Question 1

A "what-if" technique that examines the impact of changes in underlying assumptions on an answer is

Accepted Answer

A)  margin of safety. 
B)  sales mix. 
C)  indifference point. 
D)  cost structure. 
E)  sensitivity analysis. 
A)  margin of safety. 
B)  sales mix. 
C)  indifference point. 
D)  cost structure. 
E)  sensitivity analysis.

Question 2

The following data pertain to the three products produced by Alberts Corporation:   Fixed costs are $90,000 per month.
60% of all units sold are Product A, 30% are Product B, and 10% are Product C.
What is the monthly break-even point for total units?

Accepted Answer

A)  45,000 units 
B)  36,000 units 
C)  60,000 units 
D)  180,000 units 
A)  45,000 units 
B)  36,000 units 
C)  60,000 units 
D)  180,000 units

Question 3

Figure 4-1.Foster Company makes power tools. The budgeted sales are $420,000, budgeted variable costs are $147,000, and budgeted fixed costs are $227,500.
-Refer to Figure 4-1. What is the variable cost ratio?

Accepted Answer

A)  54% 
B)  35% 
C)  89% 
D)  19% 
E)  50% 
A)  54% 
B)  35% 
C)  89% 
D)  19% 
E)  50%

Question 4

Degree of operating leverage is calculated as

Accepted Answer

A)  Variable costs/Sales 
B)  Total sales/Common fixed costs 
C)  Fixed costs/Variable costs 
D)  Contribution margin/Operating income 
E)  Operating income/Contribution margin 
A)  Variable costs/Sales 
B)  Total sales/Common fixed costs 
C)  Fixed costs/Variable costs 
D)  Contribution margin/Operating income 
E)  Operating income/Contribution margin

Question 5

Match each item with the correct statement below.
-measured in units sold

Accepted Answer

A) horizontal-axis of CVP graph 
B) vertical-axis of CVP graph 
C) slope of revenue line 
D) slope of cost line 
E) point where the total revenue line and the total cost line intersect 
A) horizontal-axis of CVP graph 
B) vertical-axis of CVP graph 
C) slope of revenue line 
D) slope of cost line 
E) point where the total revenue line and the total cost line intersect

Question 6

A profit-volume graph visually portrays the relationship between

Accepted Answer

A)  total sales and fixed cost. 
B)  profits and units sold. 
C)  total sales and margin of safety. 
D)  total sales and variable costs. 
E)  profits and degree of operating leverage. 
A)  total sales and fixed cost. 
B)  profits and units sold. 
C)  total sales and margin of safety. 
D)  total sales and variable costs. 
E)  profits and degree of operating leverage.

Question 7

Figure 4-3.Paney Company makes calendars. Information on cost per unit is as follows:
   Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10.
-Refer to Figure 4-3. What is the break-even point in units?

Accepted Answer

A)  2,167 
B)  5,833 
C)  8,000 
D)  12,000 
E)  2,800 
A)  2,167 
B)  5,833 
C)  8,000 
D)  12,000 
E)  2,800

Question 8

Figure 4-2.Pauley Company provides home health care. Pauley charges $35/hour for professional care. Variable costs are $21/hour and fixed costs are $78,000. Next year, Pauley expects to charge out 12,000 hours of home health care.
-Refer to Figure 4-2. What is the break-even point in sales dollars?

Accepted Answer

A)  $130,000 
B)  $195,000 
C)  $252,000 
D)  $420,000 
E)  $342,000 
A)  $130,000 
B)  $195,000 
C)  $252,000 
D)  $420,000 
E)  $342,000

Question 9

Shamrock Inc. plans to sell 3,000 Irish sweaters for $200 each in the coming year. Product costs include:
   Variable selling expenses are $5 per sweater and fixed selling and administrative expenses total $12,000.
Required:
A.) Calculate the total variable cost per unit.
B.) Calculate the total fixed expenses for the year.
C.) Prepare a contribution margin income statement for Shamrock Inc. for the coming year.

Accepted Answer

A.) Total variable cost per un

Question 10

Information about the Harmon Company's two products includes:   What is the total monthly sales volume in units required to break even when the sales mix in units is 70% Product X and 30% Product Y?

Accepted Answer

A)  8,333 units 
B)  50,000 units 
C)  16,667 units 
D)  56,667 units 
A)  8,333 units 
B)  50,000 units 
C)  16,667 units 
D)  56,667 units

Question 11

The break-even point is when

Accepted Answer

A)  the company is operating at a loss. 
B)  total revenue equals total cost. 
C)  the company is earning a small profit. 
D)  total sales equal variable costs. 
E)  total sales equals operating income. 
A)  the company is operating at a loss. 
B)  total revenue equals total cost. 
C)  the company is earning a small profit. 
D)  total sales equal variable costs. 
E)  total sales equals operating income.

Question 12

The contribution margin is

Accepted Answer

A)  the difference between sales and variable costs. 
B)  the difference between target income and operating income. 
C)  the difference between operating income and margin of safety. 
D)  equal to sales. 
E)  when total sales equals total costs. 
A)  the difference between sales and variable costs. 
B)  the difference between target income and operating income. 
C)  the difference between operating income and margin of safety. 
D)  equal to sales. 
E)  when total sales equals total costs.

Question 13

The units sold or expected to be sold or sales revenue earned or expected to be earned above the break-even volume is called

Accepted Answer

A)  variable cost ratio. 
B)  degree of operating leverage. 
C)  break-even point. 
D)  margin of safety. 
E)  contribution margin ratio. 
A)  variable cost ratio. 
B)  degree of operating leverage. 
C)  break-even point. 
D)  margin of safety. 
E)  contribution margin ratio.

Question 14

Which is the equation for operating income?

Accepted Answer

A)  (Price - Units sold) - (Unit variable cost * Units sold) - Fixed cost 
B)  (Price *  Units sold) + (Unit variable cost * Units sold) + Fixed cost 
C)  (Price + Units sold) - (Unit variable cost + Units sold) - Fixed cost 
D)  (Price * Units sold) + (Unit variable cost - Units sold) + Fixed cost 
E)  (Price * Units sold) + (Unit variable cost * Units sold) - Fixed cost 
A)  (Price - Units sold) - (Unit variable cost * Units sold) - Fixed cost 
B)  (Price *  Units sold) + (Unit variable cost * Units sold) + Fixed cost 
C)  (Price + Units sold) - (Unit variable cost + Units sold) - Fixed cost 
D)  (Price * Units sold) + (Unit variable cost - Units sold) + Fixed cost 
E)  (Price * Units sold) + (Unit variable cost * Units sold) - Fixed cost

Question 15

Figure 4-8.A company provided the following data:
  
-Refer to Figure 4-8. How much sales in dollars is necessary to generate a profit of $30,000?

Accepted Answer

A)  $528,000 
B)  $500,000 
C)  $214,286 
D)  $100,000 
E)  $150,000 
A)  $528,000 
B)  $500,000 
C)  $214,286 
D)  $100,000 
E)  $150,000

Question 16

Explain why cost-volume-profit analysis can be useful to managers.

Accepted Answer

Cost-volume-profit (CVP) analysis is a p

Question 17

At the break-even point,

Accepted Answer

A)  total revenue equals variable cost. 
B)  total fixed cost equals variable cost. 
C)  total contribution margin equals total fixed cost. 
D)  total sales equals total fixed cost. 
E)  total margin of safety equals variable cost. 
A)  total revenue equals variable cost. 
B)  total fixed cost equals variable cost. 
C)  total contribution margin equals total fixed cost. 
D)  total sales equals total fixed cost. 
E)  total margin of safety equals variable cost.

Question 18

If a multi-product company simply wants to know the overall break-even point, it is easiest to use the break-even in sales revenue approach.

Accepted Answer

A) True 
 B)False

Question 19

Income statements for two different companies in the same industry are as follows:
  Required:

Accepted Answer

The answer of Income statements for two different companies in...

Question 20

A company provided the following information:
  Required:

Accepted Answer

The answer of A company provided the following information:
 ...

A "what-if" technique that examines the impact of changes in underlying assumptions on an answer is

The following data pertain to the three products produced by Alberts Corporation: Fixed costs are $90,000 per month. 60% of all units sold are Product A, 30% are Product B, and 10% are Product C. What is the monthly break-even point for total units?

Figure 4-1.Foster Company makes power tools. The budgeted sales are $420,000, budgeted variable costs are $147,000, and budgeted fixed costs are $227,500. -Refer to Figure 4-1. What is the variable cost ratio?

Degree of operating leverage is calculated as

Match each item with the correct statement below. -measured in units sold

A profit-volume graph visually portrays the relationship between

Figure 4-3.Paney Company makes calendars. Information on cost per unit is as follows: Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. -Refer to Figure 4-3. What is the break-even point in units?

Figure 4-2.Pauley Company provides home health care. Pauley charges $35/hour for professional care. Variable costs are $21/hour and fixed costs are $78,000. Next year, Pauley expects to charge out 12,000 hours of home health care. -Refer to Figure 4-2. What is the break-even point in sales dollars?

Information about the Harmon Company's two products includes: What is the total monthly sales volume in units required to break even when the sales mix in units is 70% Product X and 30% Product Y?

The break-even point is when

The contribution margin is

The units sold or expected to be sold or sales revenue earned or expected to be earned above the break-even volume is called

Which is the equation for operating income?

Figure 4-8.A company provided the following data: -Refer to Figure 4-8. How much sales in dollars is necessary to generate a profit of $30,000?

Explain why cost-volume-profit analysis can be useful to managers.

At the break-even point,

If a multi-product company simply wants to know the overall break-even point, it is easiest to use the break-even in sales revenue approach.

Income statements for two different companies in the same industry are as follows: Required:

A company provided the following information: Required:

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool

A "what-if" technique that examines the impact of changes in underlying assumptions on an answer is

The following data pertain to the three products produced by Alberts Corporation: Fixed costs are $90,000 per month. 60% of all units sold are Product A, 30% are Product B, and 10% are Product C. What is the monthly break-even point for total units?

Figure 4-1.Foster Company makes power tools. The budgeted sales are $420,000, budgeted variable costs are $147,000, and budgeted fixed costs are $227,500. -Refer to Figure 4-1. What is the variable cost ratio?

Degree of operating leverage is calculated as

Match each item with the correct statement below. -measured in units sold

A profit-volume graph visually portrays the relationship between

Figure 4-3.Paney Company makes calendars. Information on cost per unit is as follows: Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. -Refer to Figure 4-3. What is the break-even point in units?

Figure 4-2.Pauley Company provides home health care. Pauley charges $35/hour for professional care. Variable costs are $21/hour and fixed costs are $78,000. Next year, Pauley expects to charge out 12,000 hours of home health care. -Refer to Figure 4-2. What is the break-even point in sales dollars?

Information about the Harmon Company's two products includes: What is the total monthly sales volume in units required to break even when the sales mix in units is 70% Product X and 30% Product Y?

The break-even point is when

The contribution margin is

The units sold or expected to be sold or sales revenue earned or expected to be earned above the break-even volume is called

Which is the equation for operating income?

Figure 4-8.A company provided the following data: -Refer to Figure 4-8. How much sales in dollars is necessary to generate a profit of $30,000?

Explain why cost-volume-profit analysis can be useful to managers.

At the break-even point,

If a multi-product company simply wants to know the overall break-even point, it is easiest to use the break-even in sales revenue approach.

Income statements for two different companies in the same industry are as follows: Required:

A company provided the following information: Required:

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters