Question 1

Which of the following statements is true when making decisions using cost-volume-profit (CVP)analysis?

Accepted Answer

A)  As long as the contribution margin is a positive number,net income will be positive. 
B)  As long as variable costs are more than fixed costs,net income will be negative. 
C)  As long as the contribution margin is greater than fixed costs,net income will be positive. 
D)  As long as the sales price per unit is greater than fixed costs per unit,net income will be positive. 
A)  As long as the contribution margin is a positive number,net income will be positive. 
B)  As long as variable costs are more than fixed costs,net income will be negative. 
C)  As long as the contribution margin is greater than fixed costs,net income will be positive. 
D)  As long as the sales price per unit is greater than fixed costs per unit,net income will be positive.

Question 2

Refer to the Joe’s Coffee House information below.
Joe’s Coffee House
Joe’s Coffee House has the following information available for the month of July:
$\begin{array}{lr}
\text { Sales }(2500 \text { cups) } & \$ 7500 \
\text { Variable costs } & 3250 \
\text { Fixed costs } & 4000 \
\text { Net Income } & \$ \quad 250
\end{array}$
-Each additional cup of coffee sold will increase net income by:

Accepted Answer

A)  $1.70 
B)  $3.00 
C)  $1.00 
D)  $ .57 
A)  $1.70 
B)  $3.00 
C)  $1.00 
D)  $ .57

Question 3

Tucker Corp.
Tucker Corp. has the following product information:
$$\begin{array} { l l } 
\text { Sales price } & \$ 12 \text { per unit } \
\text { Contribution margin ratio } & 40 \% \
\text { Fixed costs } & \$ 45000
\end{array}$$
-What is the break-even point in units?

Accepted Answer

A)  1500 
B)  112 500 
C)  216 000 
D)  9375 
A)  1500 
B)  112 500 
C)  216 000 
D)  9375

Question 4

Carolina Products has the following product information:
 $\begin{array} { l l } 
\text { Sales price } & \$ 25.00 \text { per urit } \
\text { Variable costs } & \$ 15.00 \text { per urit } \
\text { Fixed costs (total) } & \$ 50 \text { a00 }
\end{array}$ 
Required: Calculate the following based on the above information:
 A. How many units need to be sold in arder to break even?
B. Calculate the increase in net income if an adkitional 1000 units aver the break-even paint are sold.

C. How many units need to be sold in order to ean a target profit of \$600 000? (Ignore taxes)

Accepted Answer

A. Break-even units @#LAT-DLM& units
B.

Question 5

Crabtree Inc.produces two types of products - Gizmos and Gadgets.The following information is available related to each product:
$\begin{array}{lrrr}
& \underline{\text { Gizmos } }&\underline{ \text { Gadgets }} \
\text { Sales price per unit } & \$ 48 & \$ 60 \
\text { Variable costs per unit } & 21 & 24 \\
\text { Percentage of total sales } &  66.67 \% & 33.33 \%
\end{array}$
If total fixed costs are $36 000,how many total units need to be sold in order for the company to break even? (round computations to nearest hundredth)

Accepted Answer

A)  581 
B)  1162 
C)  1200 
D)  405 
A)  581 
B)  1162 
C)  1200 
D)  405

Question 6

Tucker Corp.
Tucker Corp. has the following product information:
$$\begin{array} { l l } 
\text { Sales price } & \$ 12 \text { per unit } \
\text { Contribution margin ratio } & 40 \% \
\text { Fixed costs } & \$ 45000
\end{array}$$
-What is the break-even point in sales dollars?

Accepted Answer

A)  $ 45 000 
B)  $112 500 
C)  $ 18 000 
D)  $ 3750 
A)  $ 45 000 
B)  $112 500 
C)  $ 18 000 
D)  $ 3750

Question 7

Cameron Corp.
Cameron Corp. has the following product information:
$$\begin{array} { l l } 
\text { Sales price } & \$ 20 \text { per unit } \
\text { Contribution margin ratio } & 35 \% \
\text { Fixed costs } & \$ 59500
\end{array}$$
-What is the break-even point in units?

Accepted Answer

A)  8500 
B)  2975 
C)  1041 
D)  170 000 
A)  8500 
B)  2975 
C)  1041 
D)  170 000

Question 8

Tucker Corp.
Tucker Corp. has the following product information:
$$\begin{array} { l l } 
\text { Sales price } & \$ 12 \text { per unit } \
\text { Contribution margin ratio } & 40 \% \
\text { Fixed costs } & \$ 45000
\end{array}$$
-How many units need to be sold in order to earn a target profit of $542 400?

Accepted Answer

A)  234 960 
B)  216 960 
C)  113 000 
D)  122 375 
A)  234 960 
B)  216 960 
C)  113 000 
D)  122 375

Question 9

Your boss read a recent magazine article about income statements,but he was unclear about the differences between a traditional income statement and a contribution margin income statement.Explain the difference by: a)presenting a sample format for each statement,b)describing the focus of each statement,and c)discussing how and by whom each statement is used.

Accepted Answer

a.
Traditional format:
Contribution marg

Question 10

When preparing a contribution margin income statement,it is necessary to break down costs into what two categories?

Accepted Answer

A)  Direct materials and indirect materials 
B)  Product and period 
C)  Variable and fixed 
D)  Avoidable and unavoidable 
A)  Direct materials and indirect materials 
B)  Product and period 
C)  Variable and fixed 
D)  Avoidable and unavoidable

Question 11

Which of the following is usually not one of the factors that cost-volume-profit analysis focuses on?

Accepted Answer

A)  Sales prices of products 
B)  Mix of products or services produced 
C)  Variable costs per unit 
D)  Fixed costs per unit 
A)  Sales prices of products 
B)  Mix of products or services produced 
C)  Variable costs per unit 
D)  Fixed costs per unit

Question 12

Village Manufacturing
Village Manufacturing produces two types of products ? Card Games and Puzzles. The following information is available related to each product:
$\begin{array}{lrrr} 
& \underline{ \text { Card Games }} &  \underline{\text { Puzzles }} \
\text { Sales price per unit } & \$ 6.00 & \$ 15.00 \
\text { Variable costs per unit } & 2.00 & & 3.50
\end{array}$
60% of the products sold are Card Games and 40% are Puzzles.
-If total fixed costs are $24 500,how many Card Games need to be sold in order for the company to break even?

Accepted Answer

A)  2100 
B)  3675 
C)  4200 
D)  3500 
A)  2100 
B)  3675 
C)  4200 
D)  3500

Question 13

Carolina Products
Carolina Products sells a unique item with the following information available:
$\begin{array}{ll}
\text { Sales price } & \$ 40 \text { per unit } \
\text { Variable costs } & \$ 12 \text { per unit } \
\text { Fixed Costs } & \$ 2 \text { per unit } \
\text { Units produced and sold } & 2000
\end{array}$
-If one more unit is sold,net income will:

Accepted Answer

A)  increase by $28. 
B)  increase by $26. 
C)  increase by $40. 
D)  increase by $38. 
A)  increase by $28. 
B)  increase by $26. 
C)  increase by $40. 
D)  increase by $38.

Question 14

Which of the following is not an assumption of CVP analysis?

Accepted Answer

A)  Selling prices change only at the end of the month. 
B)  Costs can be thought of as fitting a linear function within the relevant range. 
C)  Sales mix is constant. 
D)  Inventory levels do not change. 
A)  Selling prices change only at the end of the month. 
B)  Costs can be thought of as fitting a linear function within the relevant range. 
C)  Sales mix is constant. 
D)  Inventory levels do not change.

Question 15

Carolina Products
Carolina Products sells a unique item with the following information available:
$\begin{array}{ll}
\text { Sales price } & \$ 40 \text { per unit } \
\text { Variable costs } & \$ 12 \text { per unit } \
\text { Fixed Costs } & \$ 2 \text { per unit } \
\text { Units produced and sold } & 2000
\end{array}$
-What is the contribution margin ratio?

Accepted Answer

A)  30% 
B)  70% 
C)  65% 
D)  35% 
A)  30% 
B)  70% 
C)  65% 
D)  35%

Question 16

What is meant by the term 'break-even point' and how is it computed in a single versus a multiproduct environment?

Accepted Answer

The 'break-even point' is the level of s

Question 17

Lowman Inc.sells a product with a sales price of $25 per unit,variable costs of $7 per unit,and total fixed costs of $100 000.Lowman is looking into implementing an aggressive advertising campaign that will cost $50 000.
Required:
By what amount do sales dollars need to at least increase by in order for the company's overall profits to not decrease by having the advertising campaign?

Accepted Answer

The contribution margin needs to increas

Question 18

When considering the impact of income taxes on the sales volume needed to achieve a desired after-tax profit,which of the following statements is true?

Accepted Answer

A)  Fixed costs will increase. 
B)  As the tax rate increases,the number of units that need to be sold will decrease. 
C)  The before-tax profit will need to be calculated. 
D)  The contribution margin per unit will decrease. 
A)  Fixed costs will increase. 
B)  As the tax rate increases,the number of units that need to be sold will decrease. 
C)  The before-tax profit will need to be calculated. 
D)  The contribution margin per unit will decrease.

Question 19

Hugo Inc.sells three sizes of umbrellas: small,medium,and large.The company has annual fixed costs of $390 400.For the past several years,20% of Hugo's sales have been the small and large umbrellas with the remaining 60% being the medium size.Hugo does not expect this to change in the upcoming year.
The following information is also available for each of the umbrellas:
 $\begin{array}{rrr}
&\underline{\text { Small }} &\underline{ \text { Medium }} &\underline{ \text { Large} } \
\text {Sales price per unit }&8& \$ 14 & \$ 35 \
\text {Variable costs per unit}&3 & 4 & 9
\end{array}$ 
Required:
 A. How many total umbrellas does the company need to produce and sell in order to break even?
B. How many medium umbrellas need to be sold in order to break even?
C. If Hugo experiences a higher demand of large umbrellas than it anticipated will the break-even point increase, decrease, or stay the same? Why?

Accepted Answer

A. The total number of umbrellas that ne

Question 20

Cost structure refers to the relative proportion of:

Accepted Answer

A)  variable costs to contribution margin. 
B)  total costs to sales. 
C)  fixed costs to variable costs. 
D)  sales price per unit to variable costs per unit. 
A)  variable costs to contribution margin. 
B)  total costs to sales. 
C)  fixed costs to variable costs. 
D)  sales price per unit to variable costs per unit.

Which of the following statements is true when making decisions using cost-volume-profit (CVP)analysis?

Tucker Corp. Tucker Corp. has the following product information: Sales price \ 12 per unit Contribution margin ratio 40\% Fixed costs \ 45000 -What is the break-even point in units?

Tucker Corp. Tucker Corp. has the following product information: Sales price \ 12 per unit Contribution margin ratio 40\% Fixed costs \ 45000 -What is the break-even point in sales dollars?

Cameron Corp. Cameron Corp. has the following product information: Sales price \ 20 per unit Contribution margin ratio 35\% Fixed costs \ 59500 -What is the break-even point in units?

Tucker Corp. Tucker Corp. has the following product information: Sales price \ 12 per unit Contribution margin ratio 40\% Fixed costs \ 45000 -How many units need to be sold in order to earn a target profit of $542 400?

When preparing a contribution margin income statement,it is necessary to break down costs into what two categories?

Which of the following is usually not one of the factors that cost-volume-profit analysis focuses on?

Carolina Products Carolina Products sells a unique item with the following information available: Sales price \ 40 per unit Variable costs \ 12 per unit Fixed Costs \ 2 per unit Units produced and sold 2000 -If one more unit is sold,net income will:

Which of the following is not an assumption of CVP analysis?

Carolina Products Carolina Products sells a unique item with the following information available: Sales price \ 40 per unit Variable costs \ 12 per unit Fixed Costs \ 2 per unit Units produced and sold 2000 -What is the contribution margin ratio?

What is meant by the term 'break-even point' and how is it computed in a single versus a multiproduct environment?

When considering the impact of income taxes on the sales volume needed to achieve a desired after-tax profit,which of the following statements is true?

Cost structure refers to the relative proportion of:

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, cost Terminology and Cost Flows

Cost Behaviour

Job Costing and Overhead Costing Systems

Process Costing Systems

Service and Operations Costing

Departmental Overhead Costing

Activity-Based Costing

Relevant Costs and Product Planning Decisions

Long-Term Capital Investmentdecisions

Fixed and Rolling Budgets for Planning and Decision Making

Management Accounting for Cost Control and Performance Evaluation Flexible Budgets and Variance Analysis

Decentralisation and Modern Performance Management Systems the Balanced Scorecard

Accounting for Sustainability Social Reporting,environmental Reporting and Management Accounting

Filters

Exam 9: Cost-Volume-Profit Analysis

Which of the following statements is true when making decisions using cost-volume-profit (CVP)analysis?

Tucker Corp. Tucker Corp. has the following product information: Sales price \ 12 per unit Contribution margin ratio 40\% Fixed costs \ 45000 -What is the break-even point in units?

Tucker Corp. Tucker Corp. has the following product information: Sales price \ 12 per unit Contribution margin ratio 40\% Fixed costs \ 45000 -What is the break-even point in sales dollars?

Cameron Corp. Cameron Corp. has the following product information: Sales price \ 20 per unit Contribution margin ratio 35\% Fixed costs \ 59500 -What is the break-even point in units?

Tucker Corp. Tucker Corp. has the following product information: Sales price \ 12 per unit Contribution margin ratio 40\% Fixed costs \ 45000 -How many units need to be sold in order to earn a target profit of $542 400?

When preparing a contribution margin income statement,it is necessary to break down costs into what two categories?

Which of the following is usually not one of the factors that cost-volume-profit analysis focuses on?

Carolina Products Carolina Products sells a unique item with the following information available: Sales price \ 40 per unit Variable costs \ 12 per unit Fixed Costs \ 2 per unit Units produced and sold 2000 -If one more unit is sold,net income will:

Which of the following is not an assumption of CVP analysis?

Carolina Products Carolina Products sells a unique item with the following information available: Sales price \ 40 per unit Variable costs \ 12 per unit Fixed Costs \ 2 per unit Units produced and sold 2000 -What is the contribution margin ratio?

What is meant by the term 'break-even point' and how is it computed in a single versus a multiproduct environment?

When considering the impact of income taxes on the sales volume needed to achieve a desired after-tax profit,which of the following statements is true?

Cost structure refers to the relative proportion of:

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, cost Terminology and Cost Flows

Cost Behaviour

Job Costing and Overhead Costing Systems

Process Costing Systems

Service and Operations Costing

Departmental Overhead Costing

Activity-Based Costing

Relevant Costs and Product Planning Decisions

Long-Term Capital Investmentdecisions

Fixed and Rolling Budgets for Planning and Decision Making

Management Accounting for Cost Control and Performance Evaluation Flexible Budgets and Variance Analysis

Decentralisation and Modern Performance Management Systems the Balanced Scorecard

Accounting for Sustainability Social Reporting,environmental Reporting and Management Accounting

Filters