Question 1

What is the company's break-even point in units?

Accepted Answer

A)  8,000 units. 
B)  12,000 units. 
C)  18,000 units. 
D)  20,000 units. 
A)  8,000 units. 
B)  12,000 units. 
C)  18,000 units. 
D)  20,000 units.

Question 2

The margin of safety is equal to:

Accepted Answer

A)  Sales - Net income. 
B)  Sales - (Variable expenses/Contribution margin). 
C)  Sales - (Fixed expenses/Contribution margin ratio). 
D)  Sales - (Variable expenses + Fixed expenses). 
A)  Sales - Net income. 
B)  Sales - (Variable expenses/Contribution margin). 
C)  Sales - (Fixed expenses/Contribution margin ratio). 
D)  Sales - (Variable expenses + Fixed expenses).

Question 3

If Dorian Company desires a monthly net income equal to 10% of sales,monthly sales will have to be:

Accepted Answer

A)  $45,600. 
B)  $90,000. 
C)  $96,000. 
D)  $120,000. 
A)  $45,600. 
B)  $90,000. 
C)  $96,000. 
D)  $120,000.

Question 4

The margin of safety percentage is equal to the margin of safety in dollars divided by total sales in dollars.

Accepted Answer

A) True 
 B)False

Question 5

Ostler Company's net income last year was $10,000 and its contribution margin was $50,000.Using the operating leverage concept,if the company's sales increase next year by 8%,net income can be expected to increase by:

Accepted Answer

A)  16%. 
B)  20%. 
C)  40%. 
D)  160%. 
A)  16%. 
B)  20%. 
C)  40%. 
D)  160%.

Question 6

Barnes Company sells three products-A,B,andC.Budgeted sales by product and in total for the coming month are as follows:
   Break-even sales-Budgeted: Fixed Expenses = $223,600 = $430,000
CM Ratio 0.52
As shown by these data,net income is budgeted at $36,400 for the month,and break-even sales at $430,000.
Assume that actual sales for the month total $500,000 as planned.Actual sales by product are: A,$160,000;B,$200,000;and C,$140,000.
Required:
a.Prepare a contribution income statement for the month based on actual sales data.Assume variable expenses as a percentage of sales and total fixed expenses are the same as budgeted.Present the income statement in the format shown above.
b.Compute break-even sales for the month,based on actual data.
c.Explain why the company did not meet the budgeted operating results or break-even sales even though it met its $500,000 sales budget.
a.
   b.Break-even sales:
Fixed Expenses = $223,600 = $520,000
CM Ratio 0.43
c.Despite the fact that the Company met its sales budget of $500,000 for the month,the mix of products sold changed from that budgeted.This is the reason the budgeted net income was not met,and the reason the break-even sales were greater than budgeted.The company's sales mix was planned at 48% A,20% B,and 32%C.The actual sales mix was 32% A,40% B,and only 28%C.The budgeted contribution margin was 52%,while the actual contribution margin was 43%.This also explains why the break-even point was higher than planned.With less average contribution margin per dollar of sales,a greater level of sales is required to provide sufficient contribution margin to cover fixed costs.

Accepted Answer

@#IMG-DLM& 
Break-even sales-Budgeted:Fixed Expens

Question 7

The contribution margin ratio is:

Accepted Answer

A)  12.5%. 
B)  25.0%. 
C)  33.0%. 
D)  37.5%. 
A)  12.5%. 
B)  25.0%. 
C)  33.0%. 
D)  37.5%.

Question 8

The following monthly budgeted data is available for the International Company:

Accepted Answer

@#IMG-DLM& 
Budgeted net income for the month is $

Question 9

Spencer Company's most recent monthly contribution format income statement is given below:

Accepted Answer

@#IMG-DLM& 
The company sells its only product for

Question 10

The following data pertain to last month's operations:   The break-even point in dollars is:

Accepted Answer

A)  $160,000. 
B)  $200,000. 
C)  $240,000. 
D)  $300,000. 
A)  $160,000. 
B)  $200,000. 
C)  $240,000. 
D)  $300,000.

Question 11

What are target sales in necklaces to generate a before tax income of $3,000?

Accepted Answer

Let X = Target Units
$5X - $1X

Question 12

Using absorption costing,what is the cost per unit manufactured in January?

Accepted Answer

A)  $9.00. 
B)  $10.00. 
C)  $11.00. 
D)  $12.00. 
A)  $9.00. 
B)  $10.00. 
C)  $11.00. 
D)  $12.00.

Question 13

If the selling price is reduced by 5%,variable expenses reduced by $1.00,and fixed expenses increased to a total of $38,400,how many units would need to be sold to earn a net income of $21,000?

Accepted Answer

A)  1,000 units. 
B)  1,700 units. 
C)  2,700 units. 
D)  2,950 units. 
A)  1,000 units. 
B)  1,700 units. 
C)  2,700 units. 
D)  2,950 units.

Question 14

The contribution margin ratio is closest to:

Accepted Answer

A)  1.9%. 
B)  2.1%. 
C)  47.1%. 
D)  52.9%. 
A)  1.9%. 
B)  2.1%. 
C)  47.1%. 
D)  52.9%.

Question 15

The break-even in sales dollars for the expected sales mix is closest to:

Accepted Answer

A)  $95,178. 
B)  $109,091. 
C)  $160,772. 
D)  $175,644. 
A)  $95,178. 
B)  $109,091. 
C)  $160,772. 
D)  $175,644.

Question 16

A company has provided the following data:   If the sales volume decreases by 25%,the variable cost per unit increases by 15%,and all other factors remain the same,net income will:

Accepted Answer

A)  decrease by $31,875. 
B)  decrease by $15,000. 
C)  increase by $20,625. 
D)  decrease by $3,125. 
A)  decrease by $31,875. 
B)  decrease by $15,000. 
C)  increase by $20,625. 
D)  decrease by $3,125.

Question 17

In the income statement of a manufacturing business with both variable and fixed overhead costs of production,if there are no beginning or ending inventories,comparing Absorption Costing to Variable Costing,which of the following statements is true?

Accepted Answer

A)  Under Absorption Costing,cost of goods sold will be higher and net income will be higher than under Variable Costing. 
B)  Under Variable Costing,cost of goods sold will be lower and net income will be higher than under Absorption Costing. 
C)  Under Absorption Costing,cost of goods sold will be higher than under Variable Costing. 
D)  There will be no differences in cost of goods sold and net income between the two methods. 
A)  Under Absorption Costing,cost of goods sold will be higher and net income will be higher than under Variable Costing. 
B)  Under Variable Costing,cost of goods sold will be lower and net income will be higher than under Absorption Costing. 
C)  Under Absorption Costing,cost of goods sold will be higher than under Variable Costing. 
D)  There will be no differences in cost of goods sold and net income between the two methods.

Question 18

Seco Corp. ,a wholesale supply company,uses independent sales agents to market the company's products.These agents currently receive a commission of 20% of sales,but are demanding an increase to 25% of sales.Seco had already prepared its budget for next year before learning of the sales agents' demand for an increase in commissions.That budgeted income statement appears below:

Accepted Answer

@#IMG-DLM& 
Seco is considering the possibility of

Question 19

The variable expense per unit is:

Accepted Answer

A)  $24.00. 
B)  $28.80. 
C)  $31.20. 
D)  $36.00. 
A)  $24.00. 
B)  $28.80. 
C)  $31.20. 
D)  $36.00.

Question 20

Wallace,Inc.prepared the following budgeted data based on a sales forecast of $6,000,000:   What would be the amount of sales dollars at the break-even point?

Accepted Answer

A)  $2,250,000. 
B)  $3,500,000. 
C)  $4,000,000. 
D)  $5,300,000. 
A)  $2,250,000. 
B)  $3,500,000. 
C)  $4,000,000. 
D)  $5,300,000.

What is the company's break-even point in units?

The margin of safety is equal to:

If Dorian Company desires a monthly net income equal to 10% of sales,monthly sales will have to be:

The margin of safety percentage is equal to the margin of safety in dollars divided by total sales in dollars.

Ostler Company's net income last year was $10,000 and its contribution margin was $50,000.Using the operating leverage concept,if the company's sales increase next year by 8%,net income can be expected to increase by:

The contribution margin ratio is:

The following monthly budgeted data is available for the International Company:

Spencer Company's most recent monthly contribution format income statement is given below:

The following data pertain to last month's operations: The break-even point in dollars is:

What are target sales in necklaces to generate a before tax income of $3,000?

Using absorption costing,what is the cost per unit manufactured in January?

If the selling price is reduced by 5%,variable expenses reduced by $1.00,and fixed expenses increased to a total of $38,400,how many units would need to be sold to earn a net income of $21,000?

The contribution margin ratio is closest to:

The break-even in sales dollars for the expected sales mix is closest to:

A company has provided the following data: If the sales volume decreases by 25%,the variable cost per unit increases by 15%,and all other factors remain the same,net income will:

In the income statement of a manufacturing business with both variable and fixed overhead costs of production,if there are no beginning or ending inventories,comparing Absorption Costing to Variable Costing,which of the following statements is true?

The variable expense per unit is:

Wallace,Inc.prepared the following budgeted data based on a sales forecast of $6,000,000: What would be the amount of sales dollars at the break-even point?

An Introduction to Managerial Accounting and Cost Concepts

Systems Design: Job-Order Costing

Systems Design: Activity-Based Costing

Systems Design: Process Costing

Cost Behavior: Analysis and Use

Cost-Volume-Profit Relationships

Profit Planning

Flexible Budgets and Overhead Analysis

Decentralization

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

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Exam 8: Standard Costs

What is the company's break-even point in units?

The margin of safety is equal to:

If Dorian Company desires a monthly net income equal to 10% of sales,monthly sales will have to be:

The margin of safety percentage is equal to the margin of safety in dollars divided by total sales in dollars.

Ostler Company's net income last year was $10,000 and its contribution margin was $50,000.Using the operating leverage concept,if the company's sales increase next year by 8%,net income can be expected to increase by:

The contribution margin ratio is:

The following monthly budgeted data is available for the International Company:

Spencer Company's most recent monthly contribution format income statement is given below:

The following data pertain to last month's operations: The break-even point in dollars is:

What are target sales in necklaces to generate a before tax income of $3,000?

Using absorption costing,what is the cost per unit manufactured in January?

If the selling price is reduced by 5%,variable expenses reduced by $1.00,and fixed expenses increased to a total of $38,400,how many units would need to be sold to earn a net income of $21,000?

The contribution margin ratio is closest to:

The break-even in sales dollars for the expected sales mix is closest to:

A company has provided the following data: If the sales volume decreases by 25%,the variable cost per unit increases by 15%,and all other factors remain the same,net income will:

In the income statement of a manufacturing business with both variable and fixed overhead costs of production,if there are no beginning or ending inventories,comparing Absorption Costing to Variable Costing,which of the following statements is true?

The variable expense per unit is:

Wallace,Inc.prepared the following budgeted data based on a sales forecast of $6,000,000: What would be the amount of sales dollars at the break-even point?

An Introduction to Managerial Accounting and Cost Concepts

Systems Design: Job-Order Costing

Systems Design: Activity-Based Costing

Systems Design: Process Costing

Cost Behavior: Analysis and Use

Cost-Volume-Profit Relationships

Profit Planning

Flexible Budgets and Overhead Analysis

Decentralization

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

How Well Am I Doing Financial Statement Analysis

Filters