Question 1

Curvilinear costs are also known as nonlinear costs.

Accepted Answer

A) True 
 B)False

Question 2

A statistical method for deriving an estimated line of cost behavior is the:

Accepted Answer

A) Scatter diagram method. 
B) High-low method. 
C) Composite method. 
D) CVP charting method. 
E) Least-squares regression method. 
A) Scatter diagram method. 
B) High-low method. 
C) Composite method. 
D) CVP charting method. 
E) Least-squares regression method.

Question 3

Ginger Company's product has a contribution margin per unit of $11.25 and a contribution margin ratio of 22.5%.What is the selling price of the product?

Accepted Answer

A) $ 5. 
B) $20. 
C) $30. 
D) $40. 
E) $50. 
A) $ 5. 
B) $20. 
C) $30. 
D) $40. 
E) $50.

Question 4

The high-low method can be used to derive an estimated line of cost behavior.

Accepted Answer

A) True 
 B)False

Question 5

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 ratio.

Accepted Answer

A) 37.5%. 
B) 62.5%. 
C) 55.0%. 
D) 50.0%. 
E) 47.5%. 
A) 37.5%. 
B) 62.5%. 
C) 55.0%. 
D) 50.0%. 
E) 47.5%.

Question 6

Conan Company has total fixed costs of $112,000.Its product sells for $35 per unit and variable costs amount to $25 per unit.Next year Conan Company wishes to earn a pretax income that equals 10% of fixed costs.How many units must be sold to achieve this target income level?

Accepted Answer

A) 1,120. 
B) 8,214. 
C) 11,200. 
D) 12,320. 
E) 14,080. 
A) 1,120. 
B) 8,214. 
C) 11,200. 
D) 12,320. 
E) 14,080.

Question 7

A cost-volume-profit (CVP)chart is a graph that plots volume on the horizontal axis and costs and sales on the vertical axis.

Accepted Answer

A) True 
 B)False

Question 8

The proportion of sales volumes for various products is known as the composite mix.

Accepted Answer

A) True 
 B)False

Question 9

Magee Windows manufactures two standard size windows,F and M,in the ratio of 5:
3.F has a selling price of $150 and M has a selling price of $200.The variable cost of F is $75.00 and the variable cost of M is $90.00.Fixed costs are $352,500.Compute the (a)weighted average contribution margin,(b)break-even point in units,(c)number of units of each product that will be sold at the break-even point.

Accepted Answer

(a)
 @#IMG-DLM& (b)$352,500/$88.125 = 4,

Question 10

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 number of units of Product A Baines must sell to break even.

Accepted Answer

A) 5,080. 
B) 6,200. 
C) 5,580. 
D) 3,100. 
E) 9,300. 
A) 5,080. 
B) 6,200. 
C) 5,580. 
D) 3,100. 
E) 9,300.

Question 11

A method that estimates cost behavior by connecting the costs linked to the highest and lowest volume is called the:

Accepted Answer

A) Scatter method. 
B) High-low method. 
C) Least-squares method. 
D) Break-even method. 
E) Step-wise method. 
A) Scatter method. 
B) High-low method. 
C) Least-squares method. 
D) Break-even method. 
E) Step-wise method.

Question 12

The high-low method of deriving an estimated cost line uses all the data points available.

Accepted Answer

A) True 
 B)False

Question 13

Kelley Company and Mason Company each have sales of $200,000 and costs of $140,000.Kelley Company's costs consist of $40,000 fixed and $100,000 variable,while Mason Company's costs consist of $100,000 fixed and $40,000 variable.Which company will suffer the greatest decline in profits if sales volume declines by 15%?
 Prepare income statements and compute degree of operating leverage to assess.

Accepted Answer

@#IMG-DLM& Since Mason's degree of opera

Question 14

The high-low method is used to derive an estimated line of cost behavior by graphically connecting the two cost amounts identified with the highest and lowest volume levels.

Accepted Answer

A) True 
 B)False

Question 15

An important tool in predicting the volume of activity,the costs to be incurred,the sales to be earned,and the profit to be received is:

Accepted Answer

A) Target income analysis. 
B) Cost-volume-profit analysis. 
C) Least-squares regression of costs. 
D) Variance analysis. 
E) Process costing. 
A) Target income analysis. 
B) Cost-volume-profit analysis. 
C) Least-squares regression of costs. 
D) Variance analysis. 
E) Process costing.

Question 16

A break-even point can be calculated either in units or in dollars.

Accepted Answer

A) True 
 B)False

Question 17

The contribution margin per unit is equal to the sales price per unit minus the variable costs per unit.

Accepted Answer

A) True 
 B)False

Question 18

What is operating leverage?
 How can the degree of operating leverage be used in analyzing changes in sales?

Accepted Answer

Operating leverage is the extent or rela

Question 19

During its most recent fiscal year,Simon Enterprises sold 200,000 electric screwdrivers at a price of $15 each.Fixed costs amounted to $400,000 and pretax income was $600,000.What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?

Accepted Answer

A) $2,400,000. 
B) $1,600,000. 
C) $3,000,000. 
D) $2,000,000. 
E) $1,000,000. 
A) $2,400,000. 
B) $1,600,000. 
C) $3,000,000. 
D) $2,000,000. 
E) $1,000,000.

Question 20

Define variable cost,fixed cost,and mixed cost.

Accepted Answer

Variable cost: a cost that changes in pr

Exam 21: Cost-Volume-Profit Analysis

Curvilinear costs are also known as nonlinear costs.

A statistical method for deriving an estimated line of cost behavior is the:

Ginger Company's product has a contribution margin per unit of $11.25 and a contribution margin ratio of 22.5%.What is the selling price of the product?

The high-low method can be used to derive an estimated line of cost behavior.

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 ratio.

Conan Company has total fixed costs of $112,000.Its product sells for $35 per unit and variable costs amount to $25 per unit.Next year Conan Company wishes to earn a pretax income that equals 10% of fixed costs.How many units must be sold to achieve this target income level?

A cost-volume-profit (CVP)chart is a graph that plots volume on the horizontal axis and costs and sales on the vertical axis.

The proportion of sales volumes for various products is known as the composite mix.

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 number of units of Product A Baines must sell to break even.

A method that estimates cost behavior by connecting the costs linked to the highest and lowest volume is called the:

The high-low method of deriving an estimated cost line uses all the data points available.

The high-low method is used to derive an estimated line of cost behavior by graphically connecting the two cost amounts identified with the highest and lowest volume levels.

An important tool in predicting the volume of activity,the costs to be incurred,the sales to be earned,and the profit to be received is:

A break-even point can be calculated either in units or in dollars.

The contribution margin per unit is equal to the sales price per unit minus the variable costs per unit.

What is operating leverage? How can the degree of operating leverage be used in analyzing changes in sales?

Define variable cost,fixed cost,and mixed cost.

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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