Question 1

To find the sales revenue needed to breakeven, the formula used could be

Accepted Answer

A) fixed expenses ÷ contribution margin ratio. 
B) contribution margin per unit ÷ fixed expenses. 
C) contribution margin ratio ÷ fixed expenses. 
D) fixed expenses ÷ contribution margin per unit. 
A) fixed expenses ÷ contribution margin ratio. 
B) contribution margin per unit ÷ fixed expenses. 
C) contribution margin ratio ÷ fixed expenses. 
D) fixed expenses ÷ contribution margin per unit.

Question 2

Yellow Company's variable expenses are 40% of sales and have monthly fixed expenses of $15,000. The monthly target operating income is $3,750. What is Yellow Company's operating leverage factor at the target level of operating income?

Accepted Answer

A) 1.25 
B) 0.20 
C) (3.00) 
D) 5.00 
A) 1.25 
B) 0.20 
C) (3.00) 
D) 5.00

Question 3

Papa Pastries sells Donuts, Muffins, and Mixed Dozens. It sold 10,000 dozens last year. Mixtures outsold Muffins by a margin of 2 to 1. Sales of Donuts were the same as sales of Mixtures. Fixed costs for Papa Pastries are $19,600 and additional information follows:
   a. Calculate the sales mix percentage of all three products (based upon the number of dozens).
b. Calculate the weighted average contribution margin for all three types of dozens.
c. Calculate the breakeven volume in number of dozens.
d. Calculate the breakeven sales in dollars.

Accepted Answer

The answer of Papa Pastries sells Donuts, Muffins, and Mixed...

Question 4

Sensitivity analysis is a "what if" technique that asks what a result will be if an underlying assumption changes.

Accepted Answer

A) True 
 B)False

Question 5

Hyde's Headphones sells deluxe headphones for $75 each. Unit variable expenses total $45. The breakeven sales in units is 2,400 and budgeted sales in units is 4,200. What is the margin of safety in dollars?

Accepted Answer

A) $24 
B) $135,000 
C) $495,000 
D) $1,800 
A) $24 
B) $135,000 
C) $495,000 
D) $1,800

Question 6

If the selling price per unit is $40.00, the variable expense per unit is $30, and total fixed expenses are $200,000, what are the breakeven sales in dollars?

Accepted Answer

A) $5,000 
B) $50,000 
C) $800,000 
D) $114,286 
A) $5,000 
B) $50,000 
C) $800,000 
D) $114,286

Question 7

Hickory Point Amusement Park sells admission tickets for $50 per person for one visit. Variable costs are $15 per visitor and fixed costs are $60,000,000 per month. The company's relevant range extends to 2,000,000 visitors per month. What is Hickory Point's projected operating income if 1,750,000 visitors come to the park during the month?

Accepted Answer

A) $1,250,000 
B) $61,250,000 
C) $87,500,000 
D) $27,500,000 
A) $1,250,000 
B) $61,250,000 
C) $87,500,000 
D) $27,500,000

Question 8

The selling price of a particular product is $5.00 per unit, the variable expense is $3.00 per unit, and the breakeven sales in dollars is $18,660, what are total fixed expenses?

Accepted Answer

A) $12,440 
B) $1,866 
C) $3,732 
D) $7,464 
A) $12,440 
B) $1,866 
C) $3,732 
D) $7,464

Question 9

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 contribution margin per patron?

Accepted Answer

A) $2.86 
B) $14.00 
C) $0.35 
D) $26.00 
A) $2.86 
B) $14.00 
C) $0.35 
D) $26.00

Question 10

All else being equal, a company with a high operating leverage will have

Accepted Answer

A) relatively low fixed costs. 
B) relatively high variable costs. 
C) relatively high contribution margin ratio. 
D) relatively low risk. 
A) relatively low fixed costs. 
B) relatively high variable costs. 
C) relatively high contribution margin ratio. 
D) relatively low risk.

Question 11

Barbara's Candles provides the following information about its single product.   What is the contribution margin per unit?

Accepted Answer

A) $60.00 
B) $0.40 
C) $160.00 
D) $40.00 
A) $60.00 
B) $0.40 
C) $160.00 
D) $40.00

Question 12

The Settler's Chuck Wagon sells tickets for dinner and a show for $50 each. The cost of providing dinner is $23 per ticket and the fixed cost of operating the theater is $115,000 per month. The company can accommodate 13,500 patrons each month. What is the projected monthly income if 5,500 patrons visit the theater each month?

Accepted Answer

A) $263,500 
B) $148,500 
C) $249,500 
D) $33,500 
A) $263,500 
B) $148,500 
C) $249,500 
D) $33,500

Question 13

Variable costs are $17 per unit and the sales price is $20 per unit. If volume would triple as a result of decreasing the sales price to $16 per unit, the business should strongly consider decreasing the sales price to $16 per unit.

Accepted Answer

A) True 
 B)False

Question 14

If total fixed costs decrease while the selling price per unit and variable costs per unit remain constant, which of the following statements is true?

Accepted Answer

A) Contribution margin increases. 
B) Contribution margin decreases. 
C) Breakeven point in units increases. 
D) Breakeven point in units decreases. 
A) Contribution margin increases. 
B) Contribution margin decreases. 
C) Breakeven point in units increases. 
D) Breakeven point in units decreases.

Question 15

What is contribution margin equal to on a contribution margin income statement?

Accepted Answer

A) Fixed expenses plus variable expenses 
B) Fixed expenses minus variable expenses 
C) Sales revenues minus variable expenses 
D) Sales revenues minus fixed expenses 
A) Fixed expenses plus variable expenses 
B) Fixed expenses minus variable expenses 
C) Sales revenues minus variable expenses 
D) Sales revenues minus fixed expenses

Question 16

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 Neeley Grocery's operating leverage factor at the target level of operating income?

Accepted Answer

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

Question 17

The following selected data relates to Ivory Corporation:   Assuming 8,500 units are sold, what is the contribution margin?

Accepted Answer

A) $314,500 
B) $84,500 
C) $59,500 
D) $34,500 
A) $314,500 
B) $84,500 
C) $59,500 
D) $34,500

Question 18

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.
How much does the Canadian contractor expect to make in commissions?

Accepted Answer

A) $ 25,000 
B) $ 75,000 
C) $225,000 
D) $ 5,000 
A) $ 25,000 
B) $ 75,000 
C) $225,000 
D) $ 5,000

Question 19

Total predicted sales (in units)minus total breakeven sales in units divided by total predicted sales (in units)yields

Accepted Answer

A) contribution margin ratio. 
B) contribution margin per unit. 
C) percent of sales mix. 
D) margin of safety percentage. 
A) contribution margin ratio. 
B) contribution margin per unit. 
C) percent of sales mix. 
D) margin of safety percentage.

Question 20

If the selling price per unit is $32, the variable expense per unit is $19.50, and the breakeven sales in dollars is $44,800, what are total fixed expenses?

Accepted Answer

A) $28,718 
B) $17,500 
C) $1,400 
D) $112 
A) $28,718 
B) $17,500 
C) $1,400 
D) $112

To find the sales revenue needed to breakeven, the formula used could be

Yellow Company's variable expenses are 40% of sales and have monthly fixed expenses of $15,000. The monthly target operating income is $3,750. What is Yellow Company's operating leverage factor at the target level of operating income?

Sensitivity analysis is a "what if" technique that asks what a result will be if an underlying assumption changes.

Hyde's Headphones sells deluxe headphones for $75 each. Unit variable expenses total $45. The breakeven sales in units is 2,400 and budgeted sales in units is 4,200. What is the margin of safety in dollars?

If the selling price per unit is $40.00, the variable expense per unit is $30, and total fixed expenses are $200,000, what are the breakeven sales in dollars?

The selling price of a particular product is $5.00 per unit, the variable expense is $3.00 per unit, and the breakeven sales in dollars is $18,660, what are total fixed expenses?

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 contribution margin per patron?

All else being equal, a company with a high operating leverage will have

Barbara's Candles provides the following information about its single product. What is the contribution margin per unit?

Variable costs are $17 per unit and the sales price is $20 per unit. If volume would triple as a result of decreasing the sales price to $16 per unit, the business should strongly consider decreasing the sales price to $16 per unit.

If total fixed costs decrease while the selling price per unit and variable costs per unit remain constant, which of the following statements is true?

What is contribution margin equal to on a contribution margin income statement?

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 Neeley Grocery's operating leverage factor at the target level of operating income?

The following selected data relates to Ivory Corporation: Assuming 8,500 units are sold, what is the contribution margin?

Total predicted sales (in units)minus total breakeven sales in units divided by total predicted sales (in units)yields

If the selling price per unit is $32, the variable expense per unit is $19.50, and the breakeven sales in dollars is $44,800, what are total fixed expenses?

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

To find the sales revenue needed to breakeven, the formula used could be

Yellow Company's variable expenses are 40% of sales and have monthly fixed expenses of $15,000. The monthly target operating income is $3,750. What is Yellow Company's operating leverage factor at the target level of operating income?

Sensitivity analysis is a "what if" technique that asks what a result will be if an underlying assumption changes.

Hyde's Headphones sells deluxe headphones for $75 each. Unit variable expenses total $45. The breakeven sales in units is 2,400 and budgeted sales in units is 4,200. What is the margin of safety in dollars?

If the selling price per unit is $40.00, the variable expense per unit is $30, and total fixed expenses are $200,000, what are the breakeven sales in dollars?

The selling price of a particular product is $5.00 per unit, the variable expense is $3.00 per unit, and the breakeven sales in dollars is $18,660, what are total fixed expenses?

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 contribution margin per patron?

All else being equal, a company with a high operating leverage will have

Barbara's Candles provides the following information about its single product. What is the contribution margin per unit?

Variable costs are $17 per unit and the sales price is $20 per unit. If volume would triple as a result of decreasing the sales price to $16 per unit, the business should strongly consider decreasing the sales price to $16 per unit.

If total fixed costs decrease while the selling price per unit and variable costs per unit remain constant, which of the following statements is true?

What is contribution margin equal to on a contribution margin income statement?

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 Neeley Grocery's operating leverage factor at the target level of operating income?

The following selected data relates to Ivory Corporation: Assuming 8,500 units are sold, what is the contribution margin?

Total predicted sales (in units)minus total breakeven sales in units divided by total predicted sales (in units)yields

If the selling price per unit is $32, the variable expense per unit is $19.50, and the breakeven sales in dollars is $44,800, what are total fixed expenses?

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