" are correct. 
A) 15:2. 
B) 15/17 A and 2/17 B. 
C) neither "15:2" nor " 15/17 A and 2/17 B" is correct. 
D) both "15:2" and " 15/17 A and 2/17 B" are correct.

Question 14

Which of the following is an underlying assumption of the cost-volume-profit graph?

Accepted Answer

A) Total fixed expenses will change during the accounting period. 
B) The sales mix of products is constantly changing. 
C) Volume is the only cost driver. 
D) Inventory levels are constantly changing. 
A) Total fixed expenses will change during the accounting period. 
B) The sales mix of products is constantly changing. 
C) Volume is the only cost driver. 
D) Inventory levels are constantly changing.

Question 15

The line that begins at the origin on a CVP graph represents

Accepted Answer

A) total fixed expenses. 
B) total sales revenues. 
C) total expenses. 
D) both the total expenses and the total sales revenues. 
A) total fixed expenses. 
B) total sales revenues. 
C) total expenses. 
D) both the total expenses and the total sales revenues.

Question 16

The selling price of a particular product is $7.00 per unit, fixed costs total $18,000, and the breakeven sales in dollars is $24,000. What would be the variable expense per unit?

Accepted Answer

A) $2.33 
B) $5.25 
C) $1.75 
D) $12.25 
A) $2.33 
B) $5.25 
C) $1.75 
D) $12.25

Question 17

The Halpert Group produces a single product selling for $70 per unit. Variable costs are $7 per unit and total fixed costs are $5,000. What is the contribution margin ratio?

Accepted Answer

A) 0.10 
B) 0.63 
C) 0.90 
D) 1.11 
A) 0.10 
B) 0.63 
C) 0.90 
D) 1.11

Question 18

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

Accepted Answer

A) 167% 
B) 60% 
C) 12% 
D) 40% 
A) 167% 
B) 60% 
C) 12% 
D) 40%

Question 19

The margin of safety is the excess of expected sales over breakeven sales.

Accepted Answer

A) True 
 B)False

Question 20

Scott Incorporated management has budgeted the following amounts for its next fiscal year:   If fixed expenses increase by 10%, to maintain the original breakeven sales in units, the selling price per unit would have to be

Accepted Answer

A) increased by 17.60%. 
B) increased by 105.60%. 
C) increased by 5.6%. 
D) decreased by 117.60%. 
A) increased by 17.60%. 
B) increased by 105.60%. 
C) increased by 5.6%. 
D) decreased by 117.60%.

Martin Enterprises provides the following information about its single product. What is the breakeven point in units?

Electric Jet Skis operates a jet ski rental business. Assume the jet skis rent for $55 for 6 hours. The variable costs are $33 per 6 hour rental, and its fixed costs are $80,000 each month. What is the contribution margin per 6 hour jet ski rental?

Tom's Taxidermy has a monthly target operating income of $25,000. Variable expenses are 75% of sales and monthly fixed expenses are $15,000. What is Tom's operating leverage factor at the target level of operating income?

If all other factors are constant, any decrease in fixed costs will decrease the breakeven point.

The operating leverage factor indicates the percentage change in operating income that will occur from a 5% change in volume.

The breakeven point represents the minimum number of units a company must sell before it earns a profit.

Which of the following is not an approach used to calculate the breakeven point?

If a unit sells for $12.50 and has a variable cost of $3.25, its contribution margin per unit is $9.25.

Neeley Grocery has a monthly target operating income of $25,000. Variable expenses are 20% of sales and monthly fixed expenses are $15,000. What is the monthly margin of safety in dollars if the business achieves its operating income goal?

If a company sells 15 of Product A for every 2 of Product B that it sells, the sales mix can be stated as

Which of the following is an underlying assumption of the cost-volume-profit graph?

The line that begins at the origin on a CVP graph represents

The selling price of a particular product is $7.00 per unit, fixed costs total $18,000, and the breakeven sales in dollars is $24,000. What would be the variable expense per unit?

The Halpert Group produces a single product selling for $70 per unit. Variable costs are $7 per unit and total fixed costs are $5,000. What is the contribution margin ratio?

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

The margin of safety is the excess of expected sales over breakeven sales.

Scott Incorporated management has budgeted the following amounts for its next fiscal year: If fixed expenses increase by 10%, to maintain the original breakeven sales in units, the selling price per unit would have to be

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

Martin Enterprises provides the following information about its single product. What is the breakeven point in units?

Electric Jet Skis operates a jet ski rental business. Assume the jet skis rent for $55 for 6 hours. The variable costs are $33 per 6 hour rental, and its fixed costs are $80,000 each month. What is the contribution margin per 6 hour jet ski rental?

Tom's Taxidermy has a monthly target operating income of $25,000. Variable expenses are 75% of sales and monthly fixed expenses are $15,000. What is Tom's operating leverage factor at the target level of operating income?

If all other factors are constant, any decrease in fixed costs will decrease the breakeven point.

The operating leverage factor indicates the percentage change in operating income that will occur from a 5% change in volume.

The breakeven point represents the minimum number of units a company must sell before it earns a profit.

Which of the following is not an approach used to calculate the breakeven point?

If a unit sells for $12.50 and has a variable cost of $3.25, its contribution margin per unit is $9.25.

Neeley Grocery has a monthly target operating income of $25,000. Variable expenses are 20% of sales and monthly fixed expenses are $15,000. What is the monthly margin of safety in dollars if the business achieves its operating income goal?

If a company sells 15 of Product A for every 2 of Product B that it sells, the sales mix can be stated as

Which of the following is an underlying assumption of the cost-volume-profit graph?

The line that begins at the origin on a CVP graph represents

The selling price of a particular product is $7.00 per unit, fixed costs total $18,000, and the breakeven sales in dollars is $24,000. What would be the variable expense per unit?

The Halpert Group produces a single product selling for $70 per unit. Variable costs are $7 per unit and total fixed costs are $5,000. What is the contribution margin ratio?

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

The margin of safety is the excess of expected sales over breakeven sales.

Scott Incorporated management has budgeted the following amounts for its next fiscal year: If fixed expenses increase by 10%, to maintain the original breakeven sales in units, the selling price per unit would have to be

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