Question 1

If the sales price per unit increases while the variable cost per unit and total fixed costs remain constant,which of the following statements is true?

Accepted Answer

A) The contribution margin decreases and the breakeven point decreases. 
B) The contribution margin increases and the breakeven point decreases. 
C) The contribution margin increases and the breakeven point increases. 
D) The contribution margin decreases and the breakeven point increases. 
A) The contribution margin decreases and the breakeven point decreases. 
B) The contribution margin increases and the breakeven point decreases. 
C) The contribution margin increases and the breakeven point increases. 
D) The contribution margin decreases and the breakeven point increases.

Question 2

Oscar Incorporated currently sells its products for $400 per unit.Management is contemplating a 10% increase in the selling price for the next year.Variable costs are currently 20% of sales revenue and are not expected to change next year.Fixed expenses are $140,000 per year.
If fixed costs were to decrease 10% during the current year and the new selling price goes into effect,how many units will need to be sold to breakeven?

Accepted Answer

A) 1,283 units 
B) 296 units 
C) 350 units 
D) 154,000 units 
A) 1,283 units 
B) 296 units 
C) 350 units 
D) 154,000 units

Question 3

Martin Company currently sells its products for $220 per unit.Management is contemplating a 20% 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.
If fixed costs increase 10% next year,and the new selling price per unit goes into effect,how many units will need to be sold to breakeven?

Accepted Answer

A) 750 units 
B) 1,000 units 
C) 132,000 units 
D) 375 units 
A) 750 units 
B) 1,000 units 
C) 132,000 units 
D) 375 units

Question 4

All else being equal,a company earns more income by selling low-contribution margin products than by selling an equal number of high-contribution margin products.

Accepted Answer

A) True 
 B)False

Question 5

The manager at Tom's Taxidermy expects to sell 800 units at $30 each unit.In order for the manager to breakeven,the manager must sell 400 units.What is the margin of safety in dollars?

Accepted Answer

A) $12,000 
B) $14,000 
C) $16,000 
D) $24,000 
A) $12,000 
B) $14,000 
C) $16,000 
D) $24,000

Question 6

Cedar Mills Incorporated has a predicted operating income of $72,000.Its total variable expenses are $20,000 and its total fixed expenses are $32,000.It has a unit contribution margin of $10.Cedar Mills' breakeven sales in units is

Accepted Answer

A) 8,400 units. 
B) 3,200 units. 
C) 4,000 units. 
D) 12,400 units. 
A) 8,400 units. 
B) 3,200 units. 
C) 4,000 units. 
D) 12,400 units.

Question 7

The Muffin House produces and sells a variety of muffins.The selling price per dozen is $15,variable costs are $9 per dozen,and total fixed costs are $4,200.What are breakeven sales in dollars?

Accepted Answer

A) $10,500 
B) $2,625 
C) $700 
D) $6,300 
A) $10,500 
B) $2,625 
C) $700 
D) $6,300

Question 8

Neeley Incorporated had the following fixed costs:
   
The company also had the following variable costs:   
The company produced and sold 55,000 units of the product during the year at a selling price of $9.00 per unit.The company had no inventory at the beginning of the year.
Required: Prepare a contribution margin income statement for the year.

Accepted Answer

The answer of Neeley Incorporated had the following fixed costs:
...

Question 9

If the variable cost per unit increases while the sale price per unit and total fixed costs remain constant,which of the following statements is true?

Accepted Answer

A) Breakeven point in units remains the same. 
B) Breakeven point in units decreases. 
C) Breakeven point in units increases. 
D) Contribution margin ratio increases. 
A) Breakeven point in units remains the same. 
B) Breakeven point in units decreases. 
C) Breakeven point in units increases. 
D) Contribution margin ratio increases.

Question 10

If the selling price per unit is $10,the unit contribution margin is $5,and total fixed expenses are $15,000,what are the breakeven sales in units?

Accepted Answer

A) 75,000 
B) 150,000 
C) 1,500 
D) 3,000 
A) 75,000 
B) 150,000 
C) 1,500 
D) 3,000

Question 11

The margin of safety is the "cushion," or drop in sales,a company can absorb without incurring a loss.

Accepted Answer

A) True 
 B)False

Question 12

The Halpert Group produces a single product selling for $70 per unit.Variable costs are $7 per unit and total fixed costs are $5,000.What is the contribution margin ratio?

Accepted Answer

A) 10% 
B) 63% 
C) 90% 
D) 111% 
A) 10% 
B) 63% 
C) 90% 
D) 111%

Question 13

Sophia's Delivery Service charges a $55 service fee.The variable cost per service run is $22.The company's fixed expenses amount to $6,200.If the operating income equals fixed expenses,what is the breakeven point in sales revenue for Sophia's Delivery Service?

Accepted Answer

A) $10,285 
B) $4,140 
C) $6,200 
D) $10,340 
A) $10,285 
B) $4,140 
C) $6,200 
D) $10,340

Question 14

LaComedia Dinner Theater sells tickets for dinner and a show for $40 each.The cost of providing dinner is $26 per ticket and the fixed cost of operating the theater is $100,000 per month.The company can accommodate 12,000 patrons each month.What is the projected monthly income if 10,000 patrons visit the theater each month?

Accepted Answer

A) $68,000 
B) $140,000 
C) $240,000 
D) $40,000 
A) $68,000 
B) $140,000 
C) $240,000 
D) $40,000

Question 15

A breakeven mix is the combination of products that are available for sale.

Accepted Answer

A) True 
 B)False

Question 16

Neeley Grocery has a monthly target operating income of $25,000.Variable expenses are 20% of sales and monthly fixed expenses are $15,000.What is Neeley Grocery's operating leverage factor at the target level of operating income?

Accepted Answer

A) 0.63 
B) 2.67 
C) 0.40 
D) 1.60 
A) 0.63 
B) 2.67 
C) 0.40 
D) 1.60

Question 17

If the selling price per unit is $70,variable expenses per unit are $45,target operating income is $38,000,and total fixed expenses are $22,000,how many units must be sold to reach the target operating income?

Accepted Answer

A) 880 
B) 2,400 
C) 1,520 
D) 543 
A) 880 
B) 2,400 
C) 1,520 
D) 543

Question 18

Madden Enterprises sells two products,Silver models and Gold models.Madden Enterprises predicts that it will sell 6,000 Silver models and 4,000 Gold models in the next period.The unit contribution margins for Silver models and Gold models are $75 and $150,respectively.What is the weighted average unit contribution margin?

Accepted Answer

A) $0.01 
B) $37.50 
C) $105.00 
D) $525.00 
A) $0.01 
B) $37.50 
C) $105.00 
D) $525.00

Question 19

Jack's Toys sells kites for $20 each.Variable costs are $8 per kite.Fixed costs are $2,400 per month.What is the contribution margin ratio for the kites?

Accepted Answer

A) 167% 
B) 60% 
C) 12% 
D) 40% 
A) 167% 
B) 60% 
C) 12% 
D) 40%

Question 20

Managers can quickly forecast the total contribution margin by multiplying the

Accepted Answer

A) projected sales units by the variable cost ratio. 
B) projected sales units by the contribution margin ratio. 
C) projected sales revenue by the unit contribution margin. 
D) projected sales revenue by the contribution margin ratio. 
A) projected sales units by the variable cost ratio. 
B) projected sales units by the contribution margin ratio. 
C) projected sales revenue by the unit contribution margin. 
D) projected sales revenue by the contribution margin ratio.

If the sales price per unit increases while the variable cost per unit and total fixed costs remain constant,which of the following statements is true?

All else being equal,a company earns more income by selling low-contribution margin products than by selling an equal number of high-contribution margin products.

The manager at Tom's Taxidermy expects to sell 800 units at $30 each unit.In order for the manager to breakeven,the manager must sell 400 units.What is the margin of safety in dollars?

Cedar Mills Incorporated has a predicted operating income of $72,000.Its total variable expenses are $20,000 and its total fixed expenses are $32,000.It has a unit contribution margin of $10.Cedar Mills' breakeven sales in units is

The Muffin House produces and sells a variety of muffins.The selling price per dozen is $15,variable costs are $9 per dozen,and total fixed costs are $4,200.What are breakeven sales in dollars?

If the variable cost per unit increases while the sale price per unit and total fixed costs remain constant,which of the following statements is true?

If the selling price per unit is $10,the unit contribution margin is $5,and total fixed expenses are $15,000,what are the breakeven sales in units?

The margin of safety is the "cushion," or drop in sales,a company can absorb without incurring a loss.

The Halpert Group produces a single product selling for $70 per unit.Variable costs are $7 per unit and total fixed costs are $5,000.What is the contribution margin ratio?

Sophia's Delivery Service charges a $55 service fee.The variable cost per service run is $22.The company's fixed expenses amount to $6,200.If the operating income equals fixed expenses,what is the breakeven point in sales revenue for Sophia's Delivery Service?

A breakeven mix is the combination of products that are available for sale.

Neeley Grocery has a monthly target operating income of $25,000.Variable expenses are 20% of sales and monthly fixed expenses are $15,000.What is Neeley Grocery's operating leverage factor at the target level of operating income?

If the selling price per unit is $70,variable expenses per unit are $45,target operating income is $38,000,and total fixed expenses are $22,000,how many units must be sold to reach the target operating income?

Jack's Toys sells kites for $20 each.Variable costs are $8 per kite.Fixed costs are $2,400 per month.What is the contribution margin ratio for the kites?

Managers can quickly forecast the total contribution margin by multiplying the

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

If the sales price per unit increases while the variable cost per unit and total fixed costs remain constant,which of the following statements is true?

All else being equal,a company earns more income by selling low-contribution margin products than by selling an equal number of high-contribution margin products.

The manager at Tom's Taxidermy expects to sell 800 units at $30 each unit.In order for the manager to breakeven,the manager must sell 400 units.What is the margin of safety in dollars?

Cedar Mills Incorporated has a predicted operating income of $72,000.Its total variable expenses are $20,000 and its total fixed expenses are $32,000.It has a unit contribution margin of $10.Cedar Mills' breakeven sales in units is

The Muffin House produces and sells a variety of muffins.The selling price per dozen is $15,variable costs are $9 per dozen,and total fixed costs are $4,200.What are breakeven sales in dollars?

If the variable cost per unit increases while the sale price per unit and total fixed costs remain constant,which of the following statements is true?

If the selling price per unit is $10,the unit contribution margin is $5,and total fixed expenses are $15,000,what are the breakeven sales in units?

The margin of safety is the "cushion," or drop in sales,a company can absorb without incurring a loss.

The Halpert Group produces a single product selling for $70 per unit.Variable costs are $7 per unit and total fixed costs are $5,000.What is the contribution margin ratio?

Sophia's Delivery Service charges a $55 service fee.The variable cost per service run is $22.The company's fixed expenses amount to $6,200.If the operating income equals fixed expenses,what is the breakeven point in sales revenue for Sophia's Delivery Service?

A breakeven mix is the combination of products that are available for sale.

Neeley Grocery has a monthly target operating income of $25,000.Variable expenses are 20% of sales and monthly fixed expenses are $15,000.What is Neeley Grocery's operating leverage factor at the target level of operating income?

If the selling price per unit is $70,variable expenses per unit are $45,target operating income is $38,000,and total fixed expenses are $22,000,how many units must be sold to reach the target operating income?

Jack's Toys sells kites for $20 each.Variable costs are $8 per kite.Fixed costs are $2,400 per month.What is the contribution margin ratio for the kites?

Managers can quickly forecast the total contribution margin by multiplying the

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