Question 1

What does the variable cost ratio express?

Accepted Answer

A) variable costs as a percentage of total costs 
B) the proportion between fixed costs and variable costs 
C) variable cost in terms of sales dollars 
D) the proportion of sales dollars available to cover fixed costs and provide for a profit 
A) variable costs as a percentage of total costs 
B) the proportion between fixed costs and variable costs 
C) variable cost in terms of sales dollars 
D) the proportion of sales dollars available to cover fixed costs and provide for a profit

Question 2

Which of the following assumption pertains to cost-profit-volume analysis?

Accepted Answer

A) Sales price per unit changes. 
B) The sales mix changes. 
C) Inventories in a manufacturing entity may go up or down. 
D) Fixed expenses are constant at all volumes of activities within the relevant range. 
A) Sales price per unit changes. 
B) The sales mix changes. 
C) Inventories in a manufacturing entity may go up or down. 
D) Fixed expenses are constant at all volumes of activities within the relevant range.

Question 3

Lewis Production Company had the following projected information: $\begin{array}{lr}
\text { Selling price per unit } & \$ 150 \
\text { Variable cost per unit  } & \$ 90 \
\text { Total fixed costs } & \$300,000
\end{array}$
 What level of sales dollars is needed to obtain a target before-tax profit of $75,000?

Accepted Answer

A) $375,000 
B) $625,000 
C) $750,000 
D) $937,500 
A) $375,000 
B) $625,000 
C) $750,000 
D) $937,500

Question 4

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

Accepted Answer

A) the selling price per unit 
B) the contribution margin per unit 
C) the variable cost per unit 
D) total contribution margin 
A) the selling price per unit 
B) the contribution margin per unit 
C) the variable cost per unit 
D) total contribution margin

Question 5

Sales * Contribution Margin is a shortcut for what formula?

Accepted Answer

A) Sales - (Variable Cost Ratio * Sales) 
B) Sales - (Fixed Costs + Variable Costs) 
C) Sales/Fixed Costs 
D) Fixed Costs/Unit Contribution Margin 
A) Sales - (Variable Cost Ratio * Sales) 
B) Sales - (Fixed Costs + Variable Costs) 
C) Sales/Fixed Costs 
D) Fixed Costs/Unit Contribution Margin

Question 6

Baker Company sells its product for $60.In addition,it has a variable cost ratio of 40 percent and total fixed costs of $9,000.What is the break-even point in units for Baker Company?

Accepted Answer

A) 250 units 
B) 375 units 
C) 2,400 units 
D) 3,600 units 
A) 250 units 
B) 375 units 
C) 2,400 units 
D) 3,600 units

Question 7

The Kringel Company provides the following information:
 $\begin{array}{lr}
\text { Sales }(200,000 \text { units) } & \$ 500,000 \
\text { Manufacturing costs: } &  \
\text { Variable } & 170,000\
\text { Fixed } &30,000  \
\text { Selling and administrative costs: } & \
\text { Variable } &80,000  \
\text { Fixed } & 20,000
\end{array}$ 
-Refer to the figure.What is the break-even point in units for Kringel?

Accepted Answer

A) 33,334 units 
B) 40,000 units 
C) 100,000 units 
D) 200,000 units 
A) 33,334 units 
B) 40,000 units 
C) 100,000 units 
D) 200,000 units

Question 8

Xi Company is the exclusive Iowa distributor of lawn mowers for a small manufacturing company.It sells only one model at $600 per unit and for which Xi pays $250.Xi's other variable costs amount to $50 per unit.Fixed costs are $2,000.In October,Xi sold 15 lawn mowers and it sold 20 in November.
Calculate the following values:
a.Monthly break-even point in sales dollars
b.Monthly break-even point in units
c.Monthly income for October
d.Monthly income for November
e.Margin of safety for October

Accepted Answer

a.$2,000/[($600 - $250 - $50)/

Question 9

Information about the Harmon Company's two products includes: $\begin{array}{lrr}
 &\underline{\text { Product X}}& \underline{\text { Product  Y }}\
\text { Unit selling price } & \$ 9.00 & \$ 9.00 \
\text { Unit variable costs: } & & \
\text { Manufacturing } & \$ 5.25 & \$ 6.75 \
\text { Selling } & .75&.75\
\text { Total } &\$ 6.00 & \$ 7.50 \
\end{array}$

$\begin{array}{l}
\text { Monthly fixed costs are as follows: }\
\text { Manufacturing } & \$ 82,500 \
\text { Selling and administrative } & \$ 45,000\
 \text { Total}&\$127,500
\end{array}$
 What is the total monthly sales volume in units required to break even when the sales mix in units is 70 percent Product X and 30 percent Product Y?

Accepted Answer

A) 8,333 units 
B) 16,667 units 
C) 50,000 units 
D) 56,667 units 
A) 8,333 units 
B) 16,667 units 
C) 50,000 units 
D) 56,667 units

Question 10

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

Accepted Answer

A) the selling price per unit 
B) the contribution margin per unit 
C) the variable cost per unit 
D) the total contribution margin 
A) the selling price per unit 
B) the contribution margin per unit 
C) the variable cost per unit 
D) the total contribution margin

Question 11

Peterson Company and Olson Corporation have the following income statements for the current year: $\begin{array}{lcc}
& \underline{\text {  Peterson Company}}& \underline{\text {  Olson Corporation }}\
\text { Sales } & \$ 50,000 & \$ 50,000 \
\text { Variable expenses } &\underline{ 10,000 }&\underline{ 25,000} \
\text { Contribution margin } & \$ 40,000 & \$ 25,000 \
\text { Fixed expenses } & \underline{25,000} & \underline{10,000 }\
\text { Operating income } & \underline{\$ 15,000} &\underline{ \$ 15,000} \
\end{array}$
 What is the degree of operating leverage for Peterson Company for the current year?

Accepted Answer

A) 0.375 
B) 1.250 
C) 1.667 
D) 2.667 
A) 0.375 
B) 1.250 
C) 1.667 
D) 2.667

Question 12

The Waldo Company had the following functional income statement for the month of July:
 $\begin{array}{lrr}
\text { Sales }(\$ 20 \times 20,000 \text { units }) & & \$ 400,000 \
\text { Costs of goods sold: } && \
\text { Direct materials } &  \$ 60,000  & \
\text { Direct labour } &40,000  & \
\text { Variable factory overhead } &120,000  \
\text { Fixed factory overhead } & \underline{50,000} & \underline{270,000} \
\text { Gross profit } & &  \$ 130,000\
\text { Selling and administrative expenses: }  \
\text { Variable } &\$ 20,000  & \
\text { Fixed } & \underline{50,000} & \underline{70,000}\
\text { Operating income }&& \$ 60,000
\end{array}$ 
There were no beginning and ending inventories. 
a.Calculate the contribution margin per unit.
b.Calculate the contribution margin ratio.
c.What is the break-even point in units?
d.What is the amount of sales in dollars needed to obtain a before-tax profit of $40,000?

Accepted Answer

a.$160,000/20,000 units = $8 p

Question 13

Zachary Plumbing Company has the following information for the current year:
  $\begin{array}{lr}
\text {Selling price per unit  }&\$10\
\text {Variable costs per unit}&\$7\
\text {Fixed costs }&\$1,500\
\end{array}$
 Prepare a profit-volume graph identifying the following items: 
a.Profit line
b.Intersection of profit line and vertical axis
c.Break-even point
d.Profit area
e.Loss area

Accepted Answer

@#IMG-DLM& *The brea

Question 14

Quinn Corporation had the following income statement for the current year: $$\begin{array} { l r } 
\text { Sales } & \$ 80,000 \
\text { Variable expenses } & 56,000 \
\text { Contribution margin } & \$ 24,000 \
\text { Fixed expenses } & 16,000 \
\text { Operating incame } & \$ 8000
\end{array}$$ What is the degree of operating leverage for Quinn Corporation for the current year?

Accepted Answer

A) 0.333 
B) 2.000 
C) 2.333 
D) 3.000 
A) 0.333 
B) 2.000 
C) 2.333 
D) 3.000

Question 15

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}$

$\begin{array}{lc}
\text { Other data: } & &\
\text { Total fixed costs (traditional) } & \$ 600,000 \
\text { Total fixed costs (ABC) } & \$ 300,000 \
\text { Unit selling price } & \$ 60
\end{array}$
- Suppose Urban could reduce setup costs by $300 per setup and could reduce the number of engineering hours needed to 1,400 hours.How many units must be sold to break even in this case?

Accepted Answer

A) 6,350 units 
B) 7,500 units 
C) 10,670 units 
D) 21,340 units 
A) 6,350 units 
B) 7,500 units 
C) 10,670 units 
D) 21,340 units

Question 16

What do cost-volume-profit models assume?

Accepted Answer

A) The sales mix may vary among multiple products. 
B) Unit selling prices are constant. 
C) Inventories are dynamic and subject to change. 
D) The total cost function is quadratic. 
A) The sales mix may vary among multiple products. 
B) Unit selling prices are constant. 
C) Inventories are dynamic and subject to change. 
D) The total cost function is quadratic.

Question 17

Which of the following is a use of CVP (Cost-Volume-Profit)analysis?

Accepted Answer

A) the ability to conduct sensitivity analysis of cost or price changes 
B) the identification of price variances 
C) the determination of who is responsible for what 
D) the calculation of efficiency variances 
A) the ability to conduct sensitivity analysis of cost or price changes 
B) the identification of price variances 
C) the determination of who is responsible for what 
D) the calculation of efficiency variances

Question 18

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}$

$\begin{array}{lc}
\text { Other data: } & &\
\text { Total fixed costs (traditional) } & \$ 600,000 \
\text { Total fixed costs (ABC) } & \$ 300,000 \
\text { Unit selling price } & \$ 60
\end{array}$
- What is the break-even point in units using ABC?

Accepted Answer

A) 5,625 units 
B) 7,500 units 
C) 11,250 units 
D) 16,875 units 
A) 5,625 units 
B) 7,500 units 
C) 11,250 units 
D) 16,875 units

Question 19

Lewis Production Company had the following projected information: $\begin{array}{llr}
  \text { Selling price per unit  } &\$150\
 \text {Variable cost per unit  } &\$90\
 \text {  Total fixed costs } &\$300,000
\end{array}$
 
-What is the break-even point in units?

Accepted Answer

A) 2,000 units 
B) 3,333 units 
C) 5,000 units 
D) 60,000 units 
A) 2,000 units 
B) 3,333 units 
C) 5,000 units 
D) 60,000 units

Question 20

Lewis Production Company had the following projected information: $\begin{array}{llr}
  \text { Selling price per unit  } &\$150\
 \text {Variable cost per unit  } &\$90\
 \text {  Total fixed costs } &\$300,000
\end{array}$

- What is the profit when one unit more than the break-even point is sold?

Accepted Answer

A) $60 
B) $90 
C) $150 
D) $240 
A) $60 
B) $90 
C) $150 
D) $240

What does the variable cost ratio express?

Which of the following assumption pertains to cost-profit-volume analysis?

Lewis Production Company had the following projected information: Selling price per unit \ 150 Variable cost per unit \ 90 Total fixed costs \3 00,000 What level of sales dollars is needed to obtain a target before-tax profit of $75,000?

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

Sales * Contribution Margin is a shortcut for what formula?

Baker Company sells its product for $60.In addition,it has a variable cost ratio of 40 percent and total fixed costs of $9,000.What is the break-even point in units for Baker Company?

The Kringel Company provides the following information: Sales (200,000 units) \ 500,000 Manufacturing costs: Variable 170,000 Fixed 30,000 Selling and administrative costs: Variable 80,000 Fixed 20,000 -Refer to the figure.What is the break-even point in units for Kringel?

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

Peterson Company and Olson Corporation have the following income statements for the current year: Sales \ 50,000 \ 50,000 Variable expenses Contribution margin \ 40,000 \ 25,000 Fixed expenses Operating income What is the degree of operating leverage for Peterson Company for the current year?

Quinn Corporation had the following income statement for the current year: Sales \ 80,000 Variable expenses 56,000 Contribution margin \ 24,000 Fixed expenses 16,000 Operating incame \ 8000 What is the degree of operating leverage for Quinn Corporation for the current year?

What do cost-volume-profit models assume?

Which of the following is a use of CVP (Cost-Volume-Profit)analysis?

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 - What is the break-even point in units using ABC?

Lewis Production Company had the following projected information: Selling price per unit \1 50 Variable cost per unit \9 0 Total fixed costs \3 00,000 -What is the break-even point in units?

Lewis Production Company had the following projected information: Selling price per unit \1 50 Variable cost per unit \9 0 Total fixed costs \3 00,000 - What is the profit when one unit more than the break-even point is sold?

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

Filters

Exam 3: Cost-Volume-Profit Analysis

What does the variable cost ratio express?

Which of the following assumption pertains to cost-profit-volume analysis?

Lewis Production Company had the following projected information: Selling price per unit \ 150 Variable cost per unit \ 90 Total fixed costs \3 00,000 What level of sales dollars is needed to obtain a target before-tax profit of $75,000?

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

Sales * Contribution Margin is a shortcut for what formula?

Baker Company sells its product for $60.In addition,it has a variable cost ratio of 40 percent and total fixed costs of $9,000.What is the break-even point in units for Baker Company?

The Kringel Company provides the following information: Sales (200,000 units) \ 500,000 Manufacturing costs: Variable 170,000 Fixed 30,000 Selling and administrative costs: Variable 80,000 Fixed 20,000 -Refer to the figure.What is the break-even point in units for Kringel?

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

Peterson Company and Olson Corporation have the following income statements for the current year: Sales \ 50,000 \ 50,000 Variable expenses Contribution margin \ 40,000 \ 25,000 Fixed expenses Operating income What is the degree of operating leverage for Peterson Company for the current year?

Quinn Corporation had the following income statement for the current year: Sales \ 80,000 Variable expenses 56,000 Contribution margin \ 24,000 Fixed expenses 16,000 Operating incame \ 8000 What is the degree of operating leverage for Quinn Corporation for the current year?

What do cost-volume-profit models assume?

Which of the following is a use of CVP (Cost-Volume-Profit)analysis?

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 - What is the break-even point in units using ABC?

Lewis Production Company had the following projected information: Selling price per unit \1 50 Variable cost per unit \9 0 Total fixed costs \3 00,000 -What is the break-even point in units?

Lewis Production Company had the following projected information: Selling price per unit \1 50 Variable cost per unit \9 0 Total fixed costs \3 00,000 - What is the profit when one unit more than the break-even point is sold?

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

Filters