Question 1

A company has fixed costs of $900 and a per-unit contribution margin of $3.Which of the following statement is (are)true?

Accepted Answer

A) Each unit "contributes" $3 toward covering the fixed costs of $900. 
B) The situation described is not possible and there must be an error. 
C) Once the break-even point is reached,the company will increase income at the rate of $3 per unit. 
D) The firm will definitely lose money in this situation. 
E) Statements "A" and "C" are truE. 
A) Each unit "contributes" $3 toward covering the fixed costs of $900. 
B) The situation described is not possible and there must be an error. 
C) Once the break-even point is reached,the company will increase income at the rate of $3 per unit. 
D) The firm will definitely lose money in this situation. 
E) Statements "A" and "C" are truE.

Question 2

Cost-volume-profit analysis is based on certain general assumptions.Which of the following is not one of these assumptions?

Accepted Answer

A) Product prices will remain constant as volume varies within the relevant range. 
B) Costs can be categorized as fixed,variable,or semivariable. 
C) The efficiency and productivity of the production process and workers will change to reflect manufacturing advances. 
D) Total fixed costs remain constant as activity changes. 
E) Unit variable cost remains constant as activity changes. 
A) Product prices will remain constant as volume varies within the relevant range. 
B) Costs can be categorized as fixed,variable,or semivariable. 
C) The efficiency and productivity of the production process and workers will change to reflect manufacturing advances. 
D) Total fixed costs remain constant as activity changes. 
E) Unit variable cost remains constant as activity changes.

Question 3

At a volume level of 500,000 units,Sullivan reported the following information:  
The company's contribution-margin ratio is closest to:

Accepted Answer

A) 0.33. 
B) 0.40. 
C) 0.60. 
D) 0.67. 
E) an amount other than those abovE. 
A) 0.33. 
B) 0.40. 
C) 0.60. 
D) 0.67. 
E) an amount other than those abovE.

Question 4

Strayer has a break-even point of 120,000 units.If the firm's sole product sells for $40 and fixed costs total $480,000,the variable cost per unit must be:

Accepted Answer

A) $4. 
B) $36. 
C) $44. 
D) an amount that cannot be derived based on the information presenteD. 
E) an amount other than those in choices "A," "B," and "C",but one that can be derived based on the information presented. 
A) $4. 
B) $36. 
C) $44. 
D) an amount that cannot be derived based on the information presenteD. 
E) an amount other than those in choices "A," "B," and "C",but one that can be derived based on the information presented.

Question 5

A recent income statement of Black Corporation reported the following data:  
If these data are based on the sale of 20,000 units,the contribution margin per unit would be:

Accepted Answer

A) $40. 
B) $150. 
C) $290. 
D) $360. 
E) an amount other than those abovE. 
A) $40. 
B) $150. 
C) $290. 
D) $360. 
E) an amount other than those abovE.

Question 6

Grey,Inc.sells a single product for $20.Variable costs are $8 per unit and fixed costs total $120,000 at a volume level of 5,000 units.Assuming that fixed costs do not change,Green's break-even sales would be:

Accepted Answer

A) $160,000. 
B) $200,000. 
C) $300,000. 
D) $480,000. 
E) an amount other than those abovE. 
A) $160,000. 
B) $200,000. 
C) $300,000. 
D) $480,000. 
E) an amount other than those abovE.

Question 7

Which of the following would take place if a company experienced a decrease in fixed costs?

Accepted Answer

A) Income would decrease. 
B) The break-even point would decrease. 
C) The contribution margin would increase. 
D) The contribution margin would decrease. 
E) More than one of the above events would occur. 
A) Income would decrease. 
B) The break-even point would decrease. 
C) The contribution margin would increase. 
D) The contribution margin would decrease. 
E) More than one of the above events would occur.

Question 8

The contribution income statement differs from the traditional income statement in which of the following ways?

Accepted Answer

A) The traditional income statement separates costs into fixed and variable components. 
B) The traditional income statement subtracts all variable costs from sales to obtain the contribution margin. 
C) Cost-volume-profit relationships can be analyzed more easily from the contribution income statement. 
D) The effect of sales volume changes on profit is readily apparent on the traditional income statement. 
E) The contribution income statement separates costs into product and period categories. 
A) The traditional income statement separates costs into fixed and variable components. 
B) The traditional income statement subtracts all variable costs from sales to obtain the contribution margin. 
C) Cost-volume-profit relationships can be analyzed more easily from the contribution income statement. 
D) The effect of sales volume changes on profit is readily apparent on the traditional income statement. 
E) The contribution income statement separates costs into product and period categories.

Question 9

Refer to the figure above.The triangular area between the horizontal axis and Line A,to the left of 4,000,represents:

Accepted Answer

A) fixed cost. 
B) variable cost. 
C) profit. 
D) loss. 
E) sales revenuE. 
A) fixed cost. 
B) variable cost. 
C) profit. 
D) loss. 
E) sales revenuE.

Question 10

Refer to the figure above.Assume that the company whose cost structure is depicted in the figure expects to produce a loss for the upcoming period.The loss would be shown on the graph:

Accepted Answer

A) by the area immediately above the break-even point. 
B) by the area immediately below the total cost line. 
C) by the area diagonally to the right of the break-even point. 
D) by the area diagonally to the left of the break-even point. 
E) in some other area not mentioned abovE. 
A) by the area immediately above the break-even point. 
B) by the area immediately below the total cost line. 
C) by the area diagonally to the right of the break-even point. 
D) by the area diagonally to the left of the break-even point. 
E) in some other area not mentioned abovE.

Question 11

Which of the following calculations can be used to measure a company's degree of operating leverage?

Accepted Answer

A) Contribution margin /sales. 
B) Contribution margin / income. 
C) Sales / contribution margin. 
D) Sales / income. 
E) Sales / fixed costs. 
A) Contribution margin /sales. 
B) Contribution margin / income. 
C) Sales / contribution margin. 
D) Sales / income. 
E) Sales / fixed costs.

Question 12

Brice Publications,Inc.produces and sells business books.The results of the company's operations for the year ended December 31,20x1,are given below.
A.Prepare a traditional income statement for the company.
B.Prepare a contribution income statement for the company.
C.The contribution statement would be used because the fixed and variable costs must be separated in order to measure the effect of a volume change on total costs.Unfortunately,a traditional income statement does not provide the necessary information.
C.Which income statement (traditional or contribution)would an operating manager most likely use to study changes in operating income that are caused by changes in sales? Why?

Accepted Answer

@#IMG-DLM& 
Required:
A.Prepare a traditional inco

Question 13

Refer to the figure above.At a given sales volume,the vertical distance between the fixed cost line and the total cost line represents:

Accepted Answer

A) fixed cost. 
B) variable cost. 
C) profit or loss at that volume. 
D) semivariable cost. 
E) the safety margin. 
A) fixed cost. 
B) variable cost. 
C) profit or loss at that volume. 
D) semivariable cost. 
E) the safety margin.

Question 14

In order to produce a target profit of $22,000,Narchie's dollar sales must total:

Accepted Answer

A) $8,440. 
B) $21,100. 
C) $1,000,000. 
D) $1,055,000. 
E) an amount other than those abovE. 
A) $8,440. 
B) $21,100. 
C) $1,000,000. 
D) $1,055,000. 
E) an amount other than those abovE.

Question 15

Barrey,Inc.is subject to a 40% income tax rate.The following data pertain to the period just ended when the company produced and sold 45,000 units:  
How many units must Barrey sell to earn an after-tax profit of $225,000?

Accepted Answer

A) 67,250. 
B) 62,250. 
C) 61,000. 
D) 51,000. 
E) An amount other than those abovE. 
A) 67,250. 
B) 62,250. 
C) 61,000. 
D) 51,000. 
E) An amount other than those abovE.

Question 16

Maddock Corporation's product no.H647 has a negative contribution margin.How can such a situation arise? Should the company continue to stock and sell product no.H647? Explain.

Accepted Answer

A negative contribution arises because s

Question 17

Which of the following does not typically appear on a contribution income statement?

Accepted Answer

A) Net income. 
B) Gross margin. 
C) Contribution margin. 
D) Total variable costs. 
E) Total fixed costs. 
A) Net income. 
B) Gross margin. 
C) Contribution margin. 
D) Total variable costs. 
E) Total fixed costs.

Question 18

Brooklyn sells a single product to wholesalers.The company's budget for the upcoming year revealed anticipated unit sales of 31,600,a selling price of $20,variable cost per unit of $8,and total fixed costs of $360,000.Brooklyn's safety margin in units is:

Accepted Answer

A) (13,400). 
B) 0. 
C) 1,600. 
D) 13,600. 
E) an amount other than those abovE. 
A) (13,400). 
B) 0. 
C) 1,600. 
D) 13,600. 
E) an amount other than those abovE.

Question 19

Which of the following expressions can be used to calculate break-even sales revenue with the contribution-margin ratio (CMR)?

Accepted Answer

A) CMR / fixed costs. 
B) CMR * fixed costs. 
C) Fixed costs / CMR. 
D) (Fixed costs + variable costs)* CMR. 
E) (Sales revenue - variable costs)/ CMR. 
A) CMR / fixed costs. 
B) CMR * fixed costs. 
C) Fixed costs / CMR. 
D) (Fixed costs + variable costs)* CMR. 
E) (Sales revenue - variable costs)/ CMR.

Question 20

Refer to the figure above.Line A is the:

Accepted Answer

A) fixed cost line. 
B) variable cost line. 
C) total cost line. 
D) total revenue line. 
E) profit linE. 
A) fixed cost line. 
B) variable cost line. 
C) total cost line. 
D) total revenue line. 
E) profit linE.

A company has fixed costs of $900 and a per-unit contribution margin of $3.Which of the following statement is (are)true?

Cost-volume-profit analysis is based on certain general assumptions.Which of the following is not one of these assumptions?

At a volume level of 500,000 units,Sullivan reported the following information: The company's contribution-margin ratio is closest to:

Strayer has a break-even point of 120,000 units.If the firm's sole product sells for $40 and fixed costs total $480,000,the variable cost per unit must be:

A recent income statement of Black Corporation reported the following data: If these data are based on the sale of 20,000 units,the contribution margin per unit would be:

Grey,Inc.sells a single product for $20.Variable costs are $8 per unit and fixed costs total $120,000 at a volume level of 5,000 units.Assuming that fixed costs do not change,Green's break-even sales would be:

Which of the following would take place if a company experienced a decrease in fixed costs?

The contribution income statement differs from the traditional income statement in which of the following ways?

Refer to the figure above.The triangular area between the horizontal axis and Line A,to the left of 4,000,represents:

Refer to the figure above.Assume that the company whose cost structure is depicted in the figure expects to produce a loss for the upcoming period.The loss would be shown on the graph:

Which of the following calculations can be used to measure a company's degree of operating leverage?

Refer to the figure above.At a given sales volume,the vertical distance between the fixed cost line and the total cost line represents:

In order to produce a target profit of $22,000,Narchie's dollar sales must total:

Barrey,Inc.is subject to a 40% income tax rate.The following data pertain to the period just ended when the company produced and sold 45,000 units: How many units must Barrey sell to earn an after-tax profit of $225,000?

Maddock Corporation's product no.H647 has a negative contribution margin.How can such a situation arise? Should the company continue to stock and sell product no.H647? Explain.

Which of the following does not typically appear on a contribution income statement?

Brooklyn sells a single product to wholesalers.The company's budget for the upcoming year revealed anticipated unit sales of 31,600,a selling price of $20,variable cost per unit of $8,and total fixed costs of $360,000.Brooklyn's safety margin in units is:

Which of the following expressions can be used to calculate break-even sales revenue with the contribution-margin ratio (CMR)?

Refer to the figure above.Line A is the:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts and Accounting for Mass Customization Operations

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis,cost Behavior,and Cost Estimation

Appendix I: The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing,Operational Performance Measures,and the Balanced Scorecard

Flexible Budgeting and the Management of Overhead and Support Activity Costs

Responsibility Accounting, Quality Control, and Environmental Cost Management

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

compound Interest and the Concept of Present Value

Inventory Management

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Exam 7: Cost-Volume-Profit Analysis

A company has fixed costs of $900 and a per-unit contribution margin of $3.Which of the following statement is (are)true?

Cost-volume-profit analysis is based on certain general assumptions.Which of the following is not one of these assumptions?

At a volume level of 500,000 units,Sullivan reported the following information: The company's contribution-margin ratio is closest to:

Strayer has a break-even point of 120,000 units.If the firm's sole product sells for $40 and fixed costs total $480,000,the variable cost per unit must be:

A recent income statement of Black Corporation reported the following data: If these data are based on the sale of 20,000 units,the contribution margin per unit would be:

Grey,Inc.sells a single product for $20.Variable costs are $8 per unit and fixed costs total $120,000 at a volume level of 5,000 units.Assuming that fixed costs do not change,Green's break-even sales would be:

Which of the following would take place if a company experienced a decrease in fixed costs?

The contribution income statement differs from the traditional income statement in which of the following ways?

Refer to the figure above.The triangular area between the horizontal axis and Line A,to the left of 4,000,represents:

Refer to the figure above.Assume that the company whose cost structure is depicted in the figure expects to produce a loss for the upcoming period.The loss would be shown on the graph:

Which of the following calculations can be used to measure a company's degree of operating leverage?

Refer to the figure above.At a given sales volume,the vertical distance between the fixed cost line and the total cost line represents:

In order to produce a target profit of $22,000,Narchie's dollar sales must total:

Barrey,Inc.is subject to a 40% income tax rate.The following data pertain to the period just ended when the company produced and sold 45,000 units: How many units must Barrey sell to earn an after-tax profit of $225,000?

Maddock Corporation's product no.H647 has a negative contribution margin.How can such a situation arise? Should the company continue to stock and sell product no.H647? Explain.

Which of the following does not typically appear on a contribution income statement?

Brooklyn sells a single product to wholesalers.The company's budget for the upcoming year revealed anticipated unit sales of 31,600,a selling price of $20,variable cost per unit of $8,and total fixed costs of $360,000.Brooklyn's safety margin in units is:

Which of the following expressions can be used to calculate break-even sales revenue with the contribution-margin ratio (CMR)?

Refer to the figure above.Line A is the:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts and Accounting for Mass Customization Operations

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis,cost Behavior,and Cost Estimation

Appendix I: The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing,Operational Performance Measures,and the Balanced Scorecard

Flexible Budgeting and the Management of Overhead and Support Activity Costs

Responsibility Accounting, Quality Control, and Environmental Cost Management

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

compound Interest and the Concept of Present Value

Inventory Management

Filters