Question 1

Cost behaviour analysis focuses on

Accepted Answer

A)  how costs respond to changes in profit 
B)  how costs change over time 
C)  how costs change as output changes 
D)  none of the above 
A)  how costs respond to changes in profit 
B)  how costs change over time 
C)  how costs change as output changes 
D)  none of the above

Question 2

Cost function is represented by the following formula:

Accepted Answer

A)  Total cost = Fixed costs + (Variable rate x Output) 
B)  Total cost = Fixed costs - (Variable rate x Output) 
C)  Total cost + Fixed costs = (Variable rate x Output) 
D)  Total cost = (Fixed rate x Output) + (Variable rate x Output) 
A)  Total cost = Fixed costs + (Variable rate x Output) 
B)  Total cost = Fixed costs - (Variable rate x Output) 
C)  Total cost + Fixed costs = (Variable rate x Output) 
D)  Total cost = (Fixed rate x Output) + (Variable rate x Output)

Question 3

When a company sells more units than the break-even point,

Accepted Answer

A)  it moves above the relevant range. 
B)  profits are positive. 
C)  there are no new variable costs incurred. 
D)  profits are negative. 
A)  it moves above the relevant range. 
B)  profits are positive. 
C)  there are no new variable costs incurred. 
D)  profits are negative.

Question 4

The break-even point is

Accepted Answer

A)  the volume of activity where all fixed costs are recovered. 
B)  where fixed costs equal total variable costs. 
C)  where total revenues equal total costs. 
D)  where total costs equal total contribution margin. 
A)  the volume of activity where all fixed costs are recovered. 
B)  where fixed costs equal total variable costs. 
C)  where total revenues equal total costs. 
D)  where total costs equal total contribution margin.

Question 5

Management is interested in utilizing the full capacity of production facilities because it

Accepted Answer

A)  spreads variable costs over a greater number of units, thereby reducing the variable cost per unit 
B)  spreads fixed costs over a greater number of units, thereby reducing the fixed cost per unit 
C)  reduces total variable costs 
D)  reduces total fixed costs 
A)  spreads variable costs over a greater number of units, thereby reducing the variable cost per unit 
B)  spreads fixed costs over a greater number of units, thereby reducing the fixed cost per unit 
C)  reduces total variable costs 
D)  reduces total fixed costs

Question 6

Supply the missing data in each independent case.

Accepted Answer

Case 1:
Price = £42,000 / 700 = £60;
Uni

Question 7

Assume the following cost behaviour data for Portrait Company: What volume of monetary sales is required to earn an after-tax income of £40,500?

Accepted Answer

A)  £360,000 
B)  £90,000 
C)  £252,000 
D)  £495,000 
A)  £360,000 
B)  £90,000 
C)  £252,000 
D)  £495,000

Question 8

Dirth Company sells only one product at a regular price of £7.50 per unit. Variable expenses are 60 percent of sales and fixed expenses are £30,000. Management has decided to decrease the selling price to £6.00 in hopes of increasing its volume of sales. What is the contribution margin ratio when the selling price is reduced to £6 per unit?

Accepted Answer

A)  25% 
B)  40% 
C)  75% 
D)  60% 
A)  25% 
B)  40% 
C)  75% 
D)  60%

Question 9

In the formula, Total cost = Fixed cost + (Variable rate x Output), total cost refers to the

Accepted Answer

A)  slope parameter or b 
B)  intercept parameter or a 
C)  dependent variable 
D)  independent variable 
A)  slope parameter or b 
B)  intercept parameter or a 
C)  dependent variable 
D)  independent variable

Question 10

The Allen Company had the following income statement for the month of July 2004: What is the sales volume required to earn a profit of £9,000?

Accepted Answer

A)  3,300 units 
B)  10,000 units 
C)  7,300 units 
D)  4,300 units 
A)  3,300 units 
B)  10,000 units 
C)  7,300 units 
D)  4,300 units

Question 11

Lewis Production Company had the following projected information for 2004: What is the break-even point in units?

Accepted Answer

A)  2,000 units 
B)  5,000 units 
C)  3,333 units 
D)  60,000 units 
A)  2,000 units 
B)  5,000 units 
C)  3,333 units 
D)  60,000 units

Question 12

Which of the following statements is true concerning the use of linear analysis at low activity levels (below the range for which the company's facility was designed)?

Accepted Answer

A)  Linear analysis is well suited for estimating total costs at low activity levels. 
B)  Linear analysis likely understates total costs at low activity levels. 
C)  Linear analysis likely overstates total costs at low activity levels. 
D)  Linear analysis of low activity levels fails to capture the fact that total fixed costs decrease as more units are produced. 
A)  Linear analysis is well suited for estimating total costs at low activity levels. 
B)  Linear analysis likely understates total costs at low activity levels. 
C)  Linear analysis likely overstates total costs at low activity levels. 
D)  Linear analysis of low activity levels fails to capture the fact that total fixed costs decrease as more units are produced.

Question 13

Assume the following information: How many units must be sold to generate a before-tax profit of £45,000?

Accepted Answer

A)  3,000 units 
B)  2,500 units 
C)  4,500 units 
D)  3,750 units 
A)  3,000 units 
B)  2,500 units 
C)  4,500 units 
D)  3,750 units

Question 14

Which of the following assumptions does NOT pertain to cost-profit-volume analysis?

Accepted Answer

A)  Sales price per unit remains constant. 
B)  The sales mix is constant. 
C)  Inventories in a manufacturing entity may go up or down. 
D)  Fixed expenses are constant at all volumes of activities within the relevant range. 
A)  Sales price per unit remains constant. 
B)  The sales mix is constant. 
C)  Inventories in a manufacturing entity may go up or down. 
D)  Fixed expenses are constant at all volumes of activities within the relevant range.

Question 15

On a profit-volume graph, the profit line intersects the horizontal axis at

Accepted Answer

A)  the origin. 
B)  the break-even point. 
C)  a volume of 1,000 units. 
D)  a point where profit is greater than zero. 
A)  the origin. 
B)  the break-even point. 
C)  a volume of 1,000 units. 
D)  a point where profit is greater than zero.

Question 16

Sales mix refers to

Accepted Answer

A)  the different volume of sales achieved during the year. 
B)  the contribution margins achieved on the different products during the year. 
C)  the relative proportions of different products that constitute total sales. 
D)  the mix of variable and fixed costs. 
A)  the different volume of sales achieved during the year. 
B)  the contribution margins achieved on the different products during the year. 
C)  the relative proportions of different products that constitute total sales. 
D)  the mix of variable and fixed costs.

Question 17

Sarah Smith, a sole proprietor, has the following projected figures for next year: What is the contribution margin ratio?

Accepted Answer

A)  0.300 
B)  1.429 
C)  0.429 
D)  3.333 
A)  0.300 
B)  1.429 
C)  0.429 
D)  3.333

Question 18

Assuming all other things are the same, variable cost per unit must have _____ if there was an increase in the break-even point.

Accepted Answer

A)  remained the same 
B)  increased first, then decreased 
C)  increased 
D)  depends on the circumstances 
A)  remained the same 
B)  increased first, then decreased 
C)  increased 
D)  depends on the circumstances

Question 19

In 2004, Angel's Bath and Body Shop had variable costs of £27,000, fixed costs of £18,000, and a net loss of £4,500. Angel's 2004 break-even sales volume was

Accepted Answer

A)  £36,000. 
B)  £37,500. 
C)  £49,500. 
D)  £54,000. 
A)  £36,000. 
B)  £37,500. 
C)  £49,500. 
D)  £54,000.

Question 20

Determine the following missing amounts:

Accepted Answer

The answer of Determine the following missing amounts:
  ...

Cost behaviour analysis focuses on

Cost function is represented by the following formula:

When a company sells more units than the break-even point,

The break-even point is

Management is interested in utilizing the full capacity of production facilities because it

Supply the missing data in each independent case.

Assume the following cost behaviour data for Portrait Company: What volume of monetary sales is required to earn an after-tax income of £40,500?

In the formula, Total cost = Fixed cost + (Variable rate x Output), total cost refers to the

The Allen Company had the following income statement for the month of July 2004: What is the sales volume required to earn a profit of £9,000?

Lewis Production Company had the following projected information for 2004: What is the break-even point in units?

Which of the following statements is true concerning the use of linear analysis at low activity levels (below the range for which the company's facility was designed)?

Assume the following information: How many units must be sold to generate a before-tax profit of £45,000?

Which of the following assumptions does NOT pertain to cost-profit-volume analysis?

On a profit-volume graph, the profit line intersects the horizontal axis at

Sales mix refers to

Sarah Smith, a sole proprietor, has the following projected figures for next year: What is the contribution margin ratio?

Assuming all other things are the same, variable cost per unit must have _____ if there was an increase in the break-even point.

In 2004, Angel's Bath and Body Shop had variable costs of £27,000, fixed costs of £18,000, and a net loss of £4,500. Angel's 2004 break-even sales volume was

Determine the following missing amounts:

Introduction to Management Accounting

An Introduction to Cost Terms and Concepts

Measuring Relevant Costs and Revenues for Decision-Making

Pricing Decisions and Profitability Analysis

Capital Investment Decisions

Cost Assignment

Activity-Based Costing

The Budgeting Process

Management Control Systems

Standard Costing and Variance Analysis

Divisional Financial Performance Measurement

Transfer Pricing in Divisionalized Companies

Cost Management

Strategic Performance Management

Filters

Exam 3: Cost-Volume-Profit Analysis

Cost behaviour analysis focuses on

Cost function is represented by the following formula:

When a company sells more units than the break-even point,

The break-even point is

Management is interested in utilizing the full capacity of production facilities because it

Supply the missing data in each independent case.

Assume the following cost behaviour data for Portrait Company: What volume of monetary sales is required to earn an after-tax income of £40,500?

In the formula, Total cost = Fixed cost + (Variable rate x Output), total cost refers to the

The Allen Company had the following income statement for the month of July 2004: What is the sales volume required to earn a profit of £9,000?

Lewis Production Company had the following projected information for 2004: What is the break-even point in units?

Which of the following statements is true concerning the use of linear analysis at low activity levels (below the range for which the company's facility was designed)?

Assume the following information: How many units must be sold to generate a before-tax profit of £45,000?

Which of the following assumptions does NOT pertain to cost-profit-volume analysis?

On a profit-volume graph, the profit line intersects the horizontal axis at

Sales mix refers to

Sarah Smith, a sole proprietor, has the following projected figures for next year: What is the contribution margin ratio?

Assuming all other things are the same, variable cost per unit must have _____ if there was an increase in the break-even point.

In 2004, Angel's Bath and Body Shop had variable costs of £27,000, fixed costs of £18,000, and a net loss of £4,500. Angel's 2004 break-even sales volume was

Determine the following missing amounts:

Introduction to Management Accounting

An Introduction to Cost Terms and Concepts

Measuring Relevant Costs and Revenues for Decision-Making

Pricing Decisions and Profitability Analysis

Capital Investment Decisions

Cost Assignment

Activity-Based Costing

The Budgeting Process

Management Control Systems

Standard Costing and Variance Analysis

Divisional Financial Performance Measurement

Transfer Pricing in Divisionalized Companies

Cost Management

Strategic Performance Management

Filters