Question 1

Barbara's Candles provides the following information about its single product.
 
What is the contribution margin per unit?

Accepted Answer

A) $60.00 
B) $0.40 
C) $160.00 
D) $40.00 
A) $60.00 
B) $0.40 
C) $160.00 
D) $40.00

Question 2

Boss Enterprises currently sells its products for $40 per unit.Management is contemplating a 40% increase in the selling price for the next year.Variable costs are currently 40% of sales revenue and are not expected to change next year.Fixed expenses are $120,000 per year.
What is the breakeven point in units at the current selling price?

Accepted Answer

A) 5,000 units 
B) 2,143 units 
C) 24 units 
D) 7,500 units 
A) 5,000 units 
B) 2,143 units 
C) 24 units 
D) 7,500 units

Question 3

The contribution margin ratio is the unit contribution margin divided by the variable cost per unit.

Accepted Answer

A) True 
 B)False

Question 4

Company A has a higher margin of safety while Company B has a lower margin of safety.Company A would be considered ________ Company B when considering only margin of safety.

Accepted Answer

A) more risky than 
B) less risky than 
C) to have the same level of risk as 
D) Unable to judge based on margin on safety. 
A) more risky than 
B) less risky than 
C) to have the same level of risk as 
D) Unable to judge based on margin on safety.

Question 5

Mississippi Mile Travel Company is conducting a sensitivity analysis in order to assess the company's margin of safety in units and in dollars.Predicted data indicate that 4,750 travel package sales can be expected while 2,200 package sales are necessary to meet the company's breakeven point.Each travel package costs $3,000.Calculate the company's margin of safety in package units and dollars.

Accepted Answer

A) 2,200 travel package units;$5,610,000 
B) 2,550 travel package units;$7,650,000 
C) 3,500 travel package units;$8,010,000 
D) 1,575 travel package units;$4,810,000 
A) 2,200 travel package units;$5,610,000 
B) 2,550 travel package units;$7,650,000 
C) 3,500 travel package units;$8,010,000 
D) 1,575 travel package units;$4,810,000

Question 6

On a CVP graph,the total cost line intersects the total revenue line at which of the following points?

Accepted Answer

A) The breakeven point 
B) The level of the variable costs 
C) The level of the fixed costs 
D) None of the above 
A) The breakeven point 
B) The level of the variable costs 
C) The level of the fixed costs 
D) None of the above

Question 7

The managerial accountant at Boone Furriers reported the following contribution margin statement information:
 
Use the data listed above to compute the following:
A.Compute the sales in units.
B.Compute the breakeven point in sales revenue.

Accepted Answer

A) 1,659 units;$338,900 
B) 323 units;$512,000 
C) 528 units;$448,800 
D) 650 units;$525,000 
A) 1,659 units;$338,900 
B) 323 units;$512,000 
C) 528 units;$448,800 
D) 650 units;$525,000

Question 8

To find the weighted average contribution margin,a company adds up the individual unit contribution margins of the different products and then divides by the number of different products.

Accepted Answer

A) True 
 B)False

Question 9

If the selling price per unit is $32,the variable expense per unit is $19.50,and the breakeven sales in dollars is $44,800,what are total fixed expenses?

Accepted Answer

A) $28,718 
B) $17,500 
C) $1,400 
D) $112 
A) $28,718 
B) $17,500 
C) $1,400 
D) $112

Question 10

Dairy Days Ice Cream sells ice cream cones for $4 per customer.Variable costs are $3 per cone.Fixed costs are $2,500 per month.What is Dairy Days' contribution margin ratio?

Accepted Answer

A) 267% 
B) 25% 
C) 2% 
D) 63% 
A) 267% 
B) 25% 
C) 2% 
D) 63%

Question 11

When using the contribution margin ratio,managers project operating income based upon sales units.

Accepted Answer

A) True 
 B)False

Question 12

Contribution margin on an income statement is equal to sales revenue minus fixed expenses.

Accepted Answer

A) True 
 B)False

Question 13

The intersection of the sales revenue line and the variable expense line on a CVP graph is known as

Accepted Answer

A) the margin of safety point. 
B) the unit contribution margin. 
C) the breakeven point. 
D) none of the above. 
A) the margin of safety point. 
B) the unit contribution margin. 
C) the breakeven point. 
D) none of the above.

Question 14

Stanley's Candies is considering building a new plant in Europe.It predicts sales at the new plant to be 40,000 units at $4.00/unit.Below is a listing of estimated expenses:
 
A European firm was contracted to sell the product and will receive a commission of 10% of the sales price.No U.S.home office expenses will be allocated to the new facility.
How much does the European contractor expect to make in commissions?

Accepted Answer

A) $4,000 
B) $32,000 
C) $80,000 
D) $16,000 
A) $4,000 
B) $32,000 
C) $80,000 
D) $16,000

Question 15

Stanley's Candies is considering building a new plant in Europe.It predicts sales at the new plant to be 40,000 units at $4.00/unit.Below is a listing of estimated expenses.
 
A European firm was contracted to sell the product and will receive a commission of 10% of the sales price.No U.S.home office expenses will be allocated to the new facility.
The contribution margin ratio for Stanley's Candies is

Accepted Answer

A) 157.50%. 
B) 57.50%. 
C) 42.50%. 
D) 52.50%. 
A) 157.50%. 
B) 57.50%. 
C) 42.50%. 
D) 52.50%.

Question 16

CVP stands for Company-Volume-Profit.

Accepted Answer

A) True 
 B)False

Question 17

Catamount Studios has budgeted the following amounts for its next fiscal year:
 
If Catamount Studios can reduce fixed expenses by $46,500,by how much can variable expenses per unit increase and still allow the company to maintain the original breakeven sales in units?

Accepted Answer

A) $1.50 
B) $20.00 
C) $21.50 
D) $18.50 
A) $1.50 
B) $20.00 
C) $21.50 
D) $18.50

Question 18

When calculating the breakeven point in terms of sales revenue,variable costs should be divided by the contribution margin ratio.

Accepted Answer

A) True 
 B)False

Question 19

Only the income statement approach may be used to calculate the breakeven point.

Accepted Answer

A) True 
 B)False

Question 20

Barbara's Candles provides the following information about its single product.
 
How many units must be sold to earn the targeted operating income?

Accepted Answer

A) 1,375 
B) 3,625 
C) 2,250 
D) 906 
A) 1,375 
B) 3,625 
C) 2,250 
D) 906

Barbara's Candles provides the following information about its single product. What is the contribution margin per unit?

The contribution margin ratio is the unit contribution margin divided by the variable cost per unit.

Company A has a higher margin of safety while Company B has a lower margin of safety.Company A would be considered ________ Company B when considering only margin of safety.

On a CVP graph,the total cost line intersects the total revenue line at which of the following points?

The managerial accountant at Boone Furriers reported the following contribution margin statement information: Use the data listed above to compute the following: A.Compute the sales in units. B.Compute the breakeven point in sales revenue.

To find the weighted average contribution margin,a company adds up the individual unit contribution margins of the different products and then divides by the number of different products.

If the selling price per unit is $32,the variable expense per unit is $19.50,and the breakeven sales in dollars is $44,800,what are total fixed expenses?

Dairy Days Ice Cream sells ice cream cones for $4 per customer.Variable costs are $3 per cone.Fixed costs are $2,500 per month.What is Dairy Days' contribution margin ratio?

When using the contribution margin ratio,managers project operating income based upon sales units.

Contribution margin on an income statement is equal to sales revenue minus fixed expenses.

The intersection of the sales revenue line and the variable expense line on a CVP graph is known as

CVP stands for Company-Volume-Profit.

Catamount Studios has budgeted the following amounts for its next fiscal year: If Catamount Studios can reduce fixed expenses by $46,500,by how much can variable expenses per unit increase and still allow the company to maintain the original breakeven sales in units?

When calculating the breakeven point in terms of sales revenue,variable costs should be divided by the contribution margin ratio.

Only the income statement approach may be used to calculate the breakeven point.

Barbara's Candles provides the following information about its single product. How many units must be sold to earn the targeted operating income?

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters

Exam 7: Cost-Volume-Profit Analysis

Barbara's Candles provides the following information about its single product. What is the contribution margin per unit?

The contribution margin ratio is the unit contribution margin divided by the variable cost per unit.

Company A has a higher margin of safety while Company B has a lower margin of safety.Company A would be considered ________ Company B when considering only margin of safety.

On a CVP graph,the total cost line intersects the total revenue line at which of the following points?

The managerial accountant at Boone Furriers reported the following contribution margin statement information: Use the data listed above to compute the following: A.Compute the sales in units. B.Compute the breakeven point in sales revenue.

To find the weighted average contribution margin,a company adds up the individual unit contribution margins of the different products and then divides by the number of different products.

If the selling price per unit is $32,the variable expense per unit is $19.50,and the breakeven sales in dollars is $44,800,what are total fixed expenses?

Dairy Days Ice Cream sells ice cream cones for $4 per customer.Variable costs are $3 per cone.Fixed costs are $2,500 per month.What is Dairy Days' contribution margin ratio?

When using the contribution margin ratio,managers project operating income based upon sales units.

Contribution margin on an income statement is equal to sales revenue minus fixed expenses.

The intersection of the sales revenue line and the variable expense line on a CVP graph is known as

CVP stands for Company-Volume-Profit.

Catamount Studios has budgeted the following amounts for its next fiscal year: If Catamount Studios can reduce fixed expenses by $46,500,by how much can variable expenses per unit increase and still allow the company to maintain the original breakeven sales in units?

When calculating the breakeven point in terms of sales revenue,variable costs should be divided by the contribution margin ratio.

Only the income statement approach may be used to calculate the breakeven point.

Barbara's Candles provides the following information about its single product. How many units must be sold to earn the targeted operating income?

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters