Question 1

An important assumption in multiproduct analysis is that the sales mix is known and remains constant.

Accepted Answer

A) True 
 B)False

Question 2

Three important assumptions in cost-volume-profit analysis is that (1)_______________ per unit is constant,(2)_____________ per unit is constant,and (3)______________ are constant in total.

Accepted Answer

answers m

Question 3

Solving problems to determine the relationship of cost,volume,and profit often commences with the measurement of the ________ point.Further analysis emphasizing profitability may be accomplished by measuring the __________ and _________________.

Accepted Answer

answers m

Question 4

In Davis Corporation's most recent fiscal year,the company reported pretax earnings of $215,000. Fixed costs totaled $325,800,the unit selling price of the firm's only product was $60,and the variable costs per unit were 40% of the selling price.Based on this information,the firm's break-even point in units was:

Accepted Answer

A) 13,575 units. 
B) 15,023 units. 
C) 13,750 units. 
D) 9,050 units. 
E) 8,750 units. 
A) 13,575 units. 
B) 15,023 units. 
C) 13,750 units. 
D) 9,050 units. 
E) 8,750 units.

Question 5

Define the break-even point of a company.

Accepted Answer

The break-even point of a company is the

Question 6

Spruce Company is considering the production and sale of a new product with the following sales and cost data:
 unit sales price,$350; unit variable costs,$180; total fixed costs,$399,500; and projected sales,$910,000.Round your answers to the nearest whole unit or dollar.
(a)Calculate break-even in units.
(b)Calculate break-even in dollars (use four decimal places when calculating the contribution margin ratio).
(c)Calculate number of units that would need to be sold to generate an after-tax profit of $420,000 assuming a 30% tax rate.
(d)Calculate dollar sales that would be needed to generate the same profit as above.
(e)Calculate the margin of safety stated as a percentage using the $910,000 projected sales level.
Be sure to label each calculation and show all calculations.

Accepted Answer

(a)$399,500/($350-180)= 2,350 units
(b)$

Question 7

The sales level at which a company neither earns a profit nor incurs a loss is the:

Accepted Answer

A) Relevant range. 
B) Margin of safety. 
C) Step-wise variable level. 
D) Break-even point. 
E) Contribution margin. 
A) Relevant range. 
B) Margin of safety. 
C) Step-wise variable level. 
D) Break-even point. 
E) Contribution margin.

Question 8

Which one of the following statements is not true?

Accepted Answer

A) Total fixed costs remain the same regardless of volume within the relevant range. 
B) Total variable costs change with volume. 
C) Total variable costs decrease as the volume increases. 
D) Fixed costs per unit increase as the volume decreases. 
E) Variable costs per unit remain the same regardless of the volume. 
A) Total fixed costs remain the same regardless of volume within the relevant range. 
B) Total variable costs change with volume. 
C) Total variable costs decrease as the volume increases. 
D) Fixed costs per unit increase as the volume decreases. 
E) Variable costs per unit remain the same regardless of the volume.

Question 9

Torville Company's contribution margin income statement is presented below.Sales for the current period consisted of 5,000 units.Determine the company's break-even point in dollars.

Accepted Answer

a)
 @#IMG-DLM& Per unit costs:
Sales pri

Question 10

A company sells a single product that has a contribution margin ratio of 24%.If the company's total fixed costs are $84,000,what is the break-even point in dollar sales?

Accepted Answer

Break-even point in

Question 11

At Flint Company's break-even point of 9,000 units,fixed costs are $180,000 and variable costs are $540,000 in total.The unit sales price is:

Accepted Answer

A) $ 20. 
B) $ 40. 
C) $ 60. 
D) $ 80. 
E) $100. 
A) $ 20. 
B) $ 40. 
C) $ 60. 
D) $ 80. 
E) $100.

Question 12

A cost that remains constant over a limited range of volume,but increases by a lump sum when volume increases beyond a maximum amount,is a(n):

Accepted Answer

A) Step-wise cost. 
B) Fixed cost. 
C) Curvilinear cost. 
D) Incremental cost. 
E) Opportunity cost. 
A) Step-wise cost. 
B) Fixed cost. 
C) Curvilinear cost. 
D) Incremental cost. 
E) Opportunity cost.

Question 13

Winthrop Manufacturing produces a product that sells for $50.00.Fixed costs are $260,000 and variable costs are $24.00 per unit.Winthrop can buy a new production machine that will increase fixed costs by $11,400 per year,but will decrease variable costs by $3.50 per unit.Compute break-even point in units if the new machine is purchased.

Accepted Answer

A) 10,438 units. 
B) 8,814 units. 
C) 10,000 units. 
D) 9,200 units. 
E) 9,869 units. 
A) 10,438 units. 
B) 8,814 units. 
C) 10,000 units. 
D) 9,200 units. 
E) 9,869 units.

Question 14

The least-squares regression method is:

Accepted Answer

A) A graphical method to identify cost behavior. 
B) An algebraic method to identify cost behavior. 
C) A statistical method to identify cost behavior. 
D) The only identify cost estimation method allowed by GAAP. 
E) A cost estimation method that only uses the two extreme values. 
A) A graphical method to identify cost behavior. 
B) An algebraic method to identify cost behavior. 
C) A statistical method to identify cost behavior. 
D) The only identify cost estimation method allowed by GAAP. 
E) A cost estimation method that only uses the two extreme values.

Question 15

Assume that sales are predicted to be $3,750,the expected contribution margin is $1,500,and a net loss of $250 is anticipated.The break-even point in sales dollars is:

Accepted Answer

A) $1,750. 
B) $2,500. 
C) $4,000. 
D) $4,250. 
E) $4,375. 
A) $1,750. 
B) $2,500. 
C) $4,000. 
D) $4,250. 
E) $4,375.

Question 16

The contribution margin ratio is the percent by which the margin of safety exceeds the break-even point.

Accepted Answer

A) True 
 B)False

Question 17

Wayward Enterprises manufactures and sells three distinct styles of bicycles: the Youth model sells for $300 and has a unit contribution margin of $105; the Adult model sells for $850 and has a unit contribution margin of $450; and the Recreational model sells for $1,000 and has a unit contribution margin of $500.The company's sales mix includes:
5 Youth models; 9 Adult models; and 6 Recreational models.If the firm's annual fixed costs total $6,500,000,calculate the firm's break-even point in sales dollars.

Accepted Answer

A) $13,250,000. 
B) $13,000,000. 
C) $12,750,000. 
D) $12,900,050. 
E) $12,750,625. 
A) $13,250,000. 
B) $13,000,000. 
C) $12,750,000. 
D) $12,900,050. 
E) $12,750,625.

Question 18

Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300.Annual fixed costs are $990,000.Current sales volume is $4,200,000.Compute the contribution margin per unit.

Accepted Answer

A) $480. 
B) $300. 
C) $200. 
D) $190. 
E) $180. 
A) $480. 
B) $300. 
C) $200. 
D) $190. 
E) $180.

Question 19

The following information describes a product expected to be produced and sold by Hadley Company:
Selling price $80 per unit
Variable costs $32 per unit
Total fixed costs $630,000
Required:
(a)Calculate the contribution margin ratio.
(b)Calculate the break-even point in dollar sales.
(c)What dollar amount of sales would be necessary to achieve a pretax income of $120,000?

Accepted Answer

(a)Contribution margin ratio =

Question 20

Ivan Company has a goal of earning $70,000 after-tax income.Ivan would need to pay $20,000 of income taxes at the target level of income.The contribution margin ratio is 30%.What amount of dollar sales must be achieved to reach the goal if fixed costs are $36,000?

Accepted Answer

A) $ 23,333. 
B) $ 36,000. 
C) $300,000. 
D) $353,333. 
E) $420,000. 
A) $ 23,333. 
B) $ 36,000. 
C) $300,000. 
D) $353,333. 
E) $420,000.

Exam 21: Cost-Volume-Profit Analysis

An important assumption in multiproduct analysis is that the sales mix is known and remains constant.

Three important assumptions in cost-volume-profit analysis is that (1)_______________ per unit is constant,(2)_____________ per unit is constant,and (3)______________ are constant in total.

Solving problems to determine the relationship of cost,volume,and profit often commences with the measurement of the ________ point.Further analysis emphasizing profitability may be accomplished by measuring the __________ and _________________.

Define the break-even point of a company.

The sales level at which a company neither earns a profit nor incurs a loss is the:

Which one of the following statements is not true?

Torville Company's contribution margin income statement is presented below.Sales for the current period consisted of 5,000 units.Determine the company's break-even point in dollars.

A company sells a single product that has a contribution margin ratio of 24%.If the company's total fixed costs are $84,000,what is the break-even point in dollar sales?

At Flint Company's break-even point of 9,000 units,fixed costs are $180,000 and variable costs are $540,000 in total.The unit sales price is:

A cost that remains constant over a limited range of volume,but increases by a lump sum when volume increases beyond a maximum amount,is a(n):

The least-squares regression method is:

Assume that sales are predicted to be $3,750,the expected contribution margin is $1,500,and a net loss of $250 is anticipated.The break-even point in sales dollars is:

The contribution margin ratio is the percent by which the margin of safety exceeds the break-even point.

Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300.Annual fixed costs are $990,000.Current sales volume is $4,200,000.Compute the contribution margin per unit.

Ivan Company has a goal of earning $70,000 after-tax income.Ivan would need to pay $20,000 of income taxes at the target level of income.The contribution margin ratio is 30%.What amount of dollar sales must be achieved to reach the goal if fixed costs are $36,000?

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

Filters

Three important assumptions in cost-volume-profit analysis is that (1)_________ per unit is constant,(2)_ per unit is constant,and (3)________ are constant in total.

Solving problems to determine the relationship of cost,volume,and profit often commences with the measurement of the point.Further analysis emphasizing profitability may be accomplished by measuring the and ___________.