Question 1

Young Company has provided the following information:   Calculate the contribution margin per unit.

Accepted Answer

A) $28 
B) $40 
C) $52 
D) $16 
A) $28 
B) $40 
C) $52 
D) $16

Question 2

Colin was a professional classical guitar player until his motorcycle accident that left him disabled. After long months of therapy, he hired an experienced luthier (maker of stringed instruments)and started a small shop to make and sell Spanish guitars. The guitars sell for $700 and the fixed monthly operating costs are as follows:   Colin's accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales, $0.65 went to cover his fixed costs, and that anything past that point was pure profit. Colin wishes to earn $4,000 of operating profit each month. Calculate the number of guitars Colin will have to sell to achieve the target profit.

Accepted Answer

A) 39 guitars 
B) 33 guitars 
C) 15 guitars 
D) 18 guitars 
A) 39 guitars 
B) 33 guitars 
C) 15 guitars 
D) 18 guitars

Question 3

Gray Company sells two products, X and Y. For the coming year, Gray predicts the sale of 5,000 units of X and 10,000 units of Y. The contribution margins of the two products are $5 and $3, respectively. The weighted-average contribution margin would be $5.50.

Accepted Answer

A) True 
 B)False

Question 4

When the total fixed costs decreases, the contribution margin per unit:

Accepted Answer

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

Question 5

If a company uses standard absorption costing, how could a business manager exploit that accounting method in order to boost book income without violating the rules of GAAP?

Accepted Answer

A) By adopting just-in-time inventory management, the manager could reduce the costs of financing and storing inventory, which would in turn, help boost book income. 
B) By coding administrative costs to inventory, the manager could report lower total expenses and thus report higher income. 
C) By reducing inventory levels, the manager could show higher sales revenues, and thus report higher book income. 
D) By building up inventory levels, fixed manufacturing costs could be "stored up" in ending inventory, the cost of goods sold would be lower, and book income would be higher. 
A) By adopting just-in-time inventory management, the manager could reduce the costs of financing and storing inventory, which would in turn, help boost book income. 
B) By coding administrative costs to inventory, the manager could report lower total expenses and thus report higher income. 
C) By reducing inventory levels, the manager could show higher sales revenues, and thus report higher book income. 
D) By building up inventory levels, fixed manufacturing costs could be "stored up" in ending inventory, the cost of goods sold would be lower, and book income would be higher.

Question 6

When the variable cost per unit decreases, the contribution margin on each unit sold also decreases.

Accepted Answer

A) True 
 B)False

Question 7

Gould Enterprises sells computer disks for $1.50 per disk. Unit variable expenses total $0.90. The breakeven point in units is 3,000 and expected sales in units are 4,300. What is the margin of safety in dollars?

Accepted Answer

A) $4,500 
B) $1,950 
C) $3,870 
D) $6,450 
A) $4,500 
B) $1,950 
C) $3,870 
D) $6,450

Question 8

The amount by which sales can decrease before the company incurs an operating loss is called breakeven point.

Accepted Answer

A) True 
 B)False

Question 9

Nancy was reviewing the water bill for her dog day care and spa and determined that her highest bill, $3,800, occurred in May when she washed 400 dogs and her lowest bill, $2,400, occurred in November when she washed 200 dogs. What was the variable cost per dog associated with Nancy's water bill?

Accepted Answer

A) $6.00 
B) $12.00 
C) $9.50 
D) $7.00 
A) $6.00 
B) $12.00 
C) $9.50 
D) $7.00

Question 10

During the current year, Simpson Inc. incurred $5,000 of fixed and $12,000 variable costs. If the number of units produced is halved next year, the company will incur $2,500 as fixed and $6,000 as variable costs.

Accepted Answer

A) True 
 B)False

Question 11

First Buy Company provided the following manufacturing costs for the month of June.   From the above information, calculate First Buy's total fixed costs.

Accepted Answer

A) $311,600 
B) $52,800 
C) $71,600 
D) $76,800 
A) $311,600 
B) $52,800 
C) $71,600 
D) $76,800

Question 12

Roberts Company has fixed costs of $10,000. Their contribution margin ratio is 40% and ratio of selling expenses to sales is 20%. What is the breakeven point in sales dollars?

Accepted Answer

A) $50,000 
B) $25,000 
C) $4,000 
D) $2,000 
A) $50,000 
B) $25,000 
C) $4,000 
D) $2,000

Young Company has provided the following information: Calculate the contribution margin per unit.

Gray Company sells two products, X and Y. For the coming year, Gray predicts the sale of 5,000 units of X and 10,000 units of Y. The contribution margins of the two products are $5 and $3, respectively. The weighted-average contribution margin would be $5.50.

When the total fixed costs decreases, the contribution margin per unit:

If a company uses standard absorption costing, how could a business manager exploit that accounting method in order to boost book income without violating the rules of GAAP?

When the variable cost per unit decreases, the contribution margin on each unit sold also decreases.

Gould Enterprises sells computer disks for $1.50 per disk. Unit variable expenses total $0.90. The breakeven point in units is 3,000 and expected sales in units are 4,300. What is the margin of safety in dollars?

The amount by which sales can decrease before the company incurs an operating loss is called breakeven point.

Nancy was reviewing the water bill for her dog day care and spa and determined that her highest bill, $3,800, occurred in May when she washed 400 dogs and her lowest bill, $2,400, occurred in November when she washed 200 dogs. What was the variable cost per dog associated with Nancy's water bill?

During the current year, Simpson Inc. incurred $5,000 of fixed and $12,000 variable costs. If the number of units produced is halved next year, the company will incur $2,500 as fixed and $6,000 as variable costs.

First Buy Company provided the following manufacturing costs for the month of June. From the above information, calculate First Buy's total fixed costs.

Roberts Company has fixed costs of $10,000. Their contribution margin ratio is 40% and ratio of selling expenses to sales is 20%. What is the breakeven point in sales dollars?

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

Filters

Exam 21: Cost-Volume-Profit Analysis

Young Company has provided the following information: Calculate the contribution margin per unit.

Gray Company sells two products, X and Y. For the coming year, Gray predicts the sale of 5,000 units of X and 10,000 units of Y. The contribution margins of the two products are $5 and $3, respectively. The weighted-average contribution margin would be $5.50.

When the total fixed costs decreases, the contribution margin per unit:

If a company uses standard absorption costing, how could a business manager exploit that accounting method in order to boost book income without violating the rules of GAAP?

When the variable cost per unit decreases, the contribution margin on each unit sold also decreases.

Gould Enterprises sells computer disks for $1.50 per disk. Unit variable expenses total $0.90. The breakeven point in units is 3,000 and expected sales in units are 4,300. What is the margin of safety in dollars?

The amount by which sales can decrease before the company incurs an operating loss is called breakeven point.

Nancy was reviewing the water bill for her dog day care and spa and determined that her highest bill, $3,800, occurred in May when she washed 400 dogs and her lowest bill, $2,400, occurred in November when she washed 200 dogs. What was the variable cost per dog associated with Nancy's water bill?

During the current year, Simpson Inc. incurred $5,000 of fixed and $12,000 variable costs. If the number of units produced is halved next year, the company will incur $2,500 as fixed and $6,000 as variable costs.

First Buy Company provided the following manufacturing costs for the month of June. From the above information, calculate First Buy's total fixed costs.

Roberts Company has fixed costs of $10,000. Their contribution margin ratio is 40% and ratio of selling expenses to sales is 20%. What is the breakeven point in sales dollars?

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

Filters