Question 1

What is contribution margin equal to on a contribution margin income statement?

Accepted Answer

A) Fixed expenses plus variable expenses 
B) Fixed expenses minus variable expenses 
C) Sales revenues minus variable expenses 
D) Sales revenues minus fixed expenses 
A) Fixed expenses plus variable expenses 
B) Fixed expenses minus variable expenses 
C) Sales revenues minus variable expenses 
D) Sales revenues minus fixed expenses

Question 2

A product is sold at $60.00 per unit,the variable expense per unit is $30,and total fixed expenses are $200,000,what are the breakeven sales in dollars?

Accepted Answer

A) $3,333 
B) $100,000 
C) $133,333 
D) $400,000 
A) $3,333 
B) $100,000 
C) $133,333 
D) $400,000

Question 3

Wallace Incorporated sells its products for $520 per unit.Variable costs are currently 45% of sales revenue.Fixed expenses are $125,840 per year.
What is the breakeven point in units at the current selling price?

Accepted Answer

A) 167 units 
B) 286 units 
C) 440 units 
D) 538 units 
A) 167 units 
B) 286 units 
C) 440 units 
D) 538 units

Question 4

Fast as Lightning is an oil change service drive-through that charges each customer $24.00 for an oil and filter change service.Fast as Lightning has found that it costs its business $16.00 per oil and filter change.Monthly fixed costs are $44,000;current sales are 8,000 services.
a.Compute the breakeven sales in units.
b.Compute Fast as Lightning's margin of safety in units and sales dollars.
c.Compute Fast as Lightning's margin of safety as a percentage.
d.Compute Fast as Lightning's operating leverage factor.
e.Compute Fast as Lightning's % of operating income decline if sales fall by 18%.

Accepted Answer

The answer of Fast as Lightning is an oil change...

Question 5

Garfield Corporation is considering building a new plant in Canada.It predicts sales at the new plant to be 50,000 units at $5.00/unit.Below is a listing of estimated expenses.
 
A Canadian 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 Garfield Corporation is

Accepted Answer

A) 28.00%. 
B) 38.00%. 
C) 172.00%. 
D) 72.00%. 
A) 28.00%. 
B) 38.00%. 
C) 172.00%. 
D) 72.00%.

Question 6

Mae Company sells its product for $12 per unit and has variable costs of $8 per unit.Total fixed costs are $60,000.Suppose variable costs increase by 10% due to an increase in the cost of direct materials.What will be the effect on the breakeven point in units?

Accepted Answer

A) Increase from 15,000 units to 18,750 units 
B) Decrease from 3,000 units to 2,885 units 
C) Decrease from 15,000 units to 5,357 units 
D) Decrease from 7,500 units to 6,818 units 
A) Increase from 15,000 units to 18,750 units 
B) Decrease from 3,000 units to 2,885 units 
C) Decrease from 15,000 units to 5,357 units 
D) Decrease from 7,500 units to 6,818 units

Question 7

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 contribution margin ratio?

Accepted Answer

A) 65% 
B) 35% 
C) 14% 
D) 286% 
A) 65% 
B) 35% 
C) 14% 
D) 286%

Question 8

Matthew's Fish Fry has a monthly target operating income of $7,200.Variable expenses are 60% of sales and monthly fixed expenses are $1,800.What is the monthly margin of safety in dollars if the business achieves its operating income goal?

Accepted Answer

A) $22,500 
B) $18,000 
C) $27,000 
D) $13,500 
A) $22,500 
B) $18,000 
C) $27,000 
D) $13,500

Question 9

Jackie's Snacks sells fudge,caramels,and popcorn.It sold 12,000 units last year.Popcorn outsold fudge by a margin of 2 to 1.Sales of caramels were the same as sales of popcorn.Fixed costs for Jackie's Snacks are $14,000.Additional information follows:
 
The breakeven sales volume in units for Jackie's Snacks is

Accepted Answer

A) 2,800. 
B) 6,000. 
C) 7,000. 
D) 1,250. 
A) 2,800. 
B) 6,000. 
C) 7,000. 
D) 1,250.

Question 10

Fixed costs of $15,750 divided by the contribution margin ratio of 50% would yield the dollar amount of breakeven sales as $31,500.

Accepted Answer

A) True 
 B)False

Question 11

If unit sales prices,unit variable costs and total fixed costs all remain the same,but the sales mix changes,there is an effect on the breakeven point.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Jackie's Snacks sells fudge,caramels,and popcorn.It sold 12,000 units last year.Popcorn outsold fudge by a margin of 2 to 1.Sales of caramels were the same as sales of popcorn.Fixed costs for Jackie's Snacks are $14,000.Additional information follows:
 
Breakeven sales in dollars for Jackie's Snacks is

Accepted Answer

A) $46,200. 
B) $39,600. 
C) $8,250. 
D) $16,800. 
A) $46,200. 
B) $39,600. 
C) $8,250. 
D) $16,800.

Question 14

A product's contribution margin per unit is the excess of the selling price per unit over the variable cost of obtaining and selling each unit.

Accepted Answer

A) True 
 B)False

Question 15

A company that sells one product would be more likely to calculate breakeven in terms of sales units,rather than sales revenue.

Accepted Answer

A) True 
 B)False

Question 16

The contribution margin per unit is how much profit each unit contributes after fixed costs are considered.

Accepted Answer

A) True 
 B)False

Question 17

Contribution margin less fixed costs yields

Accepted Answer

A) sales. 
B) operating income. 
C) variable costs. 
D) none of the above. 
A) sales. 
B) operating income. 
C) variable costs. 
D) none of the above.

Question 18

By multiplying ________ and then subtracting fixed costs,managers can quickly forecast the operating income.

Accepted Answer

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

Question 19

The addition of a specified target operating income to contribution margin analysis has the same effect on required sales in units as increasing fixed expenses.

Accepted Answer

A) True 
 B)False

Question 20

Operating leverage refers to the relative amount of fixed and variable costs that make up total costs for a company.

Accepted Answer

A) True 
 B)False

What is contribution margin equal to on a contribution margin income statement?

A product is sold at $60.00 per unit,the variable expense per unit is $30,and total fixed expenses are $200,000,what are the breakeven sales in dollars?

Wallace Incorporated sells its products for $520 per unit.Variable costs are currently 45% of sales revenue.Fixed expenses are $125,840 per year. What is the breakeven point in units at the current selling price?

Mae Company sells its product for $12 per unit and has variable costs of $8 per unit.Total fixed costs are $60,000.Suppose variable costs increase by 10% due to an increase in the cost of direct materials.What will be the effect on the breakeven point in units?

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 contribution margin ratio?

Matthew's Fish Fry has a monthly target operating income of $7,200.Variable expenses are 60% of sales and monthly fixed expenses are $1,800.What is the monthly margin of safety in dollars if the business achieves its operating income goal?

Fixed costs of $15,750 divided by the contribution margin ratio of 50% would yield the dollar amount of breakeven sales as $31,500.

If unit sales prices,unit variable costs and total fixed costs all remain the same,but the sales mix changes,there is an effect on the breakeven point.

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

A product's contribution margin per unit is the excess of the selling price per unit over the variable cost of obtaining and selling each unit.

A company that sells one product would be more likely to calculate breakeven in terms of sales units,rather than sales revenue.

The contribution margin per unit is how much profit each unit contributes after fixed costs are considered.

Contribution margin less fixed costs yields

By multiplying ________ and then subtracting fixed costs,managers can quickly forecast the operating income.

The addition of a specified target operating income to contribution margin analysis has the same effect on required sales in units as increasing fixed expenses.

Operating leverage refers to the relative amount of fixed and variable costs that make up total costs for a company.

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

What is contribution margin equal to on a contribution margin income statement?

A product is sold at $60.00 per unit,the variable expense per unit is $30,and total fixed expenses are $200,000,what are the breakeven sales in dollars?

Wallace Incorporated sells its products for $520 per unit.Variable costs are currently 45% of sales revenue.Fixed expenses are $125,840 per year. What is the breakeven point in units at the current selling price?

Mae Company sells its product for $12 per unit and has variable costs of $8 per unit.Total fixed costs are $60,000.Suppose variable costs increase by 10% due to an increase in the cost of direct materials.What will be the effect on the breakeven point in units?

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 contribution margin ratio?

Matthew's Fish Fry has a monthly target operating income of $7,200.Variable expenses are 60% of sales and monthly fixed expenses are $1,800.What is the monthly margin of safety in dollars if the business achieves its operating income goal?

Fixed costs of $15,750 divided by the contribution margin ratio of 50% would yield the dollar amount of breakeven sales as $31,500.

If unit sales prices,unit variable costs and total fixed costs all remain the same,but the sales mix changes,there is an effect on the breakeven point.

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

A product's contribution margin per unit is the excess of the selling price per unit over the variable cost of obtaining and selling each unit.

A company that sells one product would be more likely to calculate breakeven in terms of sales units,rather than sales revenue.

The contribution margin per unit is how much profit each unit contributes after fixed costs are considered.

Contribution margin less fixed costs yields

By multiplying ________ and then subtracting fixed costs,managers can quickly forecast the operating income.

The addition of a specified target operating income to contribution margin analysis has the same effect on required sales in units as increasing fixed expenses.

Operating leverage refers to the relative amount of fixed and variable costs that make up total costs for a company.

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