Question 1

Which of the following conditions would cause the break-even point to increase?

Accepted Answer

A) Increase in total fixed costs 
B) Increase in unit selling price 
C) Decrease in unit variable cost 
D) Decrease in total fixed costs 
A) Increase in total fixed costs 
B) Increase in unit selling price 
C) Decrease in unit variable cost 
D) Decrease in total fixed costs

Question 2

Currently,Unicy Company's unit selling price is $25,the variable cost is $17,and the total fixed costs are $85,000.A proposal is being evaluated to increase the selling price to $27.
(a)	Compute the current break-even sales (in units).
(b)	Compute the anticipated break-even sales (in units), assuming that the unit selling price is increased and all costs remain constant.

Accepted Answer

(a)Break­even sales (units)= $

Question 3

Vest Food Co.has the following operating data:

Accepted Answer

A) $152,016. 
B) $240,000. 
C) $208,696. 
D) $125,217. 
A) $152,016. 
B) $240,000. 
C) $208,696. 
D) $125,217.

Question 4

Cost-volume-profit analysis can be presented in both graphically and equation form.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an example of a cost that varies in total as the number of units produced changes?

Accepted Answer

A) Electricity cost per KWH to operate factory equipment 
B) Monthly rent on a factory building 
C) Straight-line depreciation on factory equipment 
D) Salary of a production supervisor 
A) Electricity cost per KWH to operate factory equipment 
B) Monthly rent on a factory building 
C) Straight-line depreciation on factory equipment 
D) Salary of a production supervisor

Question 6

A change in fixed costs as a result of increase in the property tax rates will increase the break-even point.

Accepted Answer

A) True 
 B)False

Question 7

DeGiaimo Co.has an operating leverage of 5.If next year's sales are expected to increase by 10%,then the company's operating income will increase by 50%.

Accepted Answer

A) True 
 B)False

Question 8

The contribution margin ratio is the same as the variable cost ratio.

Accepted Answer

A) True 
 B)False

Question 9

If fixed costs are $750,000 and variable costs are 60% of sales,what is the break-even point (in dollars)?

Accepted Answer

A) $1,875,000 
B) $1,250,000 
C) $1,666,667 
D) $1,350,000 
A) $1,875,000 
B) $1,250,000 
C) $1,666,667 
D) $1,350,000

Question 10

Knowing how costs behave to change in the level of activity is useful to management for all the following reasons except for:

Accepted Answer

A) predicting customer demand. 
B) predicting profits as sales and production volumes change. 
C) estimating costs. 
D) changing an existing product production. 
A) predicting customer demand. 
B) predicting profits as sales and production volumes change. 
C) estimating costs. 
D) changing an existing product production.

Question 11

Clinton Co.has an operating leverage of 4.Sales are expected to increase by 8% next year.Operating income is:

Accepted Answer

A) unaffected. 
B) expected to increase by 2%. 
C) expected to increase by 32%. 
D) expected to increase by 4 times. 
A) unaffected. 
B) expected to increase by 2%. 
C) expected to increase by 32%. 
D) expected to increase by 4 times.

Question 12

For purpose of analysis,mixed costs can generally be separated into their variable and fixed components.

Accepted Answer

A) True 
 B)False

Question 13

If sales are $820,000,variable costs are 68% of sales,and operating income is $260,000,what is the contribution margin ratio?

Accepted Answer

A) 53% 
B) 38% 
C) 47% 
D) 32% 
A) 53% 
B) 38% 
C) 47% 
D) 32%

Question 14

The break-even point (in units)is calculated by dividing the total estimated fixed costs by the net sales of a period.

Accepted Answer

A) True 
 B)False

Question 15

The range of activity over which changes in cost are of interest to management is called the relevant range.

Accepted Answer

A) True 
 B)False

Question 16

Which ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

Accepted Answer

A) Margin of safety ratio 
B) Contribution margin ratio 
C) Costs and expenses ratio 
D) Profit ratio 
A) Margin of safety ratio 
B) Contribution margin ratio 
C) Costs and expenses ratio 
D) Profit ratio

Question 17

If fixed costs are $220,000 and the unit contribution margin is $25,the sales necessary to earn an operating income of $30,000 are 10,000 units.

Accepted Answer

A) True 
 B)False

Question 18

A rental cost of $40,000 plus $0.50 per machine hour of use is an example of a mixed cost.

Accepted Answer

A) True 
 B)False

Question 19

If employees accept a wage contract that decreases the unit contribution margin,the break-even point will decrease.

Accepted Answer

A) True 
 B)False

Question 20

If sales total $5,000,000,fixed costs total $400,000,and variable costs are 2,750,000,the contribution margin ratio is 45%.

Accepted Answer

A) True 
 B)False

Which of the following conditions would cause the break-even point to increase?

Vest Food Co.has the following operating data:

Cost-volume-profit analysis can be presented in both graphically and equation form.

Which of the following is an example of a cost that varies in total as the number of units produced changes?

A change in fixed costs as a result of increase in the property tax rates will increase the break-even point.

DeGiaimo Co.has an operating leverage of 5.If next year's sales are expected to increase by 10%,then the company's operating income will increase by 50%.

The contribution margin ratio is the same as the variable cost ratio.

If fixed costs are $750,000 and variable costs are 60% of sales,what is the break-even point (in dollars)?

Knowing how costs behave to change in the level of activity is useful to management for all the following reasons except for:

Clinton Co.has an operating leverage of 4.Sales are expected to increase by 8% next year.Operating income is:

For purpose of analysis,mixed costs can generally be separated into their variable and fixed components.

If sales are $820,000,variable costs are 68% of sales,and operating income is $260,000,what is the contribution margin ratio?

The break-even point (in units)is calculated by dividing the total estimated fixed costs by the net sales of a period.

The range of activity over which changes in cost are of interest to management is called the relevant range.

Which ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

If fixed costs are $220,000 and the unit contribution margin is $25,the sales necessary to earn an operating income of $30,000 are 10,000 units.

A rental cost of $40,000 plus $0.50 per machine hour of use is an example of a mixed cost.

If employees accept a wage contract that decreases the unit contribution margin,the break-even point will decrease.

If sales total $5,000,000,fixed costs total $400,000,and variable costs are 2,750,000,the contribution margin ratio is 45%.

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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Exam 11: Cost Behavior and Cost-Volume-Profit Analysis

Which of the following conditions would cause the break-even point to increase?

Vest Food Co.has the following operating data:

Cost-volume-profit analysis can be presented in both graphically and equation form.

Which of the following is an example of a cost that varies in total as the number of units produced changes?

A change in fixed costs as a result of increase in the property tax rates will increase the break-even point.

DeGiaimo Co.has an operating leverage of 5.If next year's sales are expected to increase by 10%,then the company's operating income will increase by 50%.

The contribution margin ratio is the same as the variable cost ratio.

If fixed costs are $750,000 and variable costs are 60% of sales,what is the break-even point (in dollars)?

Knowing how costs behave to change in the level of activity is useful to management for all the following reasons except for:

Clinton Co.has an operating leverage of 4.Sales are expected to increase by 8% next year.Operating income is:

For purpose of analysis,mixed costs can generally be separated into their variable and fixed components.

If sales are $820,000,variable costs are 68% of sales,and operating income is $260,000,what is the contribution margin ratio?

The break-even point (in units)is calculated by dividing the total estimated fixed costs by the net sales of a period.

The range of activity over which changes in cost are of interest to management is called the relevant range.

Which ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

If fixed costs are $220,000 and the unit contribution margin is $25,the sales necessary to earn an operating income of $30,000 are 10,000 units.

A rental cost of $40,000 plus $0.50 per machine hour of use is an example of a mixed cost.

If employees accept a wage contract that decreases the unit contribution margin,the break-even point will decrease.

If sales total $5,000,000,fixed costs total $400,000,and variable costs are 2,750,000,the contribution margin ratio is 45%.

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters