Question 1

What is the break-even point in units per year?

Accepted Answer

A)  15,200 units. 
B)  26,600 units. 
C)  38,000 units. 
D)  40,000 units.FC = 208,000 + 324,000 = $532,000.B/E = 532,000/14 = 38,000 units. 
A)  15,200 units. 
B)  26,600 units. 
C)  38,000 units. 
D)  40,000 units.FC = 208,000 + 324,000 = $532,000.B/E = 532,000/14 = 38,000 units.

Question 2

The margin of safety in the Flaherty Company is $24,000.If the company's sales are $120,000 and its variable expenses are $80,000,what must its fixed expenses be?

Accepted Answer

A)  $8,000. 
B)  $32,000. 
C)  $24,000. 
D)  $16,000. 
A)  $8,000. 
B)  $32,000. 
C)  $24,000. 
D)  $16,000.

Question 3

How many units need to be sold to earn an annual operating income equal to 10% of sales?

Accepted Answer

A)  44,000 units. 
B)  53,200 units. 
C)  54,500 units. 
D)  47,500 units.S = 532,000/(.35 - .10)= $2,128,000.Units to be sold = 2,128,000/40= 53,200 units. 
A)  44,000 units. 
B)  53,200 units. 
C)  54,500 units. 
D)  47,500 units.S = 532,000/(.35 - .10)= $2,128,000.Units to be sold = 2,128,000/40= 53,200 units.

Question 4

Carver Company produces a product that sells for $30.Variable manufacturing costs are $15 per unit.Fixed manufacturing costs are $5 per unit based on the current level of activity,and fixed selling and administrative costs are $4 per unit.A selling commission of 10% of the selling price is paid on each unit sold.What is the contribution margin per unit?

Accepted Answer

A)  $3. 
B)  $15. 
C)  $8. 
D)  $12. 
A)  $3. 
B)  $15. 
C)  $8. 
D)  $12.

Question 5

If the fixed expenses of a product increase while variable expenses and the selling price remain constant,what will happen to the total contribution margin and the break-even point?

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 6

What is the break-even point in sales dollars,rounded to the nearest dollar?

Accepted Answer

A)  $148,148. 
B)  $266,667. 
C)  $333,333. 
D)  $350,000. 
A)  $148,148. 
B)  $266,667. 
C)  $333,333. 
D)  $350,000.

Question 7

What is the contribution margin?

Accepted Answer

A)  $240,000. 
B)  $560,000. 
C)  $632,000. 
D)  $72,000. 
A)  $240,000. 
B)  $560,000. 
C)  $632,000. 
D)  $72,000.

Question 8

A company has provided the following data:  
If the sales volume decreases by 25%,the variable cost per unit increases by 15%,and all other factors remain the same,what will the outcome be for operating income?

Accepted Answer

A)  Decrease by $31,875. 
B)  Decrease by $15,000. 
C)  Increase by $20,625. 
D)  Decrease by $3,125.   
A)  Decrease by $31,875. 
B)  Decrease by $15,000. 
C)  Increase by $20,625. 
D)  Decrease by $3,125.

Question 9

The break-even point in sales for Rice Company is $360,000,and the company's contribution margin ratio is 20%.Its income tax rate is 40%.If Rice Company desires an after-tax operating profit of $84,000,what would total sales have to be?

Accepted Answer

A)  $1,050,360. 
B)  $1,060,000. 
C)  $780,000. 
D)  Cannot be determined without additional information.Sales = (360,000 * .20 + 140,000)/.20 = $1,060,000 
A)  $1,050,360. 
B)  $1,060,000. 
C)  $780,000. 
D)  Cannot be determined without additional information.Sales = (360,000 * .20 + 140,000)/.20 = $1,060,000

Question 10

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 11

Brasher Company manufactures and sells a single product that has a positive contribution margin.If the selling price and variable expenses both decrease by 5% and fixed expenses do not change,then what would be the effect on the contribution margin per unit and the contribution margin ratio?

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 12

In the current year,the company sold 43,000 units.Due to competition,management will be forced to lower the selling price by 10% next year.How many units must be sold next year to earn the same operating income as was earned in the current year?

Accepted Answer

A)  50,000 units. 
B)  53,200 units. 
C)  58,800 units. 
D)  60,200 units.New CM = 40 * (1 - .10)- 20 - 6 = $10.Units required = (532,000 + 70,000)/10 = 60,200 units. 
A)  50,000 units. 
B)  53,200 units. 
C)  58,800 units. 
D)  60,200 units.New CM = 40 * (1 - .10)- 20 - 6 = $10.Units required = (532,000 + 70,000)/10 = 60,200 units.

Question 13

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 14

What is the company's margin of safety as a percentage of sales,rounded to the nearest whole percent?

Accepted Answer

A)  33%. 
B)  50%. 
C)  12%. 
D)  67%. 
A)  33%. 
B)  50%. 
C)  12%. 
D)  67%.

Question 15

What is the break-even point in sales dollars?

Accepted Answer

A)  $240,000. 
B)  $560,000. 
C)  $728,000. 
D)  $408,000. 
A)  $240,000. 
B)  $560,000. 
C)  $728,000. 
D)  $408,000.

Question 16

What is the company's contribution margin ratio?

Accepted Answer

A)  250%. 
B)  150%. 
C)  70%. 
D)  30%. 
A)  250%. 
B)  150%. 
C)  70%. 
D)  30%.

Question 17

What is the company's degree of operating leverage?

Accepted Answer

A)  0.2. 
B)  8.0. 
C)  1.7. 
D)  5.0. 
A)  0.2. 
B)  8.0. 
C)  1.7. 
D)  5.0.

Question 18

If the company's sales volume increases by 30% next year,all other factors remaining the same,by how much will its operating income increase?

Accepted Answer

A)  $92,400. 
B)  $50,400. 
C)  $37,800. 
D)  $72,000. 
A)  $92,400. 
B)  $50,400. 
C)  $37,800. 
D)  $72,000.

Question 19

A company with an income tax rate of 40% and an objective of an after-tax target operating profit of $48,000 should generate a before-tax target operating profit of $120,000.
48,000/(1-.4)= $80,000

Accepted Answer

A) True 
 B)False

Question 20

Austin Manufacturing had the following operating data for the year just ended:  
Management plans to improve the quality of its only product by replacing a component that costs $3.50 with a higher-grade component that costs $5.50,and renting a packing machine for $18,000 a year.If the desired target operating profit is $288,000,how many units must the company sell?

Accepted Answer

A)  19,300 units. 
B)  21,316 units. 
C)  22,500 units. 
D)  20,842 units. 
A)  19,300 units. 
B)  21,316 units. 
C)  22,500 units. 
D)  20,842 units.

What is the break-even point in units per year?

The margin of safety in the Flaherty Company is $24,000.If the company's sales are $120,000 and its variable expenses are $80,000,what must its fixed expenses be?

How many units need to be sold to earn an annual operating income equal to 10% of sales?

If the fixed expenses of a product increase while variable expenses and the selling price remain constant,what will happen to the total contribution margin and the break-even point?

What is the break-even point in sales dollars,rounded to the nearest dollar?

What is the contribution margin?

A company has provided the following data: If the sales volume decreases by 25%,the variable cost per unit increases by 15%,and all other factors remain the same,what will the outcome be for operating income?

The break-even point in sales for Rice Company is $360,000,and the company's contribution margin ratio is 20%.Its income tax rate is 40%.If Rice Company desires an after-tax operating profit of $84,000,what would total sales have to be?

The breakeven point in sales dollars is closest to:

Brasher Company manufactures and sells a single product that has a positive contribution margin.If the selling price and variable expenses both decrease by 5% and fixed expenses do not change,then what would be the effect on the contribution margin per unit and the contribution margin ratio?

In the current year,the company sold 43,000 units.Due to competition,management will be forced to lower the selling price by 10% next year.How many units must be sold next year to earn the same operating income as was earned in the current year?

How is the degree of operating leverage calculated?

What is the company's margin of safety as a percentage of sales,rounded to the nearest whole percent?

What is the break-even point in sales dollars?

What is the company's contribution margin ratio?

What is the company's degree of operating leverage?

If the company's sales volume increases by 30% next year,all other factors remaining the same,by how much will its operating income increase?

A company with an income tax rate of 40% and an objective of an after-tax target operating profit of $48,000 should generate a before-tax target operating profit of $120,000. 48,000/(1-.4)= $80,000

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

Exam 4: Cost-Volume-Profit Relationships

What is the break-even point in units per year?

The margin of safety in the Flaherty Company is $24,000.If the company's sales are $120,000 and its variable expenses are $80,000,what must its fixed expenses be?

How many units need to be sold to earn an annual operating income equal to 10% of sales?

If the fixed expenses of a product increase while variable expenses and the selling price remain constant,what will happen to the total contribution margin and the break-even point?

What is the break-even point in sales dollars,rounded to the nearest dollar?

What is the contribution margin?

A company has provided the following data: If the sales volume decreases by 25%,the variable cost per unit increases by 15%,and all other factors remain the same,what will the outcome be for operating income?

The break-even point in sales for Rice Company is $360,000,and the company's contribution margin ratio is 20%.Its income tax rate is 40%.If Rice Company desires an after-tax operating profit of $84,000,what would total sales have to be?

The breakeven point in sales dollars is closest to:

Brasher Company manufactures and sells a single product that has a positive contribution margin.If the selling price and variable expenses both decrease by 5% and fixed expenses do not change,then what would be the effect on the contribution margin per unit and the contribution margin ratio?

In the current year,the company sold 43,000 units.Due to competition,management will be forced to lower the selling price by 10% next year.How many units must be sold next year to earn the same operating income as was earned in the current year?

How is the degree of operating leverage calculated?

What is the company's margin of safety as a percentage of sales,rounded to the nearest whole percent?

What is the break-even point in sales dollars?

What is the company's contribution margin ratio?

What is the company's degree of operating leverage?

If the company's sales volume increases by 30% next year,all other factors remaining the same,by how much will its operating income increase?

A company with an income tax rate of 40% and an objective of an after-tax target operating profit of $48,000 should generate a before-tax target operating profit of $120,000. 48,000/(1-.4)= $80,000

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