Question 1

A cost that changes in proportion to changes in volume of activity is a(n):

Accepted Answer

A) Differential cost. 
B) Fixed cost. 
C) Incremental cost. 
D) Variable cost. 
E) Product cost. 
A) Differential cost. 
B) Fixed cost. 
C) Incremental cost. 
D) Variable cost. 
E) Product cost.

Question 2

As the level of output activity increases,the variable cost per unit remains constant.

Accepted Answer

A) True 
 B)False

Question 3

Joseph Co.has three products A,B,and C,and its fixed costs are $69,000.The sales mix for its products are 3 units of A,4 units of B,and 1 unit of
C.Information about the three products follows:
A B C   (a) Calculate the company's break-even point in composite units and sales dollars.(b) Calculate the number of units of each individual product to be sold at the break-even point.

Accepted Answer

3 units of A at $40 each $120
4 units of

Question 4

Describe what happens to the net income of a company under each of the following assumptions:
 (a)Sales volume is less than break-even sales.(b)Sales volume is greater than break-even sales.(c)Sales volume is equal to the break-even point.

Accepted Answer

(a)If the sales volume is less the break

Question 5

Outback Products reports the following information:
Total Contribution Margin…………………..$32,000
Total Fixed Costs…………………………….$28,000
Required:
(a)Calculate Outback Products' degree of operating leverage (DOL).
(b)Outback Products forecasts a 6% increase in sales.What is the expected effect in percent on pretax income?

Accepted Answer

@#IMG-DLM& Degree of operating leverage

Question 6

A _______________ cost is one that remains unchanged in amount when volume of activity varies from period to period within a relevant range.A ______________ cost is one that changes in proportion to changes in volume of activity.

Accepted Answer

answers m

Question 7

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 Z Baines must sell to break even.

Accepted Answer

A) 5,080. 
B) 6,200. 
C) 2,540. 
D) 3,100. 
E) 2,790. 
A) 5,080. 
B) 6,200. 
C) 2,540. 
D) 3,100. 
E) 2,790.

Question 8

A firm produces and sells a product with a contribution margin of $32 per unit.The firm is presently selling 90,000 units and earning $240,000 in after-tax income.Taxes are $80,000 at a 25% tax rate.If the firm desires to increase its after-tax income to $300,000,how many more units must it sell?

Accepted Answer

Target increase in pretax inco

Question 9

Bristol Company's contribution margin income statement is presented below.Sales for the current period consisted of 7,500 units.Compute the company's break-even point in (a)units,and (b)dollars.Compute the margin of safety in (c)dollars and (d)percent.

Accepted Answer

Per unit costs:
Sales price = $225,000/7

Question 10

Narrows Co.is considering the production and sale of a new product line with the following sales and cost data:
 unit sales price $125; unit variable costs $75; and total fixed costs of $140,000.Calculate the break-even point in units and in dollar sales.

Accepted Answer

Break-even point in units = $1

Question 11

The difference between sales price per unit and variable cost per unit is the:

Accepted Answer

A) Gross profit from sales. 
B) Gross margin per unit. 
C) Fixed cost per unit. 
D) Margin of safety per unit. 
E) Contribution margin per unit. 
A) Gross profit from sales. 
B) Gross margin per unit. 
C) Fixed cost per unit. 
D) Margin of safety per unit. 
E) Contribution margin per unit.

Question 12

A cost that can be separated into fixed and variable components is called a:

Accepted Answer

A) Mixed cost. 
B) Step-variable cost. 
C) Composite cost. 
D) Curvilinear cost. 
E) Differential cost. 
A) Mixed cost. 
B) Step-variable cost. 
C) Composite cost. 
D) Curvilinear cost. 
E) Differential cost.

Question 13

A line on a scatter diagram that is intended to reflect the past relation between cost and volume is the:

Accepted Answer

A) Margin of safety line. 
B) Break-even line. 
C) Contribution margin line. 
D) Estimated line of cost behavior. 
E) Standard cost line. 
A) Margin of safety line. 
B) Break-even line. 
C) Contribution margin line. 
D) Estimated line of cost behavior. 
E) Standard cost line.

Question 14

A target income refers to:

Accepted Answer

A) Income at the break-even point. 
B) Income from the most recent period. 
C) Income planned for a future period. 
D) Income only in a multiproduct environment. 
E) Income at the minimum contribution margin. 
A) Income at the break-even point. 
B) Income from the most recent period. 
C) Income planned for a future period. 
D) Income only in a multiproduct environment. 
E) Income at the minimum contribution margin.

Question 15

Lee Company manufactures and sells widgets for $2.00 per unit.Its variable cost per unit is $1.70.Lee's total fixed costs are $10,500.How many widgets must Lee Company sell to break even?

Accepted Answer

A) 5,250. 
B) 6,176. 
C) 35,000. 
D) 52,500. 
E) 61,760. 
A) 5,250. 
B) 6,176. 
C) 35,000. 
D) 52,500. 
E) 61,760.

Question 16

Least-squares regression is a statistical method for deriving an estimated line of cost behavior.

Accepted Answer

A) True 
 B)False

Question 17

Duxbury Co.reports the following data for the current year:
Units Sold ………………………………………..1,200
Unit Sales Price ………………………………………..$30
Unit Variable Cost ……………………………………….. $10
Total Fixed Cost……………………………………….. $18,000
Required:
(a)Calculate Duxbury's pretax income.
(b)Calculate Duxbury's degree of operating leverage.

Accepted Answer

(a)
Sales (1,200 units * $30 each)………………

Question 18

The ratio of the sales volume for the various products sold by a company is called the:

Accepted Answer

A) Current product mix. 
B) Relevant mix. 
C) Sales mix. 
D) Inventory cost ratio. 
E) Production ratio. 
A) Current product mix. 
B) Relevant mix. 
C) Sales mix. 
D) Inventory cost ratio. 
E) Production ratio.

Question 19

There are only two methods to derive an estimated line of cost behavior; the high-low method and the scatter diagram.

Accepted Answer

A) True 
 B)False

Question 20

Macleod Company's product has a contribution margin per unit of $62.50 and a contribution margin ratio of 25%.What is the per unit selling price of the product?

Accepted Answer

The answer of Macleod Company's product has a contribution margin...

Exam 21: Cost-Volume-Profit Analysis

A cost that changes in proportion to changes in volume of activity is a(n):

As the level of output activity increases,the variable cost per unit remains constant.

Describe what happens to the net income of a company under each of the following assumptions: (a)Sales volume is less than break-even sales.(b)Sales volume is greater than break-even sales.(c)Sales volume is equal to the break-even point.

A _______________ cost is one that remains unchanged in amount when volume of activity varies from period to period within a relevant range.A ______________ cost is one that changes in proportion to changes in volume of activity.

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 Z Baines must sell to break even.

A firm produces and sells a product with a contribution margin of $32 per unit.The firm is presently selling 90,000 units and earning $240,000 in after-tax income.Taxes are $80,000 at a 25% tax rate.If the firm desires to increase its after-tax income to $300,000,how many more units must it sell?

Bristol Company's contribution margin income statement is presented below.Sales for the current period consisted of 7,500 units.Compute the company's break-even point in (a)units,and (b)dollars.Compute the margin of safety in (c)dollars and (d)percent.

Narrows Co.is considering the production and sale of a new product line with the following sales and cost data: unit sales price $125; unit variable costs $75; and total fixed costs of $140,000.Calculate the break-even point in units and in dollar sales.

The difference between sales price per unit and variable cost per unit is the:

A cost that can be separated into fixed and variable components is called a:

A line on a scatter diagram that is intended to reflect the past relation between cost and volume is the:

A target income refers to:

Lee Company manufactures and sells widgets for $2.00 per unit.Its variable cost per unit is $1.70.Lee's total fixed costs are $10,500.How many widgets must Lee Company sell to break even?

Least-squares regression is a statistical method for deriving an estimated line of cost behavior.

The ratio of the sales volume for the various products sold by a company is called the:

There are only two methods to derive an estimated line of cost behavior; the high-low method and the scatter diagram.

Macleod Company's product has a contribution margin per unit of $62.50 and a contribution margin ratio of 25%.What is the per unit selling price of the product?

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

A _ cost is one that remains unchanged in amount when volume of activity varies from period to period within a relevant range.A cost is one that changes in proportion to changes in volume of activity.