Question 1

Given breakeven sales in units of 49,000 and a unit contribution margin of $3, how many units must be sold to reach a target operating income of $14,100?

Accepted Answer

A) 4700 
B) 44,300 
C) 53,700 
D) 42,300 
A) 4700 
B) 44,300 
C) 53,700 
D) 42,300

Question 2

Paint and Sip sells admission tickets for a painting class for $60 each. The cost of providing the canvas and supplies is $31 per ticket and the fixed cost of operating the art gallery is $45,000 per month. The company can accommodate 5400 patrons each month. What is the contribution margin ratio?

Accepted Answer

A) 52% 
B) 207% 
C) 29% 
D) 48% 
A) 52% 
B) 207% 
C) 29% 
D) 48%

Question 3

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 4

If a unit sells for $12.50 and has a variable cost of $3.25, its contribution margin per unit is $9.25.

Accepted Answer

A) True 
 B)False

Question 5

Heartlake Enterprises' management has budgeted the following amounts for its next fiscal year:   If Heartlake Enterprises can reduce fixed expenses by $15,400, how will breakeven sales in units be affected?

Accepted Answer

A) Increase by 342 units 
B) Increase by 1400 units 
C) Decrease by 342 units 
D) Decrease by 1400 units 
A) Increase by 342 units 
B) Increase by 1400 units 
C) Decrease by 342 units 
D) Decrease by 1400 units

Question 6

Fiesta Supply Company compiled the following data in order to assess the weighted average contribution margin per unit of two of the company's best-selling party items; the dome tent and the portable gazebo. 1. What is the contribution margin of the dome tent?
2) What is the weighted-average contribution margin per unit?

Accepted Answer

A) $960; $293.33 
B) $660; $1760 
C) $600; $240 
D) $800; $6 
A) $960; $293.33 
B) $660; $1760 
C) $600; $240 
D) $800; $6

Question 7

The Winner's Circle sells two products, medals and trophies. The Winner's Circle predicts that it will sell 20,000 medals and 4800 trophies in the next period. The unit contribution margins for medals and trophies are $7.00 and $14.75, respectively. What is the weighted average unit contribution margin?

Accepted Answer

A) $10.88 
B) $13.87 
C) $8.5 
D) $21.75 
A) $10.88 
B) $13.87 
C) $8.5 
D) $21.75

Question 8

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 9

If a company sells 16 of Product A for every 2 of Product B that it sells, the sales mix can be stated as

Accepted Answer

A) 16:2. 
B) 16/18 A and 2/18 B. 
C) neither "16:2" nor "16/18 A and 2/18 B" is correct. 
D) both "16:2" and "16/18 A and 2/18 B" are correct. 
A) 16:2. 
B) 16/18 A and 2/18 B. 
C) neither "16:2" nor "16/18 A and 2/18 B" is correct. 
D) both "16:2" and "16/18 A and 2/18 B" are correct.

Question 10

The following information for the past year for the Blaine Corporation has been provided:   During the year, the company produced and sold 40,000 units of product at a selling price of $14.03 per unit. There was no beginning inventory of product at the beginning of the year.
What is the operating income (loss)for the year?

Accepted Answer

A) $375,200 
B) $561,200 
C) $386,200 
D) $200,200 
A) $375,200 
B) $561,200 
C) $386,200 
D) $200,200

Question 11

The selling price of a Road King bicycle is $600, unit variable costs are $400, and total fixed costs are $5600. How many bicycles will Road King need to sell to breakeven?

Accepted Answer

A) 16,800 
B) 6 
C) 28 
D) 10 
A) 16,800 
B) 6 
C) 28 
D) 10

Question 12

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 13

Given breakeven sales in units of 31,000 and a unit contribution margin of $10, how many units must be sold to reach a target operating income of $15,000?

Accepted Answer

A) 29,500 
B) 150,000 
C) 32,500 
D) 1500 
A) 29,500 
B) 150,000 
C) 32,500 
D) 1500

Question 14

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 15

A company's breakeven point is only affected when the company makes changes to contribution margin.

Accepted Answer

A) True 
 B)False

Question 16

Monroe Manufacturing produces and sells a product with a price of $100/unit. The following data has been prepared for its estimated upper and lower levels of activity.   The only variable expenses for this company are

Accepted Answer

A) indirect materials, direct materials, and direct labor. 
B) all categories of selling and administrative expenses. 
C) indirect materials, indirect labor, direct materials, and direct labor. 
D) none of the above. 
A) indirect materials, direct materials, and direct labor. 
B) all categories of selling and administrative expenses. 
C) indirect materials, indirect labor, direct materials, and direct labor. 
D) none of the above.

Question 17

Pittsboro Corporation produces and sells a single product. Data for that product are:   Management is discussing increasing the price to $525 to cover an increase in fixed expenses of $80,000. Management believes they might lose 2% of sales per month.
What effect would these changes have on the company's breakeven point?

Accepted Answer

A) Breakeven would increase by 287 units 
B) Breakeven would increase by 5,269 units 
C) Breakeven would decrease by 287 units 
D) Breakeven would decrease by 5,556 units 
A) Breakeven would increase by 287 units 
B) Breakeven would increase by 5,269 units 
C) Breakeven would decrease by 287 units 
D) Breakeven would decrease by 5,556 units

Question 18

Oscar Incorporated currently sells its products for $300 per unit. Management is contemplating a 20% increase in the selling price for the next year. Variable costs are currently 10% of sales revenue and are not expected to change next year. Fixed expenses are $100,000 per year. If fixed costs were to decrease 30% 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) 2333 units 
B) 333 units 
C) 213 units 
D) 130,000 units 
A) 2333 units 
B) 333 units 
C) 213 units 
D) 130,000 units

Question 19

Jackie's Snacks sells fudge, caramels, and popcorn. It sold 8000 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 $15,000. Additional information follows:   The weighted average contribution margin for the three products of Jackie's Snacks is

Accepted Answer

A) $5.60. 
B) $0.87. 
C) $2.60. 
D) $21.00. 
A) $5.60. 
B) $0.87. 
C) $2.60. 
D) $21.00.

Question 20

The following selected data relates to Green with Envy Corporation:   If sales revenue per unit increases to $28 and 8000 units are sold, what is the contribution margin?

Accepted Answer

A) $224,000 
B) $31,000 
C) $32,000 
D) $56,000 
A) $224,000 
B) $31,000 
C) $32,000 
D) $56,000

Given breakeven sales in units of 49,000 and a unit contribution margin of $3, how many units must be sold to reach a target operating income of $14,100?

Paint and Sip sells admission tickets for a painting class for $60 each. The cost of providing the canvas and supplies is $31 per ticket and the fixed cost of operating the art gallery is $45,000 per month. The company can accommodate 5400 patrons each month. What is 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?

If a unit sells for $12.50 and has a variable cost of $3.25, its contribution margin per unit is $9.25.

Heartlake Enterprises' management has budgeted the following amounts for its next fiscal year: If Heartlake Enterprises can reduce fixed expenses by $15,400, how will breakeven sales in units be affected?

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

If a company sells 16 of Product A for every 2 of Product B that it sells, the sales mix can be stated as

The selling price of a Road King bicycle is $600, unit variable costs are $400, and total fixed costs are $5600. How many bicycles will Road King need to sell to breakeven?

CVP analysis assumes all of the following except

Given breakeven sales in units of 31,000 and a unit contribution margin of $10, how many units must be sold to reach a target operating income of $15,000?

A company's breakeven point is only affected when the company makes changes to contribution margin.

Monroe Manufacturing produces and sells a product with a price of $100/unit. The following data has been prepared for its estimated upper and lower levels of activity. The only variable expenses for this company are

The following selected data relates to Green with Envy Corporation: If sales revenue per unit increases to $28 and 8000 units are sold, what is the contribution margin?

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 Evalulation

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

Given breakeven sales in units of 49,000 and a unit contribution margin of $3, how many units must be sold to reach a target operating income of $14,100?

Paint and Sip sells admission tickets for a painting class for $60 each. The cost of providing the canvas and supplies is $31 per ticket and the fixed cost of operating the art gallery is $45,000 per month. The company can accommodate 5400 patrons each month. What is 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?

If a unit sells for $12.50 and has a variable cost of $3.25, its contribution margin per unit is $9.25.

Heartlake Enterprises' management has budgeted the following amounts for its next fiscal year: If Heartlake Enterprises can reduce fixed expenses by $15,400, how will breakeven sales in units be affected?

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

If a company sells 16 of Product A for every 2 of Product B that it sells, the sales mix can be stated as

The selling price of a Road King bicycle is $600, unit variable costs are $400, and total fixed costs are $5600. How many bicycles will Road King need to sell to breakeven?

CVP analysis assumes all of the following except

Given breakeven sales in units of 31,000 and a unit contribution margin of $10, how many units must be sold to reach a target operating income of $15,000?

A company's breakeven point is only affected when the company makes changes to contribution margin.

Monroe Manufacturing produces and sells a product with a price of $100/unit. The following data has been prepared for its estimated upper and lower levels of activity. The only variable expenses for this company are

The following selected data relates to Green with Envy Corporation: If sales revenue per unit increases to $28 and 8000 units are sold, what is the contribution margin?

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 Evalulation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters