Question 1

Which of the following will lower the breakeven point?

Accepted Answer

A) A decrease in the sales price per unit 
B) An increase in total fixed costs 
C) An increase in the variable costs per unit 
D) An increase in the sales price per unit 
A) A decrease in the sales price per unit 
B) An increase in total fixed costs 
C) An increase in the variable costs per unit 
D) An increase in the sales price per unit

Question 2

When the total fixed costs increases, the breakeven point:

Accepted Answer

A) increases. 
B) decreases. 
C) decreases proportionately. 
D) remains the same. 
A) increases. 
B) decreases. 
C) decreases proportionately. 
D) remains the same.

Question 3

Purely Pizza Company sells pizzas in two different sizes-medium and large. The two products sell in equal numbers. The contribution margin of a medium pizza is $12 and the contribution margin of a large pizza is $18. The weighted average contribution margin is $15.

Accepted Answer

A) True 
 B)False

Question 4

The dollar amount that provides for covering fixed costs and then provides for operating income is called:

Accepted Answer

A) variable cost. 
B) total cost. 
C) contribution margin. 
D) margin of safety. 
A) variable cost. 
B) total cost. 
C) contribution margin. 
D) margin of safety.

Question 5

Which of the following statements is true if total fixed costs decreases while the sales price per unit and variable costs per unit remain constant?

Accepted Answer

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

Question 6

The degree of operating leverage can be measured by:

Accepted Answer

A) dividing the contribution margin by operating income. 
B) dividing the fixed costs by the sales price per unit. 
C) multiplying the contribution margin to sales revenue. 
D) dividing the fixed costs by contribution margin. 
A) dividing the contribution margin by operating income. 
B) dividing the fixed costs by the sales price per unit. 
C) multiplying the contribution margin to sales revenue. 
D) dividing the fixed costs by contribution margin.

Question 7

Which of the following is a period cost?

Accepted Answer

A) Manufacturing overhead 
B) Direct labor cost 
C) Direct materials cost 
D) Administrative cost 
A) Manufacturing overhead 
B) Direct labor cost 
C) Direct materials cost 
D) Administrative cost

Question 8

Evans Company has estimated the following amounts for its next fiscal year:   What will happen to the breakeven point (in units)if Evans can reduce fixed expenses by $22,500?

Accepted Answer

A) The breakeven point will decrease by 1,500 units. 
B) The breakeven point will decrease by 562 units. 
C) The breakeven point will decrease by 900 units. 
D) The breakeven point will increase by 562 units. 
A) The breakeven point will decrease by 1,500 units. 
B) The breakeven point will decrease by 562 units. 
C) The breakeven point will decrease by 900 units. 
D) The breakeven point will increase by 562 units.

Question 9

From the graph given below, identify the fixed costs line.

Accepted Answer

A) OB 
B) AC 
C) AD 
D) AE 
A) OB 
B) AC 
C) AD 
D) AE

Question 10

Fixed costs divided by contribution margin per unit equals breakeven point in unit sales.

Accepted Answer

A) True 
 B)False

Question 11

Assume that John's cellphone service provider charges $5.00 per month and $0.10 per minute per call. If John's current bill is $50.00, how many calling minutes did John use?

Accepted Answer

A) 500 minutes 
B) 550 minutes 
C) 450 minutes 
D) 400 minutes 
A) 500 minutes 
B) 550 minutes 
C) 450 minutes 
D) 400 minutes

Question 12

Managers can use CVP relationships to conduct sensitivity analysis.

Accepted Answer

A) True 
 B)False

Question 13

If variable costs go up, and all other factors remain the same, the margin of safety will become smaller.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is true of variable costing?

Accepted Answer

A) only variable manufacturing costs are assigned to products 
B) only fixed manufacturing costs are assigned to products 
C) only fixed administration overhead costs are assigned to products 
D) only variable selling overhead costs are assigned to products 
A) only variable manufacturing costs are assigned to products 
B) only fixed manufacturing costs are assigned to products 
C) only fixed administration overhead costs are assigned to products 
D) only variable selling overhead costs are assigned to products

Question 15

Pluto Company sold 2,000 units in October at a price of $35 per unit. The variable cost is $20 per unit. Calculate the total contribution margin.

Accepted Answer

A) $70,000 
B) $30,000 
C) $40,000 
D) $20,000 
A) $70,000 
B) $30,000 
C) $40,000 
D) $20,000

Question 16

Anthony Company's highest point of total cost was $75,000 in June. Their point of lowest cost was $50,000 in December. The company makes a single product. Production volume in June was 13,000 units; production volume in December was 8,000 units. What is the variable cost per unit?

Accepted Answer

A) $9.38 per unit 
B) $6.25 per unit 
C) $5.00 per unit 
D) $5.77 per unit 
A) $9.38 per unit 
B) $6.25 per unit 
C) $5.00 per unit 
D) $5.77 per unit

Question 17

The phone bill for an accounting firm consists of both fixed and variable costs. Refer to the 4-month data below and apply the high-low method to answer the question.   If the company uses 380 minutes in May, how much will the total bill be?

Accepted Answer

A) $2,425 
B) $2,478 
C) $2,900 
D) $3767 
A) $2,425 
B) $2,478 
C) $2,900 
D) $3767

Question 18

Total variable costs change in direct proportion to a change in volume.

Accepted Answer

A) True 
 B)False

Question 19

Young Company has provided the following information:   What are the required sales in units for Young to break even?

Accepted Answer

A) 252 units 
B) 1,050 units 
C) 315 units 
D) 450 units 
A) 252 units 
B) 1,050 units 
C) 315 units 
D) 450 units

Question 20

If fixed costs go up, and all other factors remain the same, the margin of safety will become larger.

Accepted Answer

A) True 
 B)False

Exam 21: Cost-Volume-Profit Analysis

Which of the following will lower the breakeven point?

When the total fixed costs increases, the breakeven point:

Purely Pizza Company sells pizzas in two different sizes-medium and large. The two products sell in equal numbers. The contribution margin of a medium pizza is $12 and the contribution margin of a large pizza is $18. The weighted average contribution margin is $15.

The dollar amount that provides for covering fixed costs and then provides for operating income is called:

Which of the following statements is true if total fixed costs decreases while the sales price per unit and variable costs per unit remain constant?

The degree of operating leverage can be measured by:

Which of the following is a period cost?

Evans Company has estimated the following amounts for its next fiscal year: What will happen to the breakeven point (in units)if Evans can reduce fixed expenses by $22,500?

From the graph given below, identify the fixed costs line.

Fixed costs divided by contribution margin per unit equals breakeven point in unit sales.

Assume that John's cellphone service provider charges $5.00 per month and $0.10 per minute per call. If John's current bill is $50.00, how many calling minutes did John use?

Managers can use CVP relationships to conduct sensitivity analysis.

If variable costs go up, and all other factors remain the same, the margin of safety will become smaller.

Which of the following is true of variable costing?

Pluto Company sold 2,000 units in October at a price of $35 per unit. The variable cost is $20 per unit. Calculate the total contribution margin.

Anthony Company's highest point of total cost was $75,000 in June. Their point of lowest cost was $50,000 in December. The company makes a single product. Production volume in June was 13,000 units; production volume in December was 8,000 units. What is the variable cost per unit?

The phone bill for an accounting firm consists of both fixed and variable costs. Refer to the 4-month data below and apply the high-low method to answer the question. If the company uses 380 minutes in May, how much will the total bill be?

Total variable costs change in direct proportion to a change in volume.

Young Company has provided the following information: What are the required sales in units for Young to break even?

If fixed costs go up, and all other factors remain the same, the margin of safety will become larger.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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