Question 1

Briefly describe a CVP chart, including its major components.

Accepted Answer

The vertical axis of a CVP chart plots t

Question 2

Margin Company has total fixed costs of $360,000 and variable costs of $14 per unit. If the unit sales price is reduced from $24 to $20 and advertising is increased by $10,000, sales will increase from 40,000 to 65,000 units. Should Margin reduce its per unit sales price and pay for the additional advertising? (Support your answer with calculations.)

Accepted Answer

Current: Proposed:
Sales (40,000 * $24)

Question 3

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 4

The proportion of sales volumes for various products in a multiproduct company is known as the composite mix.

Accepted Answer

A) True 
 B)False

Question 5

During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. What amount should have been reported as fixed costs in the company's contribution margin income statement for the year in question?

Accepted Answer

A)  $1,900,000. 
B)  $2,800,000. 
C)  $1,300,000. 
D)  $1,100,000. 
E)  $1,700,000. 
A)  $1,900,000. 
B)  $2,800,000. 
C)  $1,300,000. 
D)  $1,100,000. 
E)  $1,700,000.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Journey Company is considering the production and sale of a new product with the following sales and cost data: unit sales price $18; unit variable costs $8.50; and total fixed costs of $81,250. Determine the dollar sales needed to generate a pre-tax income of $44,000, rounded to the nearest whole dollar.

Accepted Answer

Contribution margin ratio = ($18 - $8.50

Question 8

Kent Manufacturing produces a product that sells for $50.00. Fixed costs are $260,000 and variable costs are $24.00 per unit. Kent 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. What effect would the purchase of the new machine have on Kent's break-even point in units?

Accepted Answer

A)  800 unit increase. 
B)  800 unit decrease. 
C)  5,714 unit increase. 
D)  4,444 unit decrease. 
E)  No effect on the break-even point in units. 
A)  800 unit increase. 
B)  800 unit decrease. 
C)  5,714 unit increase. 
D)  4,444 unit decrease. 
E)  No effect on the break-even point in units.

Question 9

An important assumption in multiproduct CVP analysis is a constant sales mix.

Accepted Answer

A) True 
 B)False

Question 10

A ________ cost is one that remains unchanged despite variations in the volume of activity within a relevant range. A ________ cost is one that changes in proportion to changes in volume of activity.

Accepted Answer

The answer of A ________ cost is one that remains...

Question 11

A company's normal operating range, which excludes extremely high or low operating levels that are not likely to occur, is called the:

Accepted Answer

A)  Margin of safety. 
B)  Contribution range. 
C)  Break-even point. 
D)  Relevant range. 
E)  High-low point. 
A)  Margin of safety. 
B)  Contribution range. 
C)  Break-even point. 
D)  Relevant range. 
E)  High-low point.

Question 12

The following information is available for a company's cost of sales over the last five months.
   Use the high-low method to estimate the fixed and variable components of the cost of sales.

Accepted Answer

Variable cost per unit = Change in cost/

Question 13

Proctor 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 14

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

Accepted Answer

A) True 
 B)False

Question 15

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 units is:

Accepted Answer

A)  2,292. 
B)  573. 
C)  764. 
D)  327. 
E)  840. 
A)  2,292. 
B)  573. 
C)  764. 
D)  327. 
E)  840.

Question 16

Forrester Company is considering buying new equipment that would increase monthly fixed costs from $120,000 to $150,000 and would decrease the current variable costs of $70 by $10 per unit. The selling price of $100 is not expected to change. Forrester's current break-even sales are $400,000 and current break-even units are 4,000. If Forrester purchases this new equipment, the revised break-even point in dollars would be:

Accepted Answer

A)  $300,000. 
B)  $400,000. 
C)  $325,000. 
D)  $500,000. 
E)  $375,000. 
A)  $300,000. 
B)  $400,000. 
C)  $325,000. 
D)  $500,000. 
E)  $375,000.

Question 17

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 18

Madison 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 selling price per composite unit for the current sales mix (rounded to the nearest cent) is:

Accepted Answer

A)  $17.00. 
B)  $ 5.67. 
C)  $20.00. 
D)  $37.00. 
E)  $25.00. 
A)  $17.00. 
B)  $ 5.67. 
C)  $20.00. 
D)  $37.00. 
E)  $25.00.

Question 19

The following information is available for a company's cost of sales over the last five months.   Using the high-low method, the estimated variable cost of sales per unit sold is:

Accepted Answer

A)  $25.42. 
B)  $77.50. 
C)  $34.23. 
D)  $15.00. 
E)  $30.62. 
A)  $25.42. 
B)  $77.50. 
C)  $34.23. 
D)  $15.00. 
E)  $30.62.

Question 20

The following information is available for a company's utility cost for operating its machines over the last four months.   Using the high-low method, the estimated total fixed cost for utilities is:

Accepted Answer

A)  $1,500. 
B)  $3,600. 
C)  $6,000. 
D)  $3,300. 
E)  $2,100. 
A)  $1,500. 
B)  $3,600. 
C)  $6,000. 
D)  $3,300. 
E)  $2,100.

Briefly describe a CVP chart, including its major components.

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 proportion of sales volumes for various products in a multiproduct company is known as the composite mix.

During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. What amount should have been reported as fixed costs in the company's contribution margin income statement for the year in question?

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

An important assumption in multiproduct CVP analysis is a constant sales mix.

A cost is one that remains unchanged despite variations in the volume of activity within a relevant range. A cost is one that changes in proportion to changes in volume of activity.

A company's normal operating range, which excludes extremely high or low operating levels that are not likely to occur, is called the:

The following information is available for a company's cost of sales over the last five months. Use the high-low method to estimate the fixed and variable components of the cost of sales.

Proctor 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?

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

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 units is:

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

Madison 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 selling price per composite unit for the current sales mix (rounded to the nearest cent) is:

The following information is available for a company's cost of sales over the last five months. Using the high-low method, the estimated variable cost of sales per unit sold is:

The following information is available for a company's utility cost for operating its machines over the last four months. Using the high-low method, the estimated total fixed cost for utilities is:

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

Filters

Exam 5: Cost Behavior Cost-Volume-Profit Analysis

Briefly describe a CVP chart, including its major components.

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 proportion of sales volumes for various products in a multiproduct company is known as the composite mix.

During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. What amount should have been reported as fixed costs in the company's contribution margin income statement for the year in question?

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

An important assumption in multiproduct CVP analysis is a constant sales mix.

A ________ cost is one that remains unchanged despite variations in the volume of activity within a relevant range. A ________ cost is one that changes in proportion to changes in volume of activity.

A company's normal operating range, which excludes extremely high or low operating levels that are not likely to occur, is called the:

The following information is available for a company's cost of sales over the last five months. Use the high-low method to estimate the fixed and variable components of the cost of sales.

Proctor 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?

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

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 units is:

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

Madison 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 selling price per composite unit for the current sales mix (rounded to the nearest cent) is:

The following information is available for a company's cost of sales over the last five months. Using the high-low method, the estimated variable cost of sales per unit sold is:

The following information is available for a company's utility cost for operating its machines over the last four months. Using the high-low method, the estimated total fixed cost for utilities is:

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

Filters

A cost is one that remains unchanged despite variations in the volume of activity within a relevant range. A cost is one that changes in proportion to changes in volume of activity.