Question 1

The excess of expected sales over the sales level at the break-even point is known as the:

Accepted Answer

A) Sales turnover. 
B) Profit margin. 
C) Contribution margin. 
D) Relevant range. 
E) Margin of safety. 
A) Sales turnover. 
B) Profit margin. 
C) Contribution margin. 
D) Relevant range. 
E) Margin of safety.

Question 2

Contribution margin is the amount of sales that exceeds total variable costs.

Accepted Answer

A) True 
 B)False

Question 3

The margin of safety is the excess of:

Accepted Answer

A) Break-even sales over expected sales. 
B) Expected sales over variable costs. 
C) Expected sales over fixed costs. 
D) Fixed costs over expected sales. 
E) Expected sales over break-even sales. 
A) Break-even sales over expected sales. 
B) Expected sales over variable costs. 
C) Expected sales over fixed costs. 
D) Fixed costs over expected sales. 
E) Expected sales over break-even sales.

Question 4

What are the basic assumptions of CVP analysis with regard to variable cost,fixed cost,and selling price per unit?
 (Assume a single product).

Accepted Answer

Variable costs per unit are co

Question 5

The unit contribution margin divided by the selling price per unit is the _____________.

Accepted Answer

contributi

Question 6

The relevant range of operations includes extremely high and low levels of production that are unlikely to occur.

Accepted Answer

A) True 
 B)False

Question 7

A product sells for $200 per unit,and its variable costs per unit are $130.The fixed costs are $420,000.If the firm wants to earn $35,000 pretax income,how many units must be sold?

Accepted Answer

A) 6,500. 
B) 6,000. 
C) 500. 
D) 5,000. 
E) 5,500. 
A) 6,500. 
B) 6,000. 
C) 500. 
D) 5,000. 
E) 5,500.

Question 8

The relevant range of operations excludes extremely high and low levels of production that are not likely to occur.

Accepted Answer

A) True 
 B)False

Question 9

Davison Company has fixed costs of $315,000 and a contribution margin ratio of 24%.If sales are expected to be $1,500,000,what is the percentage of the margin of safety?

Accepted Answer

Break-even point in dollars sa

Question 10

Yamaguchi Company's break even point in units is 1,000.The sales price per unit is $10 and variable cost per unit is $7.If the company sells 2,500 units,what will net income be?

Accepted Answer

A) $ 4,500 
B) $ 7,500 
C) $17,000 
D) $35,000 
E) Fixed costs must be known in order to predict net income. 
A) $ 4,500 
B) $ 7,500 
C) $17,000 
D) $35,000 
E) Fixed costs must be known in order to predict net income.

Question 11

The budgeted income statement presented below is for Griffith Corporation for the coming fiscal year.If Griffith Corporation is able to achieve the budgeted level of

Accepted Answer

A) $172,420. 
B) $150,000. 
C) $262,500. 
D) $275,862. 
E) $310,115. 
A) $172,420. 
B) $150,000. 
C) $262,500. 
D) $275,862. 
E) $310,115.

Question 12

Match between columns
                        Premises: A company's normal operating range; excludes extremely high and low volumes that are not likely to be encountered.
A statistical method for deriving an estimated line of cost behavior that is more precise than the high-low method and a scatter diagram.
A cost that changes in proportion to changes in volume of activity.
A cost that remains unchanged in total amount even when the volume of activity varies.
Useful in business planning; includes predicting the volume of activity,the costs incurred,sales earned,and profits received.
The amount that the sale of one unit contributes toward recovering fixed costs and earning profit.
A cost that remains constant over limited ranges of volumes of activity but changes by a lump sum when volume changes occur outside these limited ranges.
A cost that changes with volume,but not at a constant rate.
A line drawn on a graph to fit the past relation between cost and sales.
A cost that includes both fixed and variable costs.

Accepted Answer

The Answer of Fixed cost and Mixed cost and Step-wise is...

Question 13

Baines Brothers manufactures and sells two products,A and Z in the ratio of 4: 2.Product A sells for $75; Z sells for $95.Variable costs for product A are $35; for Z $40.Fixed costs are $418,500.Compute the break-even point in composite units.

Accepted Answer

A) 1,748. 
B) 1,468. 
C) 1,550. 
D) 1,395. 
E) 1,270. 
A) 1,748. 
B) 1,468. 
C) 1,550. 
D) 1,395. 
E) 1,270.

Question 14

The budgeted income statement presented below is for Griffith Corporation for the coming fiscal year.If Griffith Corporation's income tax rate is 40%,compute the number of units that must be sold in order to achieve a target pretax income of $130,000.

Accepted Answer

A) 53,165. 
B) 81,250. 
C) 36,207. 
D) 50,000. 
E) 58,621. 
A) 53,165. 
B) 81,250. 
C) 36,207. 
D) 50,000. 
E) 58,621.

Question 15

To determine the slope of the variable cost from a scatter diagram,divide the change in volume by the change in cost.

Accepted Answer

A) True 
 B)False

Question 16

A step-wise variable cost can be separated into a fixed component and a variable component.

Accepted Answer

A) True 
 B)False

Question 17

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 the contribution margin per unit if the machine is purchased.

Accepted Answer

A) $22.50. 
B) $26.00. 
C) $29.50. 
D) $28.50. 
E) $27.50. 
A) $22.50. 
B) $26.00. 
C) $29.50. 
D) $28.50. 
E) $27.50.

Question 18

Scatter diagrams plot volume on the vertical axis and cost on the horizontal axis.

Accepted Answer

A) True 
 B)False

Question 19

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 break-even point in dollars.

Accepted Answer

A) $2,790,000. 
B) $2,640,000. 
C) $2,880,000. 
D) $2,475,000. 
E) $2,500,000. 
A) $2,790,000. 
B) $2,640,000. 
C) $2,880,000. 
D) $2,475,000. 
E) $2,500,000.

Question 20

A firm expects to sell 25,000 units of its product at $11 per unit.Pretax income is predicted to be $60,000.If the variable costs per unit are $5,total fixed costs must be:

Accepted Answer

A) $ 65,000. 
B) $ 90,000. 
C) $125,000. 
D) $215,000. 
E) $275,000. 
A) $ 65,000. 
B) $ 90,000. 
C) $125,000. 
D) $215,000. 
E) $275,000.

Exam 21: Cost-Volume-Profit Analysis

The excess of expected sales over the sales level at the break-even point is known as the:

Contribution margin is the amount of sales that exceeds total variable costs.

The margin of safety is the excess of:

What are the basic assumptions of CVP analysis with regard to variable cost,fixed cost,and selling price per unit? (Assume a single product).

The unit contribution margin divided by the selling price per unit is the _____________.

The relevant range of operations includes extremely high and low levels of production that are unlikely to occur.

A product sells for $200 per unit,and its variable costs per unit are $130.The fixed costs are $420,000.If the firm wants to earn $35,000 pretax income,how many units must be sold?

The relevant range of operations excludes extremely high and low levels of production that are not likely to occur.

Davison Company has fixed costs of $315,000 and a contribution margin ratio of 24%.If sales are expected to be $1,500,000,what is the percentage of the margin of safety?

Yamaguchi Company's break even point in units is 1,000.The sales price per unit is $10 and variable cost per unit is $7.If the company sells 2,500 units,what will net income be?

The budgeted income statement presented below is for Griffith Corporation for the coming fiscal year.If Griffith Corporation is able to achieve the budgeted level of

Baines Brothers manufactures and sells two products,A and Z in the ratio of 4: 2.Product A sells for $75; Z sells for $95.Variable costs for product A are $35; for Z $40.Fixed costs are $418,500.Compute the break-even point in composite units.

The budgeted income statement presented below is for Griffith Corporation for the coming fiscal year.If Griffith Corporation's income tax rate is 40%,compute the number of units that must be sold in order to achieve a target pretax income of $130,000.

To determine the slope of the variable cost from a scatter diagram,divide the change in volume by the change in cost.

A step-wise variable cost can be separated into a fixed component and a variable component.

Scatter diagrams plot volume on the vertical axis and cost on the horizontal axis.

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 break-even point in dollars.

A firm expects to sell 25,000 units of its product at $11 per unit.Pretax income is predicted to be $60,000.If the variable costs per unit are $5,total fixed costs must be:

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

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