Question 1

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

Accepted Answer

A) Contribution margin increases. 
B) Contribution margin decreases. 
C) Breakeven point in units increases. 
D) Breakeven point in units decreases. 
A) Contribution margin increases. 
B) Contribution margin decreases. 
C) Breakeven point in units increases. 
D) Breakeven point in units decreases.

Question 2

CVP analysis assumes all of the following except

Accepted Answer

A) the mix of products will not change. 
B) revenues are linear throughout the relevant range. 
C) inventory levels will increase. 
D) a change in volume is the only factor that affects costs. 
A) the mix of products will not change. 
B) revenues are linear throughout the relevant range. 
C) inventory levels will increase. 
D) a change in volume is the only factor that affects costs.

Question 3

Holding all other factors constant,the breakeven point will always double if fixed expenses increase by 25%.

Accepted Answer

A) True 
 B)False

Question 4

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.How many dozen muffins must The Muffin House sell to breakeven?

Accepted Answer

A) 10,500 
B) 700 
C) 280 
D) 175 
A) 10,500 
B) 700 
C) 280 
D) 175

Question 5

The margin of safety is the excess of expected sales over breakeven sales.

Accepted Answer

A) True 
 B)False

Question 6

To find the number of units that need to be sold in order to breakeven or generate a target profit,the formula used is

Accepted Answer

A) (fixed expenses + operating income)÷ contribution margin per unit. 
B) (fixed expenses + operating income)÷ contribution margin ratio. 
C) (fixed expenses - operating income)÷ contribution margin ratio. 
D) (fixed expenses - operating income)÷ contribution margin per unit. 
A) (fixed expenses + operating income)÷ contribution margin per unit. 
B) (fixed expenses + operating income)÷ contribution margin ratio. 
C) (fixed expenses - operating income)÷ contribution margin ratio. 
D) (fixed expenses - operating income)÷ contribution margin per unit.

Question 7

The unit contribution margin is computed by

Accepted Answer

A) subtracting the variable cost per unit from the sales price per unit. 
B) dividing the sales revenue by variable cost per unit. 
C) dividing the variable cost per unit by the sales revenue. 
D) subtracting the sales price per unit from the variable cost per unit. 
A) subtracting the variable cost per unit from the sales price per unit. 
B) dividing the sales revenue by variable cost per unit. 
C) dividing the variable cost per unit by the sales revenue. 
D) subtracting the sales price per unit from the variable cost per unit.

Question 8

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

Accepted Answer

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

Question 9

Marie's Magic Shoppe provides the following information about its single product.
 
What is the contribution margin ratio?

Accepted Answer

A) 192% 
B) 52% 
C) 13% 
D) 48% 
A) 192% 
B) 52% 
C) 13% 
D) 48%

Question 10

To find a firm's operating leverage factor at a given level of sales,you

Accepted Answer

A) divide the contribution margin by fixed expenses. 
B) divide the contribution margin by operating income. 
C) divide variable expenses by fixed expenses. 
D) divide relatively operating income by contribution margin. 
A) divide the contribution margin by fixed expenses. 
B) divide the contribution margin by operating income. 
C) divide variable expenses by fixed expenses. 
D) divide relatively operating income by contribution margin.

Question 11

If fixed expenses are $45,000,the breakeven in sales dollars is $60,000 and the selling price per unit is $100,then the variable expense per unit is

Accepted Answer

A) approximately $75. 
B) approximately $175. 
C) approximately $33.33. 
D) approximately $25. 
A) approximately $75. 
B) approximately $175. 
C) approximately $33.33. 
D) approximately $25.

Question 12

The Settler's Chuck Wagon sells tickets for dinner and a show for $50 each.The cost of providing dinner is $23 per ticket and the fixed cost of operating the theater is $115,000 per month.The company can accommodate 13,500 patrons each month.What is the contribution margin ratio?

Accepted Answer

A) 46% 
B) 185% 
C) 27% 
D) 54% 
A) 46% 
B) 185% 
C) 27% 
D) 54%

Question 13

Total predicted sales (in units)minus total breakeven sales in units divided by total predicted sales (in units)yields

Accepted Answer

A) contribution margin ratio. 
B) contribution margin per unit. 
C) percent of sales mix. 
D) margin of safety percentage. 
A) contribution margin ratio. 
B) contribution margin per unit. 
C) percent of sales mix. 
D) margin of safety percentage.

Question 14

If the selling price per unit is $75,total fixed expenses are $90,000,and the breakeven sales in dollars is $360,000,what will the variable expense per unit be?

Accepted Answer

A) $56.25 
B) $18.75 
C) $93.75 
D) $225.00 
A) $56.25 
B) $18.75 
C) $93.75 
D) $225.00

Question 15

Franklin Producers sells its core product for $8 per unit and has variable costs of $6 per unit.Total fixed costs are $28,000.Suppose variable costs increase by 20% due to an increase in the cost of direct materials.What will be the effect on the breakeven point in units?

Accepted Answer

A) Decrease from 2,000 units to 1,842 units 
B) Decrease from 14,000 units to 4,118 units 
C) Increase from 14,000 units to 35,000 units 
D) Decrease from 4,667 units to 3,889 units 
A) Decrease from 2,000 units to 1,842 units 
B) Decrease from 14,000 units to 4,118 units 
C) Increase from 14,000 units to 35,000 units 
D) Decrease from 4,667 units to 3,889 units

Question 16

The difference between sales dollars and total costs after breakeven point on a CVP graph is the representation of

Accepted Answer

A) operating loss. 
B) slope of variable costs per unit. 
C) operating income. 
D) slope of fixed costs per unit. 
A) operating loss. 
B) slope of variable costs per unit. 
C) operating income. 
D) slope of fixed costs per unit.

Question 17

All else being equal,a company with a low operating leverage will have

Accepted Answer

A) relatively high fixed costs. 
B) relatively high contribution margin ratio. 
C) relatively high risk. 
D) relatively high variable costs. 
A) relatively high fixed costs. 
B) relatively high contribution margin ratio. 
C) relatively high risk. 
D) relatively high variable costs.

Question 18

The selling price of a particular product is $5.00 per unit,the variable expense is $3.00 per unit,and the breakeven sales in dollars is $18,660,what are total fixed expenses?

Accepted Answer

A) $12,440 
B) $1,866 
C) $3,732 
D) $7,464 
A) $12,440 
B) $1,866 
C) $3,732 
D) $7,464

Question 19

Jackie's Creamery sells fudge,caramels,and popcorn to consumers in the local community.The manager at the creamery sold 12,000 units last year.Popcorn outsold fudge by a ratio of 2 to 1.Sales of caramels equaled sales of popcorn.Total fixed costs for Jackie's Creamery are $14,000.The managerial accountant reported the following information:
 
The sales mix percentage of caramel corn based upon units is

Accepted Answer

A) 20%. 
B) 40%. 
C) 75%. 
D) 44%. 
A) 20%. 
B) 40%. 
C) 75%. 
D) 44%.

Question 20

The sales mix cannot significantly affect CVP relationships.

Accepted Answer

A) True 
 B)False

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

CVP analysis assumes all of the following except

Holding all other factors constant,the breakeven point will always double if fixed expenses increase by 25%.

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.How many dozen muffins must The Muffin House sell to breakeven?

The margin of safety is the excess of expected sales over breakeven sales.

To find the number of units that need to be sold in order to breakeven or generate a target profit,the formula used is

The unit contribution margin is computed by

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

Marie's Magic Shoppe provides the following information about its single product. What is the contribution margin ratio?

To find a firm's operating leverage factor at a given level of sales,you

If fixed expenses are $45,000,the breakeven in sales dollars is $60,000 and the selling price per unit is $100,then the variable expense per unit is

The Settler's Chuck Wagon sells tickets for dinner and a show for $50 each.The cost of providing dinner is $23 per ticket and the fixed cost of operating the theater is $115,000 per month.The company can accommodate 13,500 patrons each month.What is the contribution margin ratio?

Total predicted sales (in units)minus total breakeven sales in units divided by total predicted sales (in units)yields

If the selling price per unit is $75,total fixed expenses are $90,000,and the breakeven sales in dollars is $360,000,what will the variable expense per unit be?

Franklin Producers sells its core product for $8 per unit and has variable costs of $6 per unit.Total fixed costs are $28,000.Suppose variable costs increase by 20% due to an increase in the cost of direct materials.What will be the effect on the breakeven point in units?

The difference between sales dollars and total costs after breakeven point on a CVP graph is the representation of

All else being equal,a company with a low operating leverage will have

The selling price of a particular product is $5.00 per unit,the variable expense is $3.00 per unit,and the breakeven sales in dollars is $18,660,what are total fixed expenses?

The sales mix cannot significantly affect CVP relationships.

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 total fixed costs decrease while the selling price per unit and variable costs per unit remain constant,which of the following statements is true?

CVP analysis assumes all of the following except

Holding all other factors constant,the breakeven point will always double if fixed expenses increase by 25%.

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.How many dozen muffins must The Muffin House sell to breakeven?

The margin of safety is the excess of expected sales over breakeven sales.

To find the number of units that need to be sold in order to breakeven or generate a target profit,the formula used is

The unit contribution margin is computed by

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

Marie's Magic Shoppe provides the following information about its single product. What is the contribution margin ratio?

To find a firm's operating leverage factor at a given level of sales,you

If fixed expenses are $45,000,the breakeven in sales dollars is $60,000 and the selling price per unit is $100,then the variable expense per unit is

The Settler's Chuck Wagon sells tickets for dinner and a show for $50 each.The cost of providing dinner is $23 per ticket and the fixed cost of operating the theater is $115,000 per month.The company can accommodate 13,500 patrons each month.What is the contribution margin ratio?

Total predicted sales (in units)minus total breakeven sales in units divided by total predicted sales (in units)yields

If the selling price per unit is $75,total fixed expenses are $90,000,and the breakeven sales in dollars is $360,000,what will the variable expense per unit be?

Franklin Producers sells its core product for $8 per unit and has variable costs of $6 per unit.Total fixed costs are $28,000.Suppose variable costs increase by 20% due to an increase in the cost of direct materials.What will be the effect on the breakeven point in units?

The difference between sales dollars and total costs after breakeven point on a CVP graph is the representation of

All else being equal,a company with a low operating leverage will have

The selling price of a particular product is $5.00 per unit,the variable expense is $3.00 per unit,and the breakeven sales in dollars is $18,660,what are total fixed expenses?

The sales mix cannot significantly affect CVP relationships.

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