Question 1

The following is last month's contribution format income statement:  
What is the company's margin of safety in dollars?

Accepted Answer

A)  $100,000. 
B)  $600,000. 
C)  $1,500,000. 
D)  $250,000. 
A)  $100,000. 
B)  $600,000. 
C)  $1,500,000. 
D)  $250,000.

Question 2

A company increased the selling price for its product from $1.00 to $1.10 a unit when total fixed expenses increased from $400,000 to $480,000 and the variable expense per unit remained unchanged at $0.50.How would these changes affect the break-even point?

Accepted Answer

A)  The break-even point in units would increase. 
B)  The break-even point in units would decrease. 
C)  The break-even point in units would remain unchanged. 
D)  The effect cannot be determined from the information given. 
A)  The break-even point in units would increase. 
B)  The break-even point in units would decrease. 
C)  The break-even point in units would remain unchanged. 
D)  The effect cannot be determined from the information given.

Question 3

If sales increase by 200 units,by how much should before-tax profits increase?

Accepted Answer

A)  $16,000. 
B)  $5,000. 
C)  $2,000. 
D)  $10,000. 
A)  $16,000. 
B)  $5,000. 
C)  $2,000. 
D)  $10,000.

Question 4

Green Company's variable expenses are 75% of sales.At a sales level of $400,000,the company's degree of operating leverage is 8.At this sales level,fixed expenses equal which of the following?

Accepted Answer

A)  $87,500. 
B)  $100,000. 
C)  $50,000. 
D)  $75,000. 
A)  $87,500. 
B)  $100,000. 
C)  $50,000. 
D)  $75,000.

Question 5

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 6

If sales increase from $80,000 per year to $120,000 per year,and if the degree of operating leverage is 5,then by what percentage should operating income increase?

Accepted Answer

A)  167%. 
B)  250%. 
C)  100%. 
D)  334%. 
A)  167%. 
B)  250%. 
C)  100%. 
D)  334%.

Question 7

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 8

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 9

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 10

North Company sells a single product.The product has a selling price of $30 per unit and variable expenses are 70% of sales.If the company's fixed expenses total $60,000 per year,then what will be its break-even?

Accepted Answer

A)  $60,000. 
B)  $85,714. 
C)  $42,000. 
D)  $200,000. 
A)  $60,000. 
B)  $85,714. 
C)  $42,000. 
D)  $200,000.

Question 11

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 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

The following information relates to Clyde Corporation,which produced and sold 50,000 units last month.  
There were no beginning or ending inventories.Production and sales next month are expected to be 40,000 units.In the next month,what should the company's unit contribution margin be?

Accepted Answer

A)  $16.63. 
B)  $3.10. 
C)  $7.98. 
D)  $13.30. 
A)  $16.63. 
B)  $3.10. 
C)  $7.98. 
D)  $13.30.

Question 14

If Dorian Company desires a monthly operating income equal to 10% of sales,what will its monthly sales have to be?

Accepted Answer

A)  $90,000. 
B)  $45,600. 
C)  $120,000. 
D)  $96,000. 
A)  $90,000. 
B)  $45,600. 
C)  $120,000. 
D)  $96,000.

Question 15

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 16

A company increased the selling price for its product from $1.00 to $1.10 a unit when total fixed expenses increased from $400,000 to $480,000 and the variable expense per unit remained unchanged at $0.50.How would these changes affect the break-even point?

Accepted Answer

A)  The break-even point in units would increase. 
B)  The break-even point in units would decrease. 
C)  The break-even point in units would remain unchanged. 
D)  The effect cannot be determined from the information given. 
A)  The break-even point in units would increase. 
B)  The break-even point in units would decrease. 
C)  The break-even point in units would remain unchanged. 
D)  The effect cannot be determined from the information given.

Question 17

Goodman Company has sales of 3,000 units at $80 per unit.Variable costs are 35% of the sales price.If total fixed costs are $66,000,what is the degree of operating leverage rounded to 2 decimal places?

Accepted Answer

A)  0.79. 
B)  0.93. 
C)  2.67. 
D)  1.73.DOL = 156,000/(156,000 - 66,000)= 1.73 
A)  0.79. 
B)  0.93. 
C)  2.67. 
D)  1.73.DOL = 156,000/(156,000 - 66,000)= 1.73

Question 18

The margin of safety percentage is equal to the margin of safety in dollars divided by total sales in dollars.

Accepted Answer

A) True 
 B)False

Question 19

A company increased the selling price for its product from $1.00 to $1.10 a unit when total fixed expenses increased from $400,000 to $480,000 and the variable expense per unit remained unchanged at $0.50.How would these changes affect the break-even point?

Accepted Answer

A)  The break-even point in units would increase. 
B)  The break-even point in units would decrease. 
C)  The break-even point in units would remain unchanged. 
D)  The effect cannot be determined from the information given. 
A)  The break-even point in units would increase. 
B)  The break-even point in units would decrease. 
C)  The break-even point in units would remain unchanged. 
D)  The effect cannot be determined from the information given.

Question 20

The following is last month's contribution format income statement:  
What is the company's margin of safety percentage,rounded to the nearest whole percent?

Accepted Answer

A)  42%. 
B)  40%. 
C)  17%. 
D)  20%. 
A)  42%. 
B)  40%. 
C)  17%. 
D)  20%.

The following is last month's contribution format income statement: What is the company's margin of safety in dollars?

A company increased the selling price for its product from $1.00 to $1.10 a unit when total fixed expenses increased from $400,000 to $480,000 and the variable expense per unit remained unchanged at $0.50.How would these changes affect the break-even point?

If sales increase by 200 units,by how much should before-tax profits increase?

Green Company's variable expenses are 75% of sales.At a sales level of $400,000,the company's degree of operating leverage is 8.At this sales level,fixed expenses equal which of the following?

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

If sales increase from $80,000 per year to $120,000 per year,and if the degree of operating leverage is 5,then by what percentage should operating income increase?

What is the company's degree of operating leverage?

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

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?

North Company sells a single product.The product has a selling price of $30 per unit and variable expenses are 70% of sales.If the company's fixed expenses total $60,000 per year,then what will be its break-even?

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?

The following information relates to Clyde Corporation,which produced and sold 50,000 units last month. There were no beginning or ending inventories.Production and sales next month are expected to be 40,000 units.In the next month,what should the company's unit contribution margin be?

If Dorian Company desires a monthly operating income equal to 10% of sales,what will its monthly sales have to be?

The breakeven point in sales dollars is closest to:

A company increased the selling price for its product from $1.00 to $1.10 a unit when total fixed expenses increased from $400,000 to $480,000 and the variable expense per unit remained unchanged at $0.50.How would these changes affect the break-even point?

Goodman Company has sales of 3,000 units at $80 per unit.Variable costs are 35% of the sales price.If total fixed costs are $66,000,what is the degree of operating leverage rounded to 2 decimal places?

The margin of safety percentage is equal to the margin of safety in dollars divided by total sales in dollars.

A company increased the selling price for its product from $1.00 to $1.10 a unit when total fixed expenses increased from $400,000 to $480,000 and the variable expense per unit remained unchanged at $0.50.How would these changes affect the break-even point?

The following is last month's contribution format income statement: What is the company's margin of safety percentage,rounded to the nearest whole percent?

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Exam 4: Cost-Volume-Profit Relationships

The following is last month's contribution format income statement: What is the company's margin of safety in dollars?

A company increased the selling price for its product from $1.00 to $1.10 a unit when total fixed expenses increased from $400,000 to $480,000 and the variable expense per unit remained unchanged at $0.50.How would these changes affect the break-even point?

If sales increase by 200 units,by how much should before-tax profits increase?

Green Company's variable expenses are 75% of sales.At a sales level of $400,000,the company's degree of operating leverage is 8.At this sales level,fixed expenses equal which of the following?

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

If sales increase from $80,000 per year to $120,000 per year,and if the degree of operating leverage is 5,then by what percentage should operating income increase?

What is the company's degree of operating leverage?

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

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?

North Company sells a single product.The product has a selling price of $30 per unit and variable expenses are 70% of sales.If the company's fixed expenses total $60,000 per year,then what will be its break-even?

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?

The following information relates to Clyde Corporation,which produced and sold 50,000 units last month. There were no beginning or ending inventories.Production and sales next month are expected to be 40,000 units.In the next month,what should the company's unit contribution margin be?

If Dorian Company desires a monthly operating income equal to 10% of sales,what will its monthly sales have to be?

The breakeven point in sales dollars is closest to:

A company increased the selling price for its product from $1.00 to $1.10 a unit when total fixed expenses increased from $400,000 to $480,000 and the variable expense per unit remained unchanged at $0.50.How would these changes affect the break-even point?

Goodman Company has sales of 3,000 units at $80 per unit.Variable costs are 35% of the sales price.If total fixed costs are $66,000,what is the degree of operating leverage rounded to 2 decimal places?

The margin of safety percentage is equal to the margin of safety in dollars divided by total sales in dollars.

A company increased the selling price for its product from $1.00 to $1.10 a unit when total fixed expenses increased from $400,000 to $480,000 and the variable expense per unit remained unchanged at $0.50.How would these changes affect the break-even point?

The following is last month's contribution format income statement: What is the company's margin of safety percentage,rounded to the nearest whole percent?

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