Question 1

The high-low method can be used to estimate the cost equation using just two points.

Accepted Answer

A) True 
 B)False  True

Question 2

Under variable costing,fixed overhead costs are excluded from product costs.

Accepted Answer

A) True 
 B)False  True

Question 3

Wolowitz Company's product has a contribution margin per unit of $62.50 and a contribution margin ratio of 25%.What is the per unit selling price of the product?

Accepted Answer

The answer of Wolowitz Company's product has a contribution margin...

Question 4

A company's normal operating range,which excludes extremely high or low operating levels that are not likely to occur,is called the:

Accepted Answer

A) Margin of safety. 
B) Contribution range. 
C) Break-even point. 
D) Relevant range. 
E) High-low point. 
A) Margin of safety. 
B) Contribution range. 
C) Break-even point. 
D) Relevant range. 
E) High-low point.

Question 5

A company has fixed costs of $320,000 and a contribution margin per unit of $15.If the company wants to earn a target $40,000 pretax income,how many units must be sold (rounded to the nearest whole unit)?

Accepted Answer

A) 24,000. 
B) 21,333. 
C) 18,666. 
D) 2,667. 
E) 20,000. 
A) 24,000. 
B) 21,333. 
C) 18,666. 
D) 2,667. 
E) 20,000.

Question 6

The relevant range of operations includes extremely high and low levels of production that are unlikely to occur.

Accepted Answer

A) True 
 B)False

Question 7

In Keegan Corporation's most recent fiscal year,the company reported pretax earnings of $215,000.Fixed costs totaled $325,800,the unit selling price of the firm's only product was $60,and the variable costs per unit were 40% of the selling price.Based on this information,the firm's break-even point in units was:

Accepted Answer

A) 13,575 units. 
B) 15,023 units. 
C) 13,750 units. 
D) 9,050 units. 
E) 8,750 units. 
A) 13,575 units. 
B) 15,023 units. 
C) 13,750 units. 
D) 9,050 units. 
E) 8,750 units.

Question 8

A manufacturer reports the following information below for its first three years in operation.   
-Income for year 2 using absorption costing is:

Accepted Answer

A) $109,000. 
B) $117,000. 
C) $106,600. 
D) $115,000. 
E) $111,000. 
A) $109,000. 
B) $117,000. 
C) $106,600. 
D) $115,000. 
E) $111,000.

Question 9

The margin of safety can be expressed in dollars or as a percent of sales.

Accepted Answer

A) True 
 B)False

Question 10

McCoy Brothers manufactures and sells two products,A and Z in the ratio of 5:2.Product A sells for $75; Z sells for $95.Variable costs for product A are $35; for Z $40.Fixed costs are $418,500.Compute the break-even point in composite units.

Accepted Answer

A) 2,092. 
B) 3,805. 
C) 1,350. 
D) 1,395. 
E) 1,550. 
A) 2,092. 
B) 3,805. 
C) 1,350. 
D) 1,395. 
E) 1,550.

Question 11

Madison Corporation sells three products (M,N,and O)in the following mix: 3:1:2.Unit price and cost data are:  Total fixed costs are $340,000.
-The break-even point in composite units for the current sales mix (round to the nearest unit)is:

Accepted Answer

A) 17,000 
B) 20,000 
C) 102,000 
D) 51,000 
E) 34,000 
A) 17,000 
B) 20,000 
C) 102,000 
D) 51,000 
E) 34,000

Question 12

A manufacturer reports the following costs to produce 10,000 units in its first year of operations: Direct materials,$10 per unit,Direct labor,$6 per unit,Variable overhead,$70,000,and Fixed overhead,$120,000.
-Of the 10,000 units produced,9,200 were sold,and 800 remain in inventory at year-end.Under variable costing,the value of the inventory is:

Accepted Answer

A) $12,800. 
B) $18,400. 
C) $28,000. 
D) $22,400. 
E) $13,600. 
A) $12,800. 
B) $18,400. 
C) $28,000. 
D) $22,400. 
E) $13,600.

Question 13

The margin of safety is the excess of:

Accepted Answer

A) Break-even sales over expected sales. 
B) Expected sales over variable costs. 
C) Expected sales over fixed costs. 
D) Fixed costs over expected sales. 
E) Expected sales over break-even sales. 
A) Break-even sales over expected sales. 
B) Expected sales over variable costs. 
C) Expected sales over fixed costs. 
D) Fixed costs over expected sales. 
E) Expected sales over break-even sales.

Question 14

Varigon Co.produces and sells three products-Household,Commercial,and Industrial,and has total fixed costs of $52,000.Sales and cost data follow:
   Calculate the break-even point in composite units.

Accepted Answer

@#IMG-DLM& Break-even point in

Question 15

The ratio (proportion)of the sales volumes of the various products sold by a company is called the ________.

Accepted Answer

The answer of The ratio (proportion)of the sales volumes of...

Question 16

Expanse Co.is considering the production and sale of a new product line with the following sales and cost data: unit sales price $125; unit variable costs $50; and total fixed costs of $150,000.Calculate the break-even point in units and in dollar sales.

Accepted Answer

Break-even point in units = $1

Question 17

Use the following information to determine the break-even point in sales dollars:

Accepted Answer

A) $88,500. 
B) $108,500. 
C) $173,600. 
D) $326,400. 
E) $500,000. 
A) $88,500. 
B) $108,500. 
C) $173,600. 
D) $326,400. 
E) $500,000.

Question 18

Raven Company has a target of $70,000 pre-tax income.The contribution margin ratio is 30%.What amount of dollar sales must be achieved to reach the goal if fixed costs are $36,000?

Accepted Answer

A) $23,333. 
B) $36,000. 
C) $300,000. 
D) $353,333. 
E) $420,000. 
A) $23,333. 
B) $36,000. 
C) $300,000. 
D) $353,333. 
E) $420,000.

Question 19

Barclay Bikes manufactures and sells three distinct styles of bicycles: the Youth model sells for $300 and has a unit contribution margin of $105; the Adult model sells for $850 and has a unit contribution margin of $450; and the Recreational model sells for $1,000 and has a unit contribution margin of $500.The company's sales mix includes: 5 Youth models; 9 Adult models; and 6 Recreational models.If the firm's annual fixed costs total $6,500,000,calculate the firm's break-even point in total sales dollars.

Accepted Answer

A) $13,250,000. 
B) $13,000,000. 
C) $12,750,000. 
D) $12,900,050. 
E) $12,750,625. 
A) $13,250,000. 
B) $13,000,000. 
C) $12,750,000. 
D) $12,900,050. 
E) $12,750,625.

Question 20

Curvilinear costs always increase:

Accepted Answer

A) With decreases in volume. 
B) In constant proportion to changes in production levels. 
C) When management performs break-even analysis. 
D) When volume increases,but at a nonconstant rate. 
E) On a per unit basis when volume of activity goes down. 
A) With decreases in volume. 
B) In constant proportion to changes in production levels. 
C) When management performs break-even analysis. 
D) When volume increases,but at a nonconstant rate. 
E) On a per unit basis when volume of activity goes down.

Exam 18: Cost Behavior and Cost-Volume-Profit Analysis

The high-low method can be used to estimate the cost equation using just two points.

Under variable costing,fixed overhead costs are excluded from product costs.

Wolowitz Company's product has a contribution margin per unit of $62.50 and a contribution margin ratio of 25%.What is the per unit selling price of the product?

A company's normal operating range,which excludes extremely high or low operating levels that are not likely to occur,is called the:

A company has fixed costs of $320,000 and a contribution margin per unit of $15.If the company wants to earn a target $40,000 pretax income,how many units must be sold (rounded to the nearest whole unit)?

The relevant range of operations includes extremely high and low levels of production that are unlikely to occur.

A manufacturer reports the following information below for its first three years in operation. -Income for year 2 using absorption costing is:

The margin of safety can be expressed in dollars or as a percent of sales.

McCoy Brothers manufactures and sells two products,A and Z in the ratio of 5:2.Product A sells for $75; Z sells for $95.Variable costs for product A are $35; for Z $40.Fixed costs are $418,500.Compute the break-even point in composite units.

Madison Corporation sells three products (M,N,and O)in the following mix: 3:1:2.Unit price and cost data are: Total fixed costs are $340,000. -The break-even point in composite units for the current sales mix (round to the nearest unit)is:

The margin of safety is the excess of:

Varigon Co.produces and sells three products-Household,Commercial,and Industrial,and has total fixed costs of $52,000.Sales and cost data follow: Calculate the break-even point in composite units.

The ratio (proportion)of the sales volumes of the various products sold by a company is called the ________.

Expanse Co.is considering the production and sale of a new product line with the following sales and cost data: unit sales price $125; unit variable costs $50; and total fixed costs of $150,000.Calculate the break-even point in units and in dollar sales.

Use the following information to determine the break-even point in sales dollars:

Raven Company has a target of $70,000 pre-tax income.The contribution margin ratio is 30%.What amount of dollar sales must be achieved to reach the goal if fixed costs are $36,000?

Curvilinear costs always increase:

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

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