The Smith Corporation has the following data for the current year: \[\begin{array} { l l } \text { Selling price per unit } & \$ 15 \\ \text { Variable cost per unit } & \$ 9 \\ \text { Fixed costs } & \$ 45,000 \\ \text { Units sold } & 10,000 \text { units } \end{array}\] If sales decrease to 7,500 units in the following year,what will be Smith's operating leverage?

A) 0.25 B) 2.00 C) 4.00 D) undefined A) 0.25 B) 2.00 C) 4.00 D) undefined D

Urban Incorporated had the following information: $\begin{array}{lcc} \underline{\text { Activity Driver}}& \underline{\text { Unit Variable Cost }}&\underline{\text { Level of Activity Driver}}\\ \text { Units sold } & \$ 20 & -- \\ \text { Setups } & 1,200 & 60 \\ \text { Engineering hours } & 52&1,500 \\ \end{array}$ $\begin{array}{lc} \text { Other data: } & &\\ \text { Total fixed costs (traditional) } & \$ 600,000 \\ \text { Total fixed costs (ABC) } & \$ 300,000 \\ \text { Unit selling price } & \$ 60 \end{array}$ - How many units need to be sold to produce a before-tax profit of $80,000 using ABC?

A) 7,500 units B) 11,500 units C) 14,000 units D) 13,250 units A) 7,500 units B) 11,500 units C) 14,000 units D) 13,250 units D

Sarah Smith,a sole proprietor,has the following projected figures for next year: $\begin{array}{lr} \text { Selling price per unit } & \$ 150.00 \\ \text { Contribution margin per unit } & \$ 45.00 \\ \text { Total fixed costs } & \$ 630,000 \end{array}$ What is the contribution margin ratio?

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

The Smith Corporation has the following data for the current year: \[\begin{array} { l l } \text { Selling price per unit } & \$ 15 \\ \text { Variable cost per unit } & \$ 9 \\ \text { Fixed costs } & \$ 45,000 \\ \text { Units sold } & 10,000 \text { units } \end{array}\] - What will be the margin of safety expressed in sales revenue?

A) $37,500 B) $45,000 C) $75,000 D) $112,500 A) $37,500 B) $45,000 C) $75,000 D) $112,500

Sarah Smith,a sole proprietor,has the following projected figures for next year: $\begin{array}{lr} \text { Selling price per unit } & \$ 150.00 \\ \text { Contribution margin per unit } & \$ 45.00 \\ \text { Total fixed costs } & \$ 630,000 \end{array}$ What selling price per unit is needed to obtain a before-tax profit of $270,000 at a volume of 4,000 units?

A) $105.00 B) $150.00 C) $225.00 D) $330.00 A) $105.00 B) $150.00 C) $225.00 D) $330.00

Halbert Company projected the following information for next year: $\begin{array}{lr} \text { Selling price per unit } & \$60.00 \\ \text { Contribution margin per unit } & \$ 30.00 \\ \text { Total fixed costs } & \$ 100,000 \\ \text { Tax rate } & 20 \% \end{array}$ How many units must be sold to obtain an after-tax profit of $40,000?

A) 3,750 units B) 5,000 units C) 5,167 units D) 5,625 units A) 3,750 units B) 5,000 units C) 5,167 units D) 5,625 units

Assume the following cost behaviour data for Portrait Company: $\begin{array}{lll} \text { Sales price } & \$ 18.00 & \text { per unit } \\ \text { Variable costs } & \$ 13.50 & \text { per unit } \\ \text { Fixed costs } & \$ 22,500 & \\ \text { Tax rate } & 40 \% & \end{array}$ -What volume of sales dollars is required to earn an after-tax income of $40,500?

A) $90,000 B) $252,000 C) $360,000 D) $495,000 A) $90,000 B) $252,000 C) $360,000 D) $495,000

The following data pertain to the three products produced by Alberts Corporation: $\begin{array}{lccc} & \underline{\text { A }}& \underline{\text {B}}& \underline{\text {C}}\\ \text { Seling price per unit } & \$ 5.00 & \$ 7.00&\$6.00 \\ \text { Variable costs per unit } & \underline{4.00 }& \underline{ 5.00}& \underline{3.00} \\ \text { Contribution margin per unit } & \underline{ \$ 1.00} & \underline{ \$ 2.00}& \underline{\$3.00} \\ \end{array}$ Fixed costs are $90,000 per month. Sixty percent of all units sold are Product A,30 percent are Product B,and 10 percent are Product C. What is the monthly break-even point for total units?

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

Information about the Harmon Company's two products includes: $\begin{array}{lrr} &\underline{\text { Product X}}& \underline{\text { Product Y }}\\ \text { Unit selling price } & \$ 9.00 & \$ 9.00 \\ \text { Unit variable costs: } & & \\ \text { Manufacturing } & \$ 5.25 & \$ 6.75 \\ \text { Selling } & .75&.75\\ \text { Total } &\$ 6.00 & \$ 7.50 \\ \end{array}$ $\begin{array}{l} \text { Monthly fixed costs are as follows: }\\ \text { Manufacturing } & \$ 82,500 \\ \text { Selling and administrative } & \$ 45,000\\ \text { Total}&\$127,500 \end{array}$ If the sales mix in units is 50 percent Product X and 50 percent Product Y,what is the monthly break-even total sales dollars?

A) $150,000 B) $450,000 C) $510,000 D) $630,000 A) $150,000 B) $450,000 C) $510,000 D) $630,000

Exam 3: Cost-Volume-Profit Analysis

The Smith Corporation has the following data for the current year: Selling price per unit \ 15 Variable cost per unit \ 9 Fixed costs \ 45,000 Units sold 10,000 units If sales decrease to 7,500 units in the following year,what will be Smith's operating leverage?

Free

(Multiple Choice)

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Question 1

Correct Answer:

Verified

D

Urban Incorporated had the following information: Units sold \ 20 -- Setups 1,200 60 Engineering hours 52 1,500 Other data: Total fixed costs (traditional) \ 600,000 Total fixed costs (ABC) \ 300,000 Unit selling price \ 60 - How many units need to be sold to produce a before-tax profit of $80,000 using ABC?

Free

(Multiple Choice)

4.8/5

(79)

Question 2

Correct Answer:

Verified

D

Sarah Smith,a sole proprietor,has the following projected figures for next year: Selling price per unit \ 150.00 Contribution margin per unit \ 45.00 Total fixed costs \ 630,000 What is the contribution margin ratio?

Free

(Multiple Choice)

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Question 3

Correct Answer:

Verified

A

In a cost-volume-profit graph,what does the slope of the total revenue line represent?

(Multiple Choice)

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Question 4

The Smith Corporation has the following data for the current year: Selling price per unit \ 15 Variable cost per unit \ 9 Fixed costs \ 45,000 Units sold 10,000 units - What will be the margin of safety expressed in sales revenue?

(Multiple Choice)

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Question 5

At a monthly volume of $25,000,a company incurs variable cost of $19,000 and fixed costs of $6,000. Determine each of the following values: a.Variable cost ratio b.Contribution margin ratio c.Monthly break-even dollar sales volume d.Monthly margin of safety in dollars

(Essay)

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Question 6

Sarah Smith,a sole proprietor,has the following projected figures for next year: Selling price per unit \ 150.00 Contribution margin per unit \ 45.00 Total fixed costs \ 630,000 What selling price per unit is needed to obtain a before-tax profit of $270,000 at a volume of 4,000 units?

(Multiple Choice)

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Question 7

Halbert Company projected the following information for next year: Selling price per unit \6 0.00 Contribution margin per unit \ 30.00 Total fixed costs \ 100,000 Tax rate 20\% How many units must be sold to obtain an after-tax profit of $40,000?

(Multiple Choice)

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Question 8

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.How does this sales mix affect the profit and contribution margin?

(Multiple Choice)

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Question 9

Dirth Company sells only one product at a regular price of $7.50 per unit.Variable expenses are 60 percent 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 sales dollar level is needed to obtain a before-tax profit of $60,000 when the selling price is $6.00 per unit?

(Multiple Choice)

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Question 10

On a profit-volume graph,what does the intersection of the profit line with the vertical axis represent?

(Multiple Choice)

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Question 11

In a cost-volume-profit graph,what does the slope of the total revenue line represent?

(Multiple Choice)

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Question 12

Patricia Company produces two products,X and Y,which account for 60 percent and 40 percent,respectively,of total sales dollars.Contribution margin ratios are 50 percent for X and 25 percent for Y.Total fixed costs are $120,000.What is Patricia's break-even point in sales dollars?

(Multiple Choice)

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Question 13

Barco,Inc.decided to institute an advertising campaign that would cost $75,000.Variable costs will remain at $15 per unit.Barco is currently selling 100,000 units of its product at $25 per unit.The Marketing Department is estimating that there will be a 10 percent increase in sales volume.With all else remaining the same,what will be the result of this decision?

(Multiple Choice)

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Question 14

Assume the following cost behaviour data for Portrait Company: Sales price \ 18.00 per unit Variable costs \ 13.50 per unit Fixed costs \ 22,500 Tax rate 40\% -What volume of sales dollars is required to earn an after-tax income of $40,500?

(Multiple Choice)

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Question 15

The following data pertain to the three products produced by Alberts Corporation: Seling price per unit \ 5.00 \ 7.00 \6 .00 Variable costs per unit Contribution margin per unit Fixed costs are $90,000 per month. Sixty percent of all units sold are Product A,30 percent are Product B,and 10 percent are Product C. What is the monthly break-even point for total units?

(Multiple Choice)

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Question 16

In the cost-volume-profit analysis,what are two ways management can deal with risk and uncertainty?

(Essay)

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Question 17

Dirth Company sells only one product at a regular price of $7.50 per unit.Variable expenses are 60 percent 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?

(Multiple Choice)

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Question 18

Which of the following assumptions is necessary for cost-volume-profit analysis?

(Multiple Choice)

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Question 19

Information about the Harmon Company's two products includes: Unit selling price \ 9.00 \ 9.00 Unit variable costs: Manufacturing \ 5.25 \ 6.75 Selling .75 .75 Total \ 6.00 \ 7.50 Monthly fixed costs are as follows: Manufacturing \ 82,500 Selling and administrative \ 45,000 Total \1 27,500 If the sales mix in units is 50 percent Product X and 50 percent Product Y,what is the monthly break-even total sales dollars?

(Multiple Choice)

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Question 20

The Smith Corporation has the following data for the current year: Selling price per unit \ 15 Variable cost per unit \ 9 Fixed costs \ 45,000 Units sold 10,000 units If sales decrease to 7,500 units in the following year,what will be Smith's operating leverage?

Sarah Smith,a sole proprietor,has the following projected figures for next year: Selling price per unit \ 150.00 Contribution margin per unit \ 45.00 Total fixed costs \ 630,000 What is the contribution margin ratio?

In a cost-volume-profit graph,what does the slope of the total revenue line represent?

The Smith Corporation has the following data for the current year: Selling price per unit \ 15 Variable cost per unit \ 9 Fixed costs \ 45,000 Units sold 10,000 units - What will be the margin of safety expressed in sales revenue?

At a monthly volume of $25,000,a company incurs variable cost of $19,000 and fixed costs of $6,000. Determine each of the following values: a.Variable cost ratio b.Contribution margin ratio c.Monthly break-even dollar sales volume d.Monthly margin of safety in dollars

Sarah Smith,a sole proprietor,has the following projected figures for next year: Selling price per unit \ 150.00 Contribution margin per unit \ 45.00 Total fixed costs \ 630,000 What selling price per unit is needed to obtain a before-tax profit of $270,000 at a volume of 4,000 units?

Halbert Company projected the following information for next year: Selling price per unit \6 0.00 Contribution margin per unit \ 30.00 Total fixed costs \ 100,000 Tax rate 20\% How many units must be sold to obtain an after-tax profit of $40,000?

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.How does this sales mix affect the profit and contribution margin?

On a profit-volume graph,what does the intersection of the profit line with the vertical axis represent?

In a cost-volume-profit graph,what does the slope of the total revenue line represent?

Patricia Company produces two products,X and Y,which account for 60 percent and 40 percent,respectively,of total sales dollars.Contribution margin ratios are 50 percent for X and 25 percent for Y.Total fixed costs are $120,000.What is Patricia's break-even point in sales dollars?

Assume the following cost behaviour data for Portrait Company: Sales price \ 18.00 per unit Variable costs \ 13.50 per unit Fixed costs \ 22,500 Tax rate 40\% -What volume of sales dollars is required to earn an after-tax income of $40,500?

In the cost-volume-profit analysis,what are two ways management can deal with risk and uncertainty?

Which of the following assumptions is necessary for cost-volume-profit analysis?

A: Basic Cost Management Concepts

B: Basic Cost Management Concepts

Cost Behaviour

Job-Order Costing Systems

Process Costing

Activity-Based Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Responsibility Accounting,performance Evaluation,and Transfer Pricing

Tactical Decision Making

Pricing and Profitability Analysis

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Inventory Management: Economic Order Quantity,jit,and the Theory of Constraints

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