Question 1

If the fixed expenses increase in a company,and all other factors remain unchanged,then one would expect the margin of safety to decrease.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is defined as the difference between total sales in dollars and total variable expenses?

Accepted Answer

A)  Margin of safety. 
B)  Operating income. 
C)  The gross margin. 
D)  The contribution margin. 
A)  Margin of safety. 
B)  Operating income. 
C)  The gross margin. 
D)  The contribution margin.

Question 3

What is the unit contribution margin per book?

Accepted Answer

A)  $10.30. 
B)  $14.30. 
C)  $10.80. 
D)  $8.30. 
A)  $10.30. 
B)  $14.30. 
C)  $10.80. 
D)  $8.30.

Question 4

How is the degree of operating leverage calculated?

Accepted Answer

A)  Contribution margin divided by sales. 
B)  Gross margin divided by operating income. 
C)  Operating income divided by sales. 
D)  Contribution margin divided by operating income. 
A)  Contribution margin divided by sales. 
B)  Gross margin divided by operating income. 
C)  Operating income divided by sales. 
D)  Contribution margin divided by operating income.

Question 5

The breakeven point in sales dollars is closest to:

Accepted Answer

A)  $137,500. 
B)  $40,000. 
C)  $120,000. 
D)  $60,000. 
A)  $137,500. 
B)  $40,000. 
C)  $120,000. 
D)  $60,000.

Question 6

When interpreting a CVP graph which of the following is NOT correct?

Accepted Answer

A)  When sales are below the breakeven intersection the company incurs a loss. 
B)  The breakeven point is where the total revenue line meets the fixed cost line. 
C)  The anticipated profit or loss at any given level of sales is measured by the vertical distance between the total revenue line and the total expense line. 
D)  The total revenue line starts at the origin. 
A)  When sales are below the breakeven intersection the company incurs a loss. 
B)  The breakeven point is where the total revenue line meets the fixed cost line. 
C)  The anticipated profit or loss at any given level of sales is measured by the vertical distance between the total revenue line and the total expense line. 
D)  The total revenue line starts at the origin.

Question 7

For a given level of sales,a low contribution margin ratio will produce less operating income than a high contribution margin ratio.

Accepted Answer

A) True 
 B)False

Question 8

If the company wants to increase its total contribution margin by 40% in the next year,all other factors remaining the same,by how much will it need to increase its sales?

Accepted Answer

A)  $96,000. 
B)  $50,400. 
C)  $67,200. 
D)  $72,000. 
A)  $96,000. 
B)  $50,400. 
C)  $67,200. 
D)  $72,000.

Question 9

How is the margin of safety percentage computed?

Accepted Answer

A)  Break-even sales divided by Total sales. 
B)  Total sales minus Break-even sales. 
C)  (Total sales - Break-even sales)divided by Break-even sales. 
D)  (Total sales - Break-even sales)divided by Total sales. 
A)  Break-even sales divided by Total sales. 
B)  Total sales minus Break-even sales. 
C)  (Total sales - Break-even sales)divided by Break-even sales. 
D)  (Total sales - Break-even sales)divided by Total sales.

Question 10

The following data pertain to last month's operations:  
What is the break-even point in dollars?

Accepted Answer

A)  $300,000. 
B)  $240,000. 
C)  $200,000. 
D)  $160,000. 
A)  $300,000. 
B)  $240,000. 
C)  $200,000. 
D)  $160,000.

Question 11

At a break-even point of 400 units sold,variable expenses were $4,000 and fixed expenses were $2,000.What will the 401st unit sold contribute to operating income?

Accepted Answer

A)  $0. 
B)  $5. 
C)  $10. 
D)  $15. 
A)  $0. 
B)  $5. 
C)  $10. 
D)  $15.

Question 12

Roberts Company sells a single product at a selling price of $55 per unit.Variable costs are $30.25 per unit,and fixed costs are $113,850.What is Roberts Company's break-even point?

Accepted Answer

A)  $207,000. 
B)  3,764 units. 
C)  $253,000. 
D)  2,070 units. 
A)  $207,000. 
B)  3,764 units. 
C)  $253,000. 
D)  2,070 units.

Question 13

The following is last month's contribution format income statement:  
What is the company's degree of operating leverage?

Accepted Answer

A)  0.125. 
B)  8.0. 
C)  3.0. 
D)  0.333. 
A)  0.125. 
B)  8.0. 
C)  3.0. 
D)  0.333.

Question 14

Once the break-even point has been reached,increases in contribution margin will be reflected dollar for dollar in increased operating income.

Accepted Answer

A) True 
 B)False

Question 15

A company with sales of $80,000 and variable expenses of $40,000 should spend $12,000 on increased advertising,if the increased advertising will increase sales by $22,000.
CM ratio = 50% so incremental CM = 22,000 * .5 which is less than $12,000.

Accepted Answer

A) True 
 B)False

Question 16

When interpreting a CVP graph which of the following is NOT correct?

Accepted Answer

A)  When sales are below the breakeven intersection the company incurs a loss. 
B)  The breakeven point is where the total revenue line meets the fixed cost line. 
C)  The anticipated profit or loss at any given level of sales is measured by the vertical distance between the total revenue line and the total expense line. 
D)  The total revenue line starts at the origin. 
A)  When sales are below the breakeven intersection the company incurs a loss. 
B)  The breakeven point is where the total revenue line meets the fixed cost line. 
C)  The anticipated profit or loss at any given level of sales is measured by the vertical distance between the total revenue line and the total expense line. 
D)  The total revenue line starts at the origin.

Question 17

The total volume in sales dollars that would be required to attain a given target operating profit is determined by dividing the sum of the fixed expenses and the target operating profit by the contribution margin ratio.

Accepted Answer

A) True 
 B)False

Question 18

What is the break-even point in sales dollars?
Refer To: 04-05

Accepted Answer

A)  $48,000. 
B)  $72,000. 
C)  $28,800. 
D)  $0. 
A)  $48,000. 
B)  $72,000. 
C)  $28,800. 
D)  $0.

Question 19

Sales = Variable expenses + Fixed expenses + Target operating income
$4.50Q = $3.00Q + $120,000 + $0
$1.50Q = $120,000
Q = $120,000/$1.50 = 80,000 units
2.80,000 units x $4.50 = $360,000
3.Sales = Variable expenses + Fixed expenses + Target operating income
$4.50Q = $3.00Q + $120,000 + $90,000
$1.50Q = $210,000
Q = $210,000/$1.50 = 140,000 units
4.Margin of safety = Sales - Sales at break-even
= $540,000 - $360,000
= $180,000
b)

Accepted Answer

The answer of Sales = Variable expenses + Fixed expenses...

Question 20

At a break-even point of 800 units sold,White Company's variable expenses are $8,000 and its fixed expenses are $4,000.What will the company's operating income be at a volume of 801 units?

Accepted Answer

A)  $15. 
B)  $10. 
C)  $5. 
D)  $20. 
A)  $15. 
B)  $10. 
C)  $5. 
D)  $20.

If the fixed expenses increase in a company,and all other factors remain unchanged,then one would expect the margin of safety to decrease.

Which of the following is defined as the difference between total sales in dollars and total variable expenses?

What is the unit contribution margin per book?

How is the degree of operating leverage calculated?

The breakeven point in sales dollars is closest to:

When interpreting a CVP graph which of the following is NOT correct?

For a given level of sales,a low contribution margin ratio will produce less operating income than a high contribution margin ratio.

If the company wants to increase its total contribution margin by 40% in the next year,all other factors remaining the same,by how much will it need to increase its sales?

How is the margin of safety percentage computed?

The following data pertain to last month's operations: What is the break-even point in dollars?

At a break-even point of 400 units sold,variable expenses were $4,000 and fixed expenses were $2,000.What will the 401^st unit sold contribute to operating income?

Roberts Company sells a single product at a selling price of $55 per unit.Variable costs are $30.25 per unit,and fixed costs are $113,850.What is Roberts Company's break-even point?

The following is last month's contribution format income statement: What is the company's degree of operating leverage?

Once the break-even point has been reached,increases in contribution margin will be reflected dollar for dollar in increased operating income.

A company with sales of $80,000 and variable expenses of $40,000 should spend $12,000 on increased advertising,if the increased advertising will increase sales by $22,000. CM ratio = 50% so incremental CM = 22,000 * .5 which is less than $12,000.

When interpreting a CVP graph which of the following is NOT correct?

The total volume in sales dollars that would be required to attain a given target operating profit is determined by dividing the sum of the fixed expenses and the target operating profit by the contribution margin ratio.

What is the break-even point in sales dollars? Refer To: 04-05

At a break-even point of 800 units sold,White Company's variable expenses are $8,000 and its fixed expenses are $4,000.What will the company's operating income be at a volume of 801 units?

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Cost Behaviour: Analysis and Use

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: a Tool to Aid Decision Making

Variable Costing: a Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis Online

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Exam 4: Cost-Volume-Profit Relationships

If the fixed expenses increase in a company,and all other factors remain unchanged,then one would expect the margin of safety to decrease.

Which of the following is defined as the difference between total sales in dollars and total variable expenses?

What is the unit contribution margin per book?

How is the degree of operating leverage calculated?

The breakeven point in sales dollars is closest to:

When interpreting a CVP graph which of the following is NOT correct?

For a given level of sales,a low contribution margin ratio will produce less operating income than a high contribution margin ratio.

If the company wants to increase its total contribution margin by 40% in the next year,all other factors remaining the same,by how much will it need to increase its sales?

How is the margin of safety percentage computed?

The following data pertain to last month's operations: What is the break-even point in dollars?

At a break-even point of 400 units sold,variable expenses were $4,000 and fixed expenses were $2,000.What will the 401st unit sold contribute to operating income?

Roberts Company sells a single product at a selling price of $55 per unit.Variable costs are $30.25 per unit,and fixed costs are $113,850.What is Roberts Company's break-even point?

The following is last month's contribution format income statement: What is the company's degree of operating leverage?

Once the break-even point has been reached,increases in contribution margin will be reflected dollar for dollar in increased operating income.

A company with sales of $80,000 and variable expenses of $40,000 should spend $12,000 on increased advertising,if the increased advertising will increase sales by $22,000. CM ratio = 50% so incremental CM = 22,000 * .5 which is less than $12,000.

When interpreting a CVP graph which of the following is NOT correct?

The total volume in sales dollars that would be required to attain a given target operating profit is determined by dividing the sum of the fixed expenses and the target operating profit by the contribution margin ratio.

What is the break-even point in sales dollars? Refer To: 04-05

At a break-even point of 800 units sold,White Company's variable expenses are $8,000 and its fixed expenses are $4,000.What will the company's operating income be at a volume of 801 units?

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Cost Behaviour: Analysis and Use

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: a Tool to Aid Decision Making

Variable Costing: a Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis Online

Filters

At a break-even point of 400 units sold,variable expenses were $4,000 and fixed expenses were $2,000.What will the 401^st unit sold contribute to operating income?