Question 1

When fixed costs are $50,000 and variable costs are 60% of the selling price,then breakeven sales are ________.

Accepted Answer

A)  $115,000 
B)  $125,000 
C)  $175,000 
D)  $275,000 
A)  $115,000 
B)  $125,000 
C)  $175,000 
D)  $275,000

Question 2

Ballpark Concessions currently sells hot dogs.During a typical month,the stand reports a profit of $9,000 with sales of $50,000,fixed costs of $21,000,and variable costs of $0.64 per hot dog.
Next year,the company plans to start selling nachos for $3 per unit.Nachos will have a variable cost of $0.72 and new equipment and personnel to produce nachos will increase monthly fixed costs by $8,808.Initial sales of nachos should total 5,000 units.Most of the nacho sales are anticipated to come from current hot dog purchasers,therefore,monthly sales of hot dogs are expected to decline to $20,000.
After the first year of nacho sales,the company president believes that hot dog sales will increase to $33,750 a month and nacho sales will increase to 7,500 units a month.
Required:
a.Determine the monthly breakeven sales in dollars before adding nachos.
b.Determine the monthly breakeven sales during the first year of nachos sales,assuming a constant sales mix of 1 hotdog and 2 units of nachos.

Accepted Answer

The answer of Ballpark Concessions currently sells hot dogs.During a...

Question 3

If contribution margin decreases by $1 per unit,then operating profits will increase by $1 per unit.

Accepted Answer

A) True 
 B)False

Question 4

In the merchandising sector ________.

Accepted Answer

A)  only variable costs are subtracted to determine gross margin 
B)  fixed overhead costs are subtracted to determine gross margin 
C)  fixed overhead costs are subtracted to determine contribution margin 
D)  all operating costs are subtracted to determine contribution margin 
A)  only variable costs are subtracted to determine gross margin 
B)  fixed overhead costs are subtracted to determine gross margin 
C)  fixed overhead costs are subtracted to determine contribution margin 
D)  all operating costs are subtracted to determine contribution margin

Question 5

Answer the following questions using the information below:
The following information is for the Jeffries Corporation:
 Product A: Revenue $\quad \$ 16.00$
Variable Cost $\quad \$ 12.00$
Product B: Revenue $\quad \$ 24.00$
Variable Cost $\quad \$ 16.00$
Total fixed costs
$\$ 75,000$
-What is the breakeven point,assuming the sales mix consists of three units of Product A and one unit of Product B?

Accepted Answer

A)  10,000 units of A and 5,000 units of B 
B)  11,250 units of A and 3,750 units of B 
C)  12,000 units of A and 4,000 units of B 
D)  4,000 units of A and 12,000 units of B 
A)  10,000 units of A and 5,000 units of B 
B)  11,250 units of A and 3,750 units of B 
C)  12,000 units of A and 4,000 units of B 
D)  4,000 units of A and 12,000 units of B

Question 6

Pearl Lights sells only pearl necklaces.8,000 units were sold resulting in $240,000 of sales revenue,$60,000 of variable costs,and $40,000 of fixed costs.The breakeven point in total sales dollars is ________.

Accepted Answer

A)  $40,000 
B)  $53,334 
C)  $100,000 
D)  $58,334 
A)  $40,000 
B)  $53,334 
C)  $100,000 
D)  $58,334

Question 7

Contribution margin per unit is a useful tool for calculating contribution margin and operating income.

Accepted Answer

A) True 
 B)False

Question 8

What is meant by the term breakeven point? Why should a manager be concerned about the breakeven point and what helps them study the breakeven analysis?

Accepted Answer

The breakeven point is the level of prod

Question 9

Tony Manufacturing produces a single product that sells for $80.Variable costs per unit equal $30.The company expects total fixed costs to be $78,000 for the next month at the projected sales level of 2,500 units.In an attempt to improve performance,management is considering a number of alternative actions.Each situation is to be evaluated separately.Suppose that management believes that a 10% reduction in the selling price will result in a 10% increase in sales.If this proposed reduction in selling price is implemented ________.

Accepted Answer

A)  operating income will decrease by $9,500 
B)  operating income will increase by $10,000 
C)  operating income will decrease by $6,000 
D)  operating income will increase by $11,300 
A)  operating income will decrease by $9,500 
B)  operating income will increase by $10,000 
C)  operating income will decrease by $6,000 
D)  operating income will increase by $11,300

Question 10

In multiproduct situations,when sales mix shifts toward the product with the lowest contribution margin then ________.

Accepted Answer

A)  total revenues will increase 
B)  interest cost will decrease 
C)  total contribution margin will increase 
D)  operating income will decrease 
A)  total revenues will increase 
B)  interest cost will decrease 
C)  total contribution margin will increase 
D)  operating income will decrease

Question 11

All else being constant,an increase in operating income will result in an increase in net income.

Accepted Answer

A) True 
 B)False

Question 12

Answer the following questions using the information below:
Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,000, variable costs are $400, and fixed costs are $90,000.
-How many dresses are sold when operating income is zero?

Accepted Answer

A)  225 dresses 
B)  150 dresses 
C)  100 dresses 
D)  90 dresses 
A)  225 dresses 
B)  150 dresses 
C)  100 dresses 
D)  90 dresses

Question 13

Which of the following is true about the assumptions underlying basic CVP analysis?

Accepted Answer

A)  Selling price varies with demand and supply of the product. 
B)  Only selling price and variable cost per unit are known and constant. 
C)  Only selling price, variable cost per unit, and total fixed costs are known and constant. 
D)  Selling price, variable cost per unit, fixed cost per unit, and total fixed costs are known and constant. 
A)  Selling price varies with demand and supply of the product. 
B)  Only selling price and variable cost per unit are known and constant. 
C)  Only selling price, variable cost per unit, and total fixed costs are known and constant. 
D)  Selling price, variable cost per unit, fixed cost per unit, and total fixed costs are known and constant.

Question 14

In the graph method of CVP analysis,the total revenues line always begins from the x-axis and the total costs line begins from the fixed cost line.

Accepted Answer

A) True 
 B)False

Question 15

Digital Cellular sells phones for $100.The unit variable cost per phone is $50 plus a selling commission of 10%.Fixed manufacturing costs total $1,250 per month,while fixed selling and administrative costs total $2,500.
Required:
a.What is the contribution margin per phone?
b.What is the breakeven point in phones?
c.How many phones must be sold to earn pretax income of $7,500?

Accepted Answer

None

Question 16

Jacob's Manufacturing sales is equal to production.If Jacob's Manufacturing presented a Financial Accounting Income Statement emphasizing gross margin showing operating income of $180,000,a Contribution Income Statement emphasizing contribution margin would show a different operating income.

Accepted Answer

A) True 
 B)False

Question 17

Answer the following questions using the information below:
Patrick Ross has three booth rental options at the county fair where he plans to sell his new product. The booth rental options are:
 Option 1: $\quad \$ 1,000$ fixed fee, or
Option 2: $\quad\$ 750$ fixed fee $+ 5 \%$ of all revenues generated at the fair, or
Option 3: $\quad20 \%$ of all revenues generated at the fair. The product sells for $37.50 per unit. He is able to purchase the units for $12.50 each.
-How many actions and events will a decision table contain?

Accepted Answer

A)  1 action and 3 events 
B)  1 action and 6 events 
C)  2 actions and 3 events 
D)  3 actions and 6 events 
A)  1 action and 3 events 
B)  1 action and 6 events 
C)  2 actions and 3 events 
D)  3 actions and 6 events

Question 18

Answer the following questions using the information below:
The following information is for High Corp:
 $\begin{array}{lr}
\text { Selling price } & \$ 60 \text { per unit } \
\text { Variable costs } & \$ 40 \text { per unit } \
\text { Total fixed costs } & \$ 125,000
\end{array}$
-If targeted operating income is $50,000,then targeted sales revenue is ________.

Accepted Answer

A)  $525,052 
B)  $533,333 
C)  $498,133 
D)  $517,072 
A)  $525,052 
B)  $533,333 
C)  $498,133 
D)  $517,072

Question 19

When a company has the least fixed costs,the company is operating at a very high operating leverage.

Accepted Answer

A) True 
 B)False

Question 20

Sales margin = Contribution margin percentage × Revenues (in dollars).

Accepted Answer

A) True 
 B)False

When fixed costs are $50,000 and variable costs are 60% of the selling price,then breakeven sales are ________.

If contribution margin decreases by $1 per unit,then operating profits will increase by $1 per unit.

In the merchandising sector ________.

Pearl Lights sells only pearl necklaces.8,000 units were sold resulting in $240,000 of sales revenue,$60,000 of variable costs,and $40,000 of fixed costs.The breakeven point in total sales dollars is ________.

Contribution margin per unit is a useful tool for calculating contribution margin and operating income.

What is meant by the term breakeven point? Why should a manager be concerned about the breakeven point and what helps them study the breakeven analysis?

In multiproduct situations,when sales mix shifts toward the product with the lowest contribution margin then ________.

All else being constant,an increase in operating income will result in an increase in net income.

Answer the following questions using the information below: Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,000, variable costs are $400, and fixed costs are $90,000. -How many dresses are sold when operating income is zero?

Which of the following is true about the assumptions underlying basic CVP analysis?

In the graph method of CVP analysis,the total revenues line always begins from the x-axis and the total costs line begins from the fixed cost line.

Jacob's Manufacturing sales is equal to production.If Jacob's Manufacturing presented a Financial Accounting Income Statement emphasizing gross margin showing operating income of $180,000,a Contribution Income Statement emphasizing contribution margin would show a different operating income.

Answer the following questions using the information below: The following information is for High Corp: Selling price \ 60 per unit Variable costs \ 40 per unit Total fixed costs \ 125,000 -If targeted operating income is $50,000,then targeted sales revenue is ________.

When a company has the least fixed costs,the company is operating at a very high operating leverage.

Sales margin = Contribution margin percentage × Revenues (in dollars).

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 3: Cost-Volume-Profit Analysis

When fixed costs are $50,000 and variable costs are 60% of the selling price,then breakeven sales are ________.

If contribution margin decreases by $1 per unit,then operating profits will increase by $1 per unit.

In the merchandising sector ________.

Pearl Lights sells only pearl necklaces.8,000 units were sold resulting in $240,000 of sales revenue,$60,000 of variable costs,and $40,000 of fixed costs.The breakeven point in total sales dollars is ________.

Contribution margin per unit is a useful tool for calculating contribution margin and operating income.

What is meant by the term breakeven point? Why should a manager be concerned about the breakeven point and what helps them study the breakeven analysis?

In multiproduct situations,when sales mix shifts toward the product with the lowest contribution margin then ________.

All else being constant,an increase in operating income will result in an increase in net income.

Answer the following questions using the information below: Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,000, variable costs are $400, and fixed costs are $90,000. -How many dresses are sold when operating income is zero?

Which of the following is true about the assumptions underlying basic CVP analysis?

In the graph method of CVP analysis,the total revenues line always begins from the x-axis and the total costs line begins from the fixed cost line.

Jacob's Manufacturing sales is equal to production.If Jacob's Manufacturing presented a Financial Accounting Income Statement emphasizing gross margin showing operating income of $180,000,a Contribution Income Statement emphasizing contribution margin would show a different operating income.

Answer the following questions using the information below: The following information is for High Corp: Selling price \ 60 per unit Variable costs \ 40 per unit Total fixed costs \ 125,000 -If targeted operating income is $50,000,then targeted sales revenue is ________.

When a company has the least fixed costs,the company is operating at a very high operating leverage.

Sales margin = Contribution margin percentage × Revenues (in dollars).

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters