Question 1

What is the high-low method?
 Briefly describe how it is applied.

Accepted Answer

The high-low method is a way to estimate

Question 2

Cost-volume-profit analysis is a precise tool for perfectly predicting the profit consequences of cost changes,price changes,and volume changes.

Accepted Answer

A) True 
 B)False

Question 3

The margin of safety is the amount that sales can drop before the company incurs a loss.

Accepted Answer

A) True 
 B)False

Question 4

A product is sold for $45 and has variable costs of $33 per unit.The total fixed costs for the firm are $180,600.If the firm desires to earn a pretax income of $77,400,how many units must be sold?

Accepted Answer

Unit sales targeted income = F

Question 5

There are at least three different methods to separate costs into fixed and variable.These methods are the _______________,_______________,and _______________ methods.

Accepted Answer

answers c

Question 6

The margin of safety can be expressed in units of product,in dollars,or as a percent of sales.

Accepted Answer

A) True 
 B)False

Question 7

Wilton Company is analyzing two alternative methods of producing its product.The production manager indicates that variable costs can be reduced 40% by installing a machine that automates production,but fixed costs would increase.Alternative 1 shows costs before installing the machine; Alternative 2 shows costs after the machine is installed.(a)Compute the break-even point in units and dollars for both alternatives.(b)Prepare a forecasted income statement for both alternatives assuming that 30,000 units will be sold.The statements should report sales,total variable costs,contribution margin,fixed costs,income before taxes,income taxes,and net income.Below the income statement,compute the degree of operating leverage.Which alternative would you recommend and why?

Accepted Answer

(a)
Alternative 1 break-even in units =

Question 8

A __________ cost is one that includes both fixed and variable cost components; a ______________ cost is one that reflects a step pattern.

Accepted Answer

answers m

Question 9

The extent,or relative size,of fixed costs in the total cost structure is known as operating leverage.

Accepted Answer

A) True 
 B)False

Question 10

What is an important feature that must be remembered when using cost identifying and behavior methods?

Accepted Answer

All three methods of estimation (scatter

Question 11

Camden Corporation sells three products (M,N,and O)in the following mix:3:1:2.Unit price and cost data are:
  Total fixed costs are $340,000.The break-even point in sales dollars for the current sales mix is (round to the nearest thousand):

Accepted Answer

A) $ 20,000. 
B) $289,000. 
C) $400,000. 
D) $629,000. 
E) $740,000. 
A) $ 20,000. 
B) $289,000. 
C) $400,000. 
D) $629,000. 
E) $740,000.

Question 12

The Haskins Company manufactures and sells radios.Each radio sells for $23.75 and the variable cost per unit is $16.25.Haskin's total fixed costs are $25,000,and budgeted sales are 8,000 units.What is the contribution margin per unit?

Accepted Answer

A) $7.50. 
B) $16.25. 
C) $23.75. 
D) $60,000. 
E) $1.25 
A) $7.50. 
B) $16.25. 
C) $23.75. 
D) $60,000. 
E) $1.25

Question 13

The sales mix of Palm Company is 5 units of A,3 units of B,and 1 unit of
C.Per unit sales prices for each product are $30, $40, and $50, respectively.Variable costs per unit are $14, $24, and $34, respectively.Fixed costs are $597,600.What is the break-even point in composite units and in units of A, B, and C?

Accepted Answer

@#IMG-DLM& Contribution margin of a composite unit

Question 14

Hartman Co.has fixed costs of $36,000 and a contribution margin ratio of 24%.If expected sales are $200,000,what is the margin of safety as a percent of sales?

Accepted Answer

A) 6%. 
B) 25%. 
C) 33%. 
D) 50%. 
E) 75%. 
A) 6%. 
B) 25%. 
C) 33%. 
D) 50%. 
E) 75%.

Question 15

In cost-volume-profit analysis,the unit contribution margin is:

Accepted Answer

A) Sales price per unit less cost of goods sold per unit. 
B) Sales price per unit less unit fixed cost per unit . 
C) Sales price per unit less total variable cost per unit . 
D) Sales price per unit less unit total cost per unit. 
E) The same as the contribution margin ratio. 
A) Sales price per unit less cost of goods sold per unit. 
B) Sales price per unit less unit fixed cost per unit . 
C) Sales price per unit less total variable cost per unit . 
D) Sales price per unit less unit total cost per unit. 
E) The same as the contribution margin ratio.

Question 16

One aid in measuring cost behavior involves creating a display of the data about past costs in graphical form.Such a visual display is called a ______________________.

Accepted Answer

The answer of One aid in measuring cost behavior involves...

Question 17

Mueller Corp.manufactures compact discs that sell for $5.00.Fixed costs are $28,000 and variable costs are $3.60 per unit.Mueller can buy a newer production machine that will increase fixed costs by $8,000 per year,but will decrease variable costs by $0.40 per unit.What effect would the purchase of the new machine have on Mueller's break-even point in units?

Accepted Answer

A) 4,444 unit increase. 
B) 9,850 unit decrease. 
C) 5,714 unit increase. 
D) 4,444 unit decrease. 
E) No effect on the break-even point in units. 
A) 4,444 unit increase. 
B) 9,850 unit decrease. 
C) 5,714 unit increase. 
D) 4,444 unit decrease. 
E) No effect on the break-even point in units.

Question 18

A company manufactures and sells a product for $120 per unit.The company's fixed costs are $68,760,and its variable costs are $90 per unit.The company's break-even point in dollars is:

Accepted Answer

A) $91,680. 
B) $68,760. 
C) $2,292. 
D) $275,040. 
E) $206,280. 
A) $91,680. 
B) $68,760. 
C) $2,292. 
D) $275,040. 
E) $206,280.

Question 19

A graphic depiction of the break-even point is known as a cost-volume-profit (CVP)chart.

Accepted Answer

A) True 
 B)False

Question 20

Briefly describe a CVP chart,including its major components.

Accepted Answer

The vertical axis of a CVP chart plots t

Exam 21: Cost-Volume-Profit Analysis

What is the high-low method? Briefly describe how it is applied.

Cost-volume-profit analysis is a precise tool for perfectly predicting the profit consequences of cost changes,price changes,and volume changes.

The margin of safety is the amount that sales can drop before the company incurs a loss.

A product is sold for $45 and has variable costs of $33 per unit.The total fixed costs for the firm are $180,600.If the firm desires to earn a pretax income of $77,400,how many units must be sold?

There are at least three different methods to separate costs into fixed and variable.These methods are the _______________,_______________,and _______________ methods.

The margin of safety can be expressed in units of product,in dollars,or as a percent of sales.

A __________ cost is one that includes both fixed and variable cost components; a ______________ cost is one that reflects a step pattern.

The extent,or relative size,of fixed costs in the total cost structure is known as operating leverage.

What is an important feature that must be remembered when using cost identifying and behavior methods?

Camden Corporation sells three products (M,N,and O)in the following mix:3:1:2.Unit price and cost data are: Total fixed costs are $340,000.The break-even point in sales dollars for the current sales mix is (round to the nearest thousand):

The Haskins Company manufactures and sells radios.Each radio sells for $23.75 and the variable cost per unit is $16.25.Haskin's total fixed costs are $25,000,and budgeted sales are 8,000 units.What is the contribution margin per unit?

Hartman Co.has fixed costs of $36,000 and a contribution margin ratio of 24%.If expected sales are $200,000,what is the margin of safety as a percent of sales?

In cost-volume-profit analysis,the unit contribution margin is:

One aid in measuring cost behavior involves creating a display of the data about past costs in graphical form.Such a visual display is called a ______________________.

A company manufactures and sells a product for $120 per unit.The company's fixed costs are $68,760,and its variable costs are $90 per unit.The company's break-even point in dollars is:

A graphic depiction of the break-even point is known as a cost-volume-profit (CVP)chart.

Briefly describe a CVP chart,including its major components.

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

There are at least three different methods to separate costs into fixed and variable.These methods are the _______,_,and _________ methods.

A cost is one that includes both fixed and variable cost components; a ____ cost is one that reflects a step pattern.