Question 1

Which of the following is true regarding the contribution margin ratio of a company that produces only a single product?

Accepted Answer

A) As fixed expenses decrease, the contribution margin ratio increases. 
B) The contribution margin ratio multiplied by the selling price per unit equals the contribution margin per unit. 
C) The contribution margin ratio will decline as unit sales decline. 
D) The contribution margin ratio equals the selling price per unit less the variable expense ratio. 
A) As fixed expenses decrease, the contribution margin ratio increases. 
B) The contribution margin ratio multiplied by the selling price per unit equals the contribution margin per unit. 
C) The contribution margin ratio will decline as unit sales decline. 
D) The contribution margin ratio equals the selling price per unit less the variable expense ratio.

Question 2

Creswell Corporation's fixed monthly expenses are $29,000 and its contribution margin ratio is 56%.Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $95,000?

Accepted Answer

A) $12,800 
B) $24,200 
C) $53,200 
D) $66,000 
A) $12,800 
B) $24,200 
C) $53,200 
D) $66,000

Question 3

Black Corporation's sales are $600,000, its fixed expenses are $150,000, and its variable expenses are 60% of sales.The margin of safety is:

Accepted Answer

A) $90,000 
B) $190,000 
C) $225,000 
D) $240,000 
A) $90,000 
B) $190,000 
C) $225,000 
D) $240,000

Question 4

Mio Canoe Livery rents canoes and transports canoes and customers to and from their canoe trip on a local river.The trip is priced at $20 per person and has a CM ratio of 30%.Mio's fixed expenses are $84,000.Last year, sales were $400,000 and profit was $36,000.How many units need to be sold to break-even, and how many need to be sold to earn a profit of $42,000?

Accepted Answer

A) 1,800 and 2,100 
B) 6,000 and 8,143 
C) 14,000 and 21,000 
D) 4,200 and 6,300 
A) 1,800 and 2,100 
B) 6,000 and 8,143 
C) 14,000 and 21,000 
D) 4,200 and 6,300

Question 5

For a capital intensive, automated company the break-even point will tend to be higher and the margin of safety will be lower than for a less capital intensive company with the same sales.

Accepted Answer

A) True 
 B)False

Question 6

Hopi Corporation expects the following operating results for next year:   What is Hopi expecting total fixed expenses to be next year?

Accepted Answer

A) $75,000 
B) $100,000 
C) $200,000 
D) $225,000 
A) $75,000 
B) $100,000 
C) $200,000 
D) $225,000

Question 7

The break-even point in dollar sales is closest to:

Accepted Answer

A) $162,000 
B) $117,000 
C) $0 
D) $173,700 
A) $162,000 
B) $117,000 
C) $0 
D) $173,700

Question 8

Derst Inc.sells a particular textbook for $140.Variable expenses are $25 per book.At the current volume of 6,000 books sold per year the company is just breaking even.Given these data, the annual fixed expenses associated with the textbook total:

Accepted Answer

A) $400,000 
B) $690,000 
C) $840,000 
D) $150,000 
A) $400,000 
B) $690,000 
C) $840,000 
D) $150,000

Question 9

Break-even analysis assumes that:

Accepted Answer

A) Total revenue is constant. 
B) Unit variable expense is constant. 
C) Unit fixed expense is constant. 
D) Selling prices must fall in order to generate more revenue. 
A) Total revenue is constant. 
B) Unit variable expense is constant. 
C) Unit fixed expense is constant. 
D) Selling prices must fall in order to generate more revenue.

Question 10

Sales at East Corporation declined from $100,000 to $80,000, while net operating income declined by 300%.Given these data, the company must have had an operating leverage of:

Accepted Answer

A) 15 
B) 2.7 
C) 30 
D) 12 
A) 15 
B) 2.7 
C) 30 
D) 12

Question 11

Kelchner Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range.   The contribution margin ratio is closest to:

Accepted Answer

A) 67% 
B) 40% 
C) 33% 
D) 60% 
A) 67% 
B) 40% 
C) 33% 
D) 60%

Question 12

Lofft Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range.   Using the degree of operating leverage, the estimated percent increase in net operating income as the result of a 10% increase in sales is closest to:

Accepted Answer

A) 1.13% 
B) 88.89% 
C) 22.22% 
D) 4.50% 
A) 1.13% 
B) 88.89% 
C) 22.22% 
D) 4.50%

Question 13

If the selling price increases by $3 per unit and the sales volume decreases by 400 units, the net operating income would be closest to:

Accepted Answer

A) $19,000 
B) $16,800 
C) $13,800 
D) $17,733 
A) $19,000 
B) $16,800 
C) $13,800 
D) $17,733

Question 14

A decrease in the number of units sold will decrease the break-even point.

Accepted Answer

A) True 
 B)False

Question 15

Nocum Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range.    If sales decline to 2,900 units, the net operating income would be closest to:

Accepted Answer

A) $29,000 
B) $1,000 
C) $8,700 
D) $8,000 
A) $29,000 
B) $1,000 
C) $8,700 
D) $8,000

Question 16

This question is to be considered independently of all other questions relating to Lemelin Corporation.Refer to the original data when answering this question. The marketing manager would like to cut the selling price by $18 and increase the advertising budget by $37,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 1,600 units.What should be the overall effect on the company's monthly net operating income of this change?

Accepted Answer

A) increase of $118,200 
B) increase of $302,200 
C) decrease of $118,200 
D) decrease of $7,800 
A) increase of $118,200 
B) increase of $302,200 
C) decrease of $118,200 
D) decrease of $7,800

Question 17

The variable expense ratio is closest to:

Accepted Answer

A) 33% 
B) 67% 
C) 25% 
D) 75% 
A) 33% 
B) 67% 
C) 25% 
D) 75%

Question 18

Data concerning Neuner Corporation's single product appear below:   Fixed expenses are $425,000 per month.The company is currently selling 4,000 units per month.
Required:
The marketing manager would like to cut the selling price by $11 and increase the advertising budget by $23,700 per month.The marketing manager predicts that these two changes would increase monthly sales by 400 units.What should be the overall effect on the company's monthly net operating income of this change? Show your work!

Accepted Answer

The answer of Data concerning Neuner Corporation's single product appear...

Question 19

A shift in the sales mix from products with high contribution margin ratios toward products with low contribution margin ratios will raise the break-even point for the company as a whole.

Accepted Answer

A) True 
 B)False

Question 20

The break-even in monthly unit sales is closest to:

Accepted Answer

A) 2,328 units 
B) 1,342 units 
C) 3,441 units 
D) 2,200 units 
A) 2,328 units 
B) 1,342 units 
C) 3,441 units 
D) 2,200 units

Which of the following is true regarding the contribution margin ratio of a company that produces only a single product?

Creswell Corporation's fixed monthly expenses are $29,000 and its contribution margin ratio is 56%.Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $95,000?

Black Corporation's sales are $600,000, its fixed expenses are $150,000, and its variable expenses are 60% of sales.The margin of safety is:

For a capital intensive, automated company the break-even point will tend to be higher and the margin of safety will be lower than for a less capital intensive company with the same sales.

Hopi Corporation expects the following operating results for next year: What is Hopi expecting total fixed expenses to be next year?

The break-even point in dollar sales is closest to:

Derst Inc.sells a particular textbook for $140.Variable expenses are $25 per book.At the current volume of 6,000 books sold per year the company is just breaking even.Given these data, the annual fixed expenses associated with the textbook total:

Break-even analysis assumes that:

Sales at East Corporation declined from $100,000 to $80,000, while net operating income declined by 300%.Given these data, the company must have had an operating leverage of:

Kelchner Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The contribution margin ratio is closest to:

If the selling price increases by $3 per unit and the sales volume decreases by 400 units, the net operating income would be closest to:

A decrease in the number of units sold will decrease the break-even point.

Nocum Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. If sales decline to 2,900 units, the net operating income would be closest to:

The variable expense ratio is closest to:

A shift in the sales mix from products with high contribution margin ratios toward products with low contribution margin ratios will raise the break-even point for the company as a whole.

The break-even in monthly unit sales is closest to:

Managerial Accounting and Cost Concepts

Job-Order Costing: Calculating Unit Product Costs

Job-Order Costing: Cost Flows and External Reporting

Activity-Based Costing

Process Costing6 Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Master Budgeting

Performance Measurement in Decentralized Organizations

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Flexible Budgets Standard Costs and Variance Analysis

Statement of Cash Flows

Financial Statement Analysis

Job-Order Costing: Cost Flows and External Reporting

Process Costing6 Cost-Volume-Profit Relationships

Cost-Volume-Profit Relationships

Flexible Budgets, Standard Costs, and Variance Analysis

Flexible Budgets, Standard Costs, and Variance Analysis

A Capital Budgeting Decisions

A Statement of Cash Flows

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Exam 6: Cost-Volume-Profit Relationships

Which of the following is true regarding the contribution margin ratio of a company that produces only a single product?

Creswell Corporation's fixed monthly expenses are $29,000 and its contribution margin ratio is 56%.Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $95,000?

Black Corporation's sales are $600,000, its fixed expenses are $150,000, and its variable expenses are 60% of sales.The margin of safety is:

For a capital intensive, automated company the break-even point will tend to be higher and the margin of safety will be lower than for a less capital intensive company with the same sales.

Hopi Corporation expects the following operating results for next year: What is Hopi expecting total fixed expenses to be next year?

The break-even point in dollar sales is closest to:

Derst Inc.sells a particular textbook for $140.Variable expenses are $25 per book.At the current volume of 6,000 books sold per year the company is just breaking even.Given these data, the annual fixed expenses associated with the textbook total:

Break-even analysis assumes that:

Sales at East Corporation declined from $100,000 to $80,000, while net operating income declined by 300%.Given these data, the company must have had an operating leverage of:

Kelchner Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The contribution margin ratio is closest to:

If the selling price increases by $3 per unit and the sales volume decreases by 400 units, the net operating income would be closest to:

A decrease in the number of units sold will decrease the break-even point.

Nocum Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. If sales decline to 2,900 units, the net operating income would be closest to:

The variable expense ratio is closest to:

A shift in the sales mix from products with high contribution margin ratios toward products with low contribution margin ratios will raise the break-even point for the company as a whole.

The break-even in monthly unit sales is closest to:

Managerial Accounting and Cost Concepts

Job-Order Costing: Calculating Unit Product Costs

Job-Order Costing: Cost Flows and External Reporting

Activity-Based Costing

Process Costing6 Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Master Budgeting

Performance Measurement in Decentralized Organizations

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Flexible Budgets Standard Costs and Variance Analysis

Statement of Cash Flows

Financial Statement Analysis

Job-Order Costing: Cost Flows and External Reporting

Process Costing6 Cost-Volume-Profit Relationships

Cost-Volume-Profit Relationships

Flexible Budgets, Standard Costs, and Variance Analysis

Flexible Budgets, Standard Costs, and Variance Analysis

A Capital Budgeting Decisions

A Statement of Cash Flows

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