Question 1

Operating leverage is the relative mix of

Accepted Answer

A)  revenues earned and manufacturing costs. 
B)  fixed and variable costs. 
C)  high-volume and low-volume products. 
D)  manufacturing costs and period costs. 
E)  revenues earned and variable costs. 
A)  revenues earned and manufacturing costs. 
B)  fixed and variable costs. 
C)  high-volume and low-volume products. 
D)  manufacturing costs and period costs. 
E)  revenues earned and variable costs.

Question 2

Which of the following is not an assumption of a cost-volume-profit analysis?

Accepted Answer

A)  Selling price and costs can be accurately identified. 
B)  Selling price and costs remain constant within the relevant range. 
C)  Inventory levels can increase or decrease. 
D)  Selling price and costs behave in a linear manner. 
A)  Selling price and costs can be accurately identified. 
B)  Selling price and costs remain constant within the relevant range. 
C)  Inventory levels can increase or decrease. 
D)  Selling price and costs behave in a linear manner.

Question 3

The use of fixed costs to extract higher percentage changes in profits as sales activity changes.

Accepted Answer

A) break-even point 
B) Common fixed expenses 
C) Contribution margin 
D) Direct fixed expenses 
E) Margin of safety
F)Operating leverage
G)Degree of operating leverage
H)Sales mix 
A) break-even point 
B) Common fixed expenses 
C) Contribution margin 
D) Direct fixed expenses 
E) Margin of safety
F)Operating leverage
G)Degree of operating leverage
H)Sales mix

Question 4

To determine the number of units that must be sold to earn a target operating income, one can use the equation for operating income and replace the operating income term with the target operating income.

Accepted Answer

A) True 
 B)False

Question 5

On a cost-volume-profit graph, the break-even point is where

Accepted Answer

A)  the revenue line intersects the profit line. 
B)  the revenue line intersects the total cost line. 
C)  the fixed cost line intersects the variable cost line. 
D)  the contribution margin line intersects the fixed cost line. 
E)  All of these are correct. 
A)  the revenue line intersects the profit line. 
B)  the revenue line intersects the total cost line. 
C)  the fixed cost line intersects the variable cost line. 
D)  the contribution margin line intersects the fixed cost line. 
E)  All of these are correct.

Question 6

In the equation to determine the number of units that must be sold to earn a target income, targeted income is subtracted from fixed expense in the numerator.

Accepted Answer

A) True 
 B)False

Question 7

The Young Manufacturing Company produces the following three products:
  Fixed costs are $76,000 per year.
50% of all sales in units are hammers, 30% are screwdrivers, and 20% are saws.
Required: Calculate the following values:

Accepted Answer

The answer of The Young Manufacturing Company produces the following...

Question 8

Which of the following is not an assumption used to prepare a cost-volume-profit graph?

Accepted Answer

A)  linear costs within the relevant range 
B)  units produced equals units sold 
C)  constant sales mix 
D)  constant cost fluctuation 
E)  All of these are assumptions used in preparing cost-volume-profit graphs. 
A)  linear costs within the relevant range 
B)  units produced equals units sold 
C)  constant sales mix 
D)  constant cost fluctuation 
E)  All of these are assumptions used in preparing cost-volume-profit graphs.

Question 9

__________ is the relative combination of products being sold by a firm.

Accepted Answer

The answer of __________ is the relative combination of products...

Question 10

The _________________________________ can be measured for a given level of sales by taking the ratio of contribution margin to operating income.

Accepted Answer

degree of

Question 11

Figure 4-5.Standlar Company makes wireless speakers. The standard model price is $360 and variable expenses are $210. The deluxe model price is $500 and variable expenses are $300. The superior model price is $1,600 and variable expense per unit is $600. Total fixed expenses are $300,000. Generally, Standlar sells 8 standard models and 4 deluxe models for every superior model sold.
-Refer to Figure 4-5. What is the number of standard models sold at break-even?

Accepted Answer

A)  100 
B)  800 
C)  180 
D)  1,000 
E)  250 
A)  100 
B)  800 
C)  180 
D)  1,000 
E)  250

Question 12

Dirth Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60% of sales and fixed expenses are $30,000. Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales. What is the sales dollars level required to break even at the old price of $7.50?

Accepted Answer

A)  $75,000 
B)  $12,000 
C)  $18,000 
D)  $50,000 
A)  $75,000 
B)  $12,000 
C)  $18,000 
D)  $50,000

Question 13

Assuming that fixed costs remain unchanged, the _____________________ can be used to find the profit impact of a change in sales revenue.

Accepted Answer

contributi

Question 14

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 break-even point in sales dollars?

Accepted Answer

A)  $350,000 
B)  $420,000 
C)  $650,000 
D)  $780,000 
E)  $567,000 
A)  $350,000 
B)  $420,000 
C)  $650,000 
D)  $780,000 
E)  $567,000

Question 15

______________________ are those fixed costs that can be traced to each segment and would be avoided if the segment did not exist.

Accepted Answer

Direct fix

Question 16

The cost-volume profit graph depicts the relationships among cost, volume, and profits, by plotting the total revenue line and the total cost line on the graph.

Accepted Answer

A) True 
 B)False

Question 17

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 hours? (round to the nearest whole hour)

Accepted Answer

A)  2,229 
B)  1,393 
C)  3,714 
D)  5,571 
E)  12,000 
A)  2,229 
B)  1,393 
C)  3,714 
D)  5,571 
E)  12,000

Question 18

Common fixed expenses are the fixed costs that are traceable to the segments and would be avoided if the segment did not exist.

Accepted Answer

A) True 
 B)False

Question 19

Melody Company sells a product for $14, variable costs are $10 per unit, and total fixed costs are $5,040. What is the per unit contribution margin?

Accepted Answer

A)  $14 
B)  $10 
C)  $24 
D)  $10. 
E)  $4 
A)  $14 
B)  $10 
C)  $24 
D)  $10. 
E)  $4

Question 20

The profit-volume graph

Accepted Answer

A)  is difficult to interpret. 
B)  fails to reveal how costs change as sales volume changes. 
C)  can be only plotted using the break-even point. 
D)  can be only plotted using fixed costs. 
E)  shows the relationship between operating income and variable costs. 
A)  is difficult to interpret. 
B)  fails to reveal how costs change as sales volume changes. 
C)  can be only plotted using the break-even point. 
D)  can be only plotted using fixed costs. 
E)  shows the relationship between operating income and variable costs.

Operating leverage is the relative mix of

Which of the following is not an assumption of a cost-volume-profit analysis?

The use of fixed costs to extract higher percentage changes in profits as sales activity changes.

To determine the number of units that must be sold to earn a target operating income, one can use the equation for operating income and replace the operating income term with the target operating income.

On a cost-volume-profit graph, the break-even point is where

In the equation to determine the number of units that must be sold to earn a target income, targeted income is subtracted from fixed expense in the numerator.

The Young Manufacturing Company produces the following three products: Fixed costs are $76,000 per year. 50% of all sales in units are hammers, 30% are screwdrivers, and 20% are saws. Required: Calculate the following values:

Which of the following is not an assumption used to prepare a cost-volume-profit graph?

__________ is the relative combination of products being sold by a firm.

The _________________________________ can be measured for a given level of sales by taking the ratio of contribution margin to operating income.

Assuming that fixed costs remain unchanged, the _____________________ can be used to find the profit impact of a change in sales revenue.

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 break-even point in sales dollars?

______________________ are those fixed costs that can be traced to each segment and would be avoided if the segment did not exist.

The cost-volume profit graph depicts the relationships among cost, volume, and profits, by plotting the total revenue line and the total cost line on the graph.

Common fixed expenses are the fixed costs that are traceable to the segments and would be avoided if the segment did not exist.

Melody Company sells a product for $14, variable costs are $10 per unit, and total fixed costs are $5,040. What is the per unit contribution margin?

The profit-volume graph

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

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

Operating leverage is the relative mix of

Which of the following is not an assumption of a cost-volume-profit analysis?

The use of fixed costs to extract higher percentage changes in profits as sales activity changes.

To determine the number of units that must be sold to earn a target operating income, one can use the equation for operating income and replace the operating income term with the target operating income.

On a cost-volume-profit graph, the break-even point is where

In the equation to determine the number of units that must be sold to earn a target income, targeted income is subtracted from fixed expense in the numerator.

The Young Manufacturing Company produces the following three products: Fixed costs are $76,000 per year. 50% of all sales in units are hammers, 30% are screwdrivers, and 20% are saws. Required: Calculate the following values:

Which of the following is not an assumption used to prepare a cost-volume-profit graph?

__________ is the relative combination of products being sold by a firm.

The _________________________________ can be measured for a given level of sales by taking the ratio of contribution margin to operating income.

Assuming that fixed costs remain unchanged, the _____________________ can be used to find the profit impact of a change in sales revenue.

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 break-even point in sales dollars?

______________________ are those fixed costs that can be traced to each segment and would be avoided if the segment did not exist.

The cost-volume profit graph depicts the relationships among cost, volume, and profits, by plotting the total revenue line and the total cost line on the graph.

Common fixed expenses are the fixed costs that are traceable to the segments and would be avoided if the segment did not exist.

Melody Company sells a product for $14, variable costs are $10 per unit, and total fixed costs are $5,040. What is the per unit contribution margin?

The profit-volume graph

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