Question 1

Sarah Smith, a sole proprietor, has the following projected figures for next year:   What is the contribution margin ratio?

Accepted Answer

A)  0.300 
B)  1.429 
C)  0.429 
D)  3.333 
A)  0.300 
B)  1.429 
C)  0.429 
D)  3.333

Question 2

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 contribution margin ratio?

Accepted Answer

A)  35% 
B)  65% 
C)  54% 
D)  89% 
E)  50% 
A)  35% 
B)  65% 
C)  54% 
D)  89% 
E)  50%

Question 3

The _________________________ is the proportion of each sales dollar available to cover fixed costs and provide for profit.

Accepted Answer

contributi

Question 4

Rachel Company sells office chairs at $350 each, incurs variable cost per unit of $100, and has a total fixed expense of $30,000. How many units must be sold to achieve a target operating income of $55,000?

Accepted Answer

A)  200 
B)  340 
C)  180 
D)  450 
E)  275 
A)  200 
B)  340 
C)  180 
D)  450 
E)  275

Question 5

_____________________ is the use of fixed costs to extract higher percentage changes in profits as sales activity changes.

Accepted Answer

The answer of _____________________ is the use of fixed costs...

Question 6

The "what-if" process of altering certain key variables to assess the effect on the original outcome is also called a __________________.

Accepted Answer

sensitivit

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 sales dollars?

Accepted Answer

A)  $120,000 
B)  $80,000 
C)  $58,330 
D)  $21,670 
E)  $28,000 
A)  $120,000 
B)  $80,000 
C)  $58,330 
D)  $21,670 
E)  $28,000

Question 8

It is possible to calculate the break-even point for individual products in a multiple product firm by separating the common and direct fixed expenses.

Accepted Answer

A) True 
 B)False

Question 9

The ______________________ is the proportion of each sales dollar that must be used to cover variable costs.

Accepted Answer

The answer of The ______________________ is the proportion of each...

Question 10

A graph that depicts the relationships among cost, volume and profits (operating income) is the

Accepted Answer

A)  Cost graph. 
B)  Volume graph. 
C)  Cost-volume-profit graph. 
D)  Profit-volume graph. 
E)  break-even graph. 
A)  Cost graph. 
B)  Volume graph. 
C)  Cost-volume-profit graph. 
D)  Profit-volume graph. 
E)  break-even graph.

Question 11

Total variable cost divided by price is

Accepted Answer

A)  variable cost ratio. 
B)  revenue ratio. 
C)  contribution ratio. 
D)  sales ratio. 
E)  degree of operating leverage. 
A)  variable cost ratio. 
B)  revenue ratio. 
C)  contribution ratio. 
D)  sales ratio. 
E)  degree of operating leverage.

Question 12

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 per unit?

Accepted Answer

A)  $6.30 
B)  $5.00 
C)  $6.40 
D)  $6.00 
E)  $5.40 
A)  $6.30 
B)  $5.00 
C)  $6.40 
D)  $6.00 
E)  $5.40

Question 13

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 variable expense ratio?

Accepted Answer

A)  40% 
B)  36% 
C)  50% 
D)  60% 
E)  46% 
A)  40% 
B)  36% 
C)  50% 
D)  60% 
E)  46%

Question 14

Melody Company sells a product for $14, variable costs are $10 per unit, and total fixed costs are $5,040. If Melody wants to earn an operating profit of $880, how many units must it sell?

Accepted Answer

A)  1,480 
B)  1,260 
C)  1,040 
D)  62 
E)  247 
A)  1,480 
B)  1,260 
C)  1,040 
D)  62 
E)  247

Question 15

If fixed costs increase, the break-even point in units will

Accepted Answer

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

Question 16

Which statement is true about cost-volume profit (CVP) analysis?

Accepted Answer

A)  CVP analysis is a powerful tool for planning and decision making. 
B)  CVP analysis allows managers to do sensitivity analysis by examining the impact of various prices or cost levels on profit. 
C)  CVP analysis shows how revenues, expenses, and profits behave as volume changes. 
D)  CVP analysis can be used in both single-product and multi-product firms. 
E)  All of these statements are true. 
A)  CVP analysis is a powerful tool for planning and decision making. 
B)  CVP analysis allows managers to do sensitivity analysis by examining the impact of various prices or cost levels on profit. 
C)  CVP analysis shows how revenues, expenses, and profits behave as volume changes. 
D)  CVP analysis can be used in both single-product and multi-product firms. 
E)  All of these statements are true.

Question 17

In a multi-product firm, if the sales mix changes, the break-even points for each product will not change.

Accepted Answer

A) True 
 B)False

Question 18

In order for the break-even computation to be meaningful to management, sales mix should be computed using the

Accepted Answer

A)  expected mix. 
B)  most desirable mix. 
C)  least desirable mix. 
D)  traditional mix. 
E)  average mix over the past 5 years. 
A)  expected mix. 
B)  most desirable mix. 
C)  least desirable mix. 
D)  traditional mix. 
E)  average mix over the past 5 years.

Question 19

Newman Company expects to produce and sell 2,000 units next month. Data on costs follows:
  Required:

Accepted Answer

The answer of Newman Company expects to produce and sell...

Question 20

Variable expense per unit consists only of direct materials, direct labor, and variable overhead.

Accepted Answer

A) True 
 B)False

Sarah Smith, a sole proprietor, has the following projected figures for next year: What is the contribution margin ratio?

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 contribution margin ratio?

The _________________________ is the proportion of each sales dollar available to cover fixed costs and provide for profit.

Rachel Company sells office chairs at $350 each, incurs variable cost per unit of $100, and has a total fixed expense of $30,000. How many units must be sold to achieve a target operating income of $55,000?

_____________________ is the use of fixed costs to extract higher percentage changes in profits as sales activity changes.

The "what-if" process of altering certain key variables to assess the effect on the original outcome is also called a __________________.

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 sales dollars?

It is possible to calculate the break-even point for individual products in a multiple product firm by separating the common and direct fixed expenses.

The ______________________ is the proportion of each sales dollar that must be used to cover variable costs.

A graph that depicts the relationships among cost, volume and profits (operating income) is the

Total variable cost divided by price is

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 per unit?

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 variable expense ratio?

Melody Company sells a product for $14, variable costs are $10 per unit, and total fixed costs are $5,040. If Melody wants to earn an operating profit of $880, how many units must it sell?

If fixed costs increase, the break-even point in units will

Which statement is true about cost-volume profit (CVP) analysis?

In a multi-product firm, if the sales mix changes, the break-even points for each product will not change.

In order for the break-even computation to be meaningful to management, sales mix should be computed using the

Newman Company expects to produce and sell 2,000 units next month. Data on costs follows: Required:

Variable expense per unit consists only of direct materials, direct labor, and variable overhead.

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

Sarah Smith, a sole proprietor, has the following projected figures for next year: What is the contribution margin ratio?

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 contribution margin ratio?

The _________________________ is the proportion of each sales dollar available to cover fixed costs and provide for profit.

Rachel Company sells office chairs at $350 each, incurs variable cost per unit of $100, and has a total fixed expense of $30,000. How many units must be sold to achieve a target operating income of $55,000?

_____________________ is the use of fixed costs to extract higher percentage changes in profits as sales activity changes.

The "what-if" process of altering certain key variables to assess the effect on the original outcome is also called a __________________.

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 sales dollars?

It is possible to calculate the break-even point for individual products in a multiple product firm by separating the common and direct fixed expenses.

The ______________________ is the proportion of each sales dollar that must be used to cover variable costs.

A graph that depicts the relationships among cost, volume and profits (operating income) is the

Total variable cost divided by price is

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 per unit?

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 variable expense ratio?

Melody Company sells a product for $14, variable costs are $10 per unit, and total fixed costs are $5,040. If Melody wants to earn an operating profit of $880, how many units must it sell?

If fixed costs increase, the break-even point in units will

Which statement is true about cost-volume profit (CVP) analysis?

In a multi-product firm, if the sales mix changes, the break-even points for each product will not change.

In order for the break-even computation to be meaningful to management, sales mix should be computed using the

Newman Company expects to produce and sell 2,000 units next month. Data on costs follows: Required:

Variable expense per unit consists only of direct materials, direct labor, and variable overhead.

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