Question 1

The difference between sales and variable expenses is called the ______________________.

Accepted Answer

contributi

Question 2

The ratio of fixed expenses to the contribution margin ratio is the

Accepted Answer

A)  indifference point. 
B)  break-even point in units. 
C)  fixed cost ratio. 
D)  break-even point in sales. 
E)  sensitivity analysis. 
A)  indifference point. 
B)  break-even point in units. 
C)  fixed cost ratio. 
D)  break-even point in sales. 
E)  sensitivity analysis.

Question 3

Product 1 has a contribution margin of $6.00 per unit, and Product 2 has a contribution margin of $7.50 per unit. Total fixed costs are $300,000. Sales mix and total volume varies from one period to another. Which of the following is true?

Accepted Answer

A)  At a sales volume in excess of 25,000 units of 1 and 25,000 units of 2, operations will be profitable. 
B)  The ratio of net profit to total sales for 2 will be larger than the ratio of net profit to total sales for 1. 
C)  Variable costs are $1.50 more for 2 than for 1. 
D)  The ratio of contribution margin to total sales always will be larger for 1 than for 2. 
A)  At a sales volume in excess of 25,000 units of 1 and 25,000 units of 2, operations will be profitable. 
B)  The ratio of net profit to total sales for 2 will be larger than the ratio of net profit to total sales for 1. 
C)  Variable costs are $1.50 more for 2 than for 1. 
D)  The ratio of contribution margin to total sales always will be larger for 1 than for 2.

Question 4

The impact on a firm's income resulting from a change in the number of units sold can be assessed by multiplying the unit contribution margin by the change in units sold assuming that fixed costs remain the same.

Accepted Answer

A) True 
 B)False

Question 5

Music Now plans to sell 6,000 MP3 players at $60 each in the coming year. Variable cost per unit is $12 and total fixed cost is $24,000.
Required:
A.) Calculate the variable cost ratio.
B.) Calculate the contribution margin ratio.
C.) Calculate the break-even point in sales dollars.
D.) If Music Now has a target profit of $90,000, how many MP3 players will they have to sell?

Accepted Answer

A.) $12/$60 = 20%
B.) ($60-$12

Question 6

If the selling price per unit increases, the break-even point in units will

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  remain the same; however, contribution per unit will decrease. 
A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  remain the same; however, contribution per unit will decrease.

Question 7

Fixed costs that are directly traceable to a given segment and, consequently, disappear if the segment is eliminated.

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 8

Which of the following can be considered a measure of risk in cost-volume-profit analysis?

Accepted Answer

A)  margin of safety 
B)  contribution margin 
C)  break-even point 
D)  sales mix 
A)  margin of safety 
B)  contribution margin 
C)  break-even point 
D)  sales mix

Question 9

The break-even point is where total sales revenue equals total cost.

Accepted Answer

A) True 
 B)False

Question 10

A profit-volume graph differs from a cost-volume-profits graph in that a profit-volume graph displays only

Accepted Answer

A)  costs associated with units produced. 
B)  operating income associated with expected sales. 
C)  revenues and costs associated with sales volume. 
D)  revenues expected at targeted sales levels. 
E)  All of these are correct. 
A)  costs associated with units produced. 
B)  operating income associated with expected sales. 
C)  revenues and costs associated with sales volume. 
D)  revenues expected at targeted sales levels. 
E)  All of these are correct.

Question 11

Sales mix can be expressed in terms of

Accepted Answer

A)  units but not revenues. 
B)  either revenues or units. 
C)  revenues but not units. 
D)  neither units nor revenue. 
A)  units but not revenues. 
B)  either revenues or units. 
C)  revenues but not units. 
D)  neither units nor revenue.

Question 12

The _________________ is the units sold or the revenue earned above the break-even volume.

Accepted Answer

The answer of The _________________ is the units sold or...

Question 13

A ________________________ visually portrays the relationship between profits and units sold.

Accepted Answer

The answer of A ________________________ visually portrays the relationship between...

Question 14

If the break-even volume for a company is 600 units and the company is currently selling 1,000 units than the 400 units would represent the company's ____________________.

Accepted Answer

The answer of If the break-even volume for a company...

Question 15

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

Accepted Answer

A)  Contribution margin ratio 
B)  Degree of operating leverage 
C)  Break-even point 
D)  Sensitivity analysis 
E)  Contribution margin 
A)  Contribution margin ratio 
B)  Degree of operating leverage 
C)  Break-even point 
D)  Sensitivity analysis 
E)  Contribution margin

Question 16

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 variable cost ratio?

Accepted Answer

A)  50% 
B)  40% 
C)  33% 
D)  67% 
E)  60% 
A)  50% 
B)  40% 
C)  33% 
D)  67% 
E)  60%

Question 17

The Noble Company manufactures two products. Information about the two products are as follows:
  The company expects fixed costs to be $189,000. The firm expects 60% of its sales (in units) to be Product A (a sales mix of 3:2).
Required:

Accepted Answer

The answer of The Noble Company manufactures two products. Information...

Question 18

The margin of safety measures the units sold or the revenue earned above the break-even volume.

Accepted Answer

A) True 
 B)False

Question 19

The contribution margin income statement provides a good check to determine if the sale of a certain number of units really results in operating income of the given amount.

Accepted Answer

A) True 
 B)False

Question 20

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 contribution margin ratio?

Accepted Answer

A)  36% 
B)  40% 
C)  50% 
D)  60% 
E)  44% 
A)  36% 
B)  40% 
C)  50% 
D)  60% 
E)  44%

The difference between sales and variable expenses is called the ______________________.

The ratio of fixed expenses to the contribution margin ratio is the

Product 1 has a contribution margin of $6.00 per unit, and Product 2 has a contribution margin of $7.50 per unit. Total fixed costs are $300,000. Sales mix and total volume varies from one period to another. Which of the following is true?

The impact on a firm's income resulting from a change in the number of units sold can be assessed by multiplying the unit contribution margin by the change in units sold assuming that fixed costs remain the same.

If the selling price per unit increases, the break-even point in units will

Fixed costs that are directly traceable to a given segment and, consequently, disappear if the segment is eliminated.

Which of the following can be considered a measure of risk in cost-volume-profit analysis?

The break-even point is where total sales revenue equals total cost.

A profit-volume graph differs from a cost-volume-profits graph in that a profit-volume graph displays only

Sales mix can be expressed in terms of

The _________________ is the units sold or the revenue earned above the break-even volume.

A ________________________ visually portrays the relationship between profits and units sold.

If the break-even volume for a company is 600 units and the company is currently selling 1,000 units than the 400 units would represent the company's ____________________.

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

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 variable cost ratio?

The Noble Company manufactures two products. Information about the two products are as follows: The company expects fixed costs to be $189,000. The firm expects 60% of its sales (in units) to be Product A (a sales mix of 3:2). Required:

The margin of safety measures the units sold or the revenue earned above the break-even volume.

The contribution margin income statement provides a good check to determine if the sale of a certain number of units really results in operating income of the given amount.

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 contribution margin ratio?

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

The difference between sales and variable expenses is called the ______________________.

The ratio of fixed expenses to the contribution margin ratio is the

Product 1 has a contribution margin of $6.00 per unit, and Product 2 has a contribution margin of $7.50 per unit. Total fixed costs are $300,000. Sales mix and total volume varies from one period to another. Which of the following is true?

The impact on a firm's income resulting from a change in the number of units sold can be assessed by multiplying the unit contribution margin by the change in units sold assuming that fixed costs remain the same.

If the selling price per unit increases, the break-even point in units will

Fixed costs that are directly traceable to a given segment and, consequently, disappear if the segment is eliminated.

Which of the following can be considered a measure of risk in cost-volume-profit analysis?

The break-even point is where total sales revenue equals total cost.

A profit-volume graph differs from a cost-volume-profits graph in that a profit-volume graph displays only

Sales mix can be expressed in terms of

The _________________ is the units sold or the revenue earned above the break-even volume.

A ________________________ visually portrays the relationship between profits and units sold.

If the break-even volume for a company is 600 units and the company is currently selling 1,000 units than the 400 units would represent the company's ____________________.

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

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 variable cost ratio?

The Noble Company manufactures two products. Information about the two products are as follows: The company expects fixed costs to be $189,000. The firm expects 60% of its sales (in units) to be Product A (a sales mix of 3:2). Required:

The margin of safety measures the units sold or the revenue earned above the break-even volume.

The contribution margin income statement provides a good check to determine if the sale of a certain number of units really results in operating income of the given amount.

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 contribution margin ratio?

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