Question 1

If a company increases fixed costs,then the breakeven point will be lower.

Accepted Answer

A) True 
 B)False

Question 2

Managers use cost-volume-profit (CVP)analysis to ________.

Accepted Answer

A)  forecast the cost of capital for a given period of time 
B)  to study the behavior of and relationship among the elements such as total revenues, total costs, and income 
C)  estimate the risks associated with a given job 
D)  analyse a firm's profitability and help to decide wealth distribution among its stakeholders 
A)  forecast the cost of capital for a given period of time 
B)  to study the behavior of and relationship among the elements such as total revenues, total costs, and income 
C)  estimate the risks associated with a given job 
D)  analyse a firm's profitability and help to decide wealth distribution among its stakeholders

Question 3

Breakeven point in units is ________.

Accepted Answer

A)  total costs divided by profit margin per unit 
B)  contribution margin per unit divided by total cost per unit 
C)  fixed costs divided by contribution margin per unit 
D)  the sum of fixed and variable costs divided by contribution margin per unit 
A)  total costs divided by profit margin per unit 
B)  contribution margin per unit divided by total cost per unit 
C)  fixed costs divided by contribution margin per unit 
D)  the sum of fixed and variable costs divided by contribution margin per unit

Question 4

Answer the following questions using the information below:
Bell Company sells several products. Information of average revenue and costs is as follows:
 $\begin{array}{lr}
\text { Selling price per unit } & \$ 28.50 \
\text { Variable costs per unit: } & \
\text { Direct material } & \$ 5.25 \
\text { Direct manufacturing labor } & \$ 1.15 \
\text { Manufacturing overhead } & \$ 0.25 \
\quad \text { Selling costs } & \$ 1.85 \
\text { Annual fixed costs } & \$ 110,000
\end{array}$
$\text { The company sells } 10,000 \text { units. }$
-What is the proportion of variable costs to total costs?

Accepted Answer

A)  45.00% 
B)  48.56% 
C)  53.56% 
D)  43.56% 
A)  45.00% 
B)  48.56% 
C)  53.56% 
D)  43.56%

Question 5

If the contribution margin ratio is 0.40,targeted operating income is $80,000,and targeted sales volume in dollars is $500,000,then the degree of operating leverage is ________.

Accepted Answer

A)  1.50 times 
B)  2.00 times 
C)  2.50 times 
D)  3.00 times 
A)  1.50 times 
B)  2.00 times 
C)  2.50 times 
D)  3.00 times

Question 6

Explain net income and what implications can tax have on it that influences a manager's decision?

Accepted Answer

Net income is operating income plus nono

Question 7

If a company would like to increase its degree of operating leverage it should ________.

Accepted Answer

A)  increase its sales relative to its fixed costs 
B)  increase its sales relative to its variable costs 
C)  increase its variable costs relative to its fixed costs 
D)  increase its fixed costs relative to its variable costs 
A)  increase its sales relative to its fixed costs 
B)  increase its sales relative to its variable costs 
C)  increase its variable costs relative to its fixed costs 
D)  increase its fixed costs relative to its variable costs

Question 8

Which of the following is true of CVP analysis?

Accepted Answer

A)  Costs may be separated into separate inventoriable and period components with respect to the level of output. 
B)  Total revenues and total costs are linear in relation to output units. 
C)  Unit selling price, unit variable costs, and unit fixed costs are known and remain constant. 
D)  Proportion of different products will vary according to demand and supply when multiple products are sold. 
A)  Costs may be separated into separate inventoriable and period components with respect to the level of output. 
B)  Total revenues and total costs are linear in relation to output units. 
C)  Unit selling price, unit variable costs, and unit fixed costs are known and remain constant. 
D)  Proportion of different products will vary according to demand and supply when multiple products are sold.

Question 9

Margin of safety measures the difference between budgeted revenues and breakeven revenues.

Accepted Answer

A) True 
 B)False

Question 10

Answer the following questions using the information below:

Southwestern College is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet:
 
Southwestern College has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band which will cost another $800. Tickets are expected to be $30 per person. Local business supporters will donate any other items required for the event.

-Which option has the lowest breakeven point?

Accepted Answer

A)  Option one 
B)  Option two 
C)  Both options have the same breakeven point. 
D)  The lowest breakeven point cannot be determined. 
A)  Option one 
B)  Option two 
C)  Both options have the same breakeven point. 
D)  The lowest breakeven point cannot be determined.

Question 11

Answer the following questions using the information below:
Northern Star sells several products. Information of average revenue and costs is as follows:
 $$\begin{array} { l r } 
\text { Selling price per unit } & \$ 20.00 \
\text { Variable costs per unit: } & \
\text { Direct material } & \$ 4.00 \
\text { Direct manufacturing labor } & \$ 1.60 \
\text { Manufacturing overhead } & \$ 0.40 \
\text { Selling costs } & \$ 2.00 \
\text { Annual fixed costs } & \$ 96,000
\end{array}$$
$\text { The company sells } 12,000 \text { units at the end of the year. }$
-The contribution margin per unit is ________.

Accepted Answer

A)  $11.00 
B)  $12.00 
C)  $4.00 
D)  $14.00 
A)  $11.00 
B)  $12.00 
C)  $4.00 
D)  $14.00

Question 12

To apply CVP analysis in the hotel industry,which of the following is the most important measure of output?

Accepted Answer

A)  number of room-nights occupied 
B)  number of visitors 
C)  number of dishes on the menu 
D)  number of employees 
A)  number of room-nights occupied 
B)  number of visitors 
C)  number of dishes on the menu 
D)  number of employees

Question 13

In CVP analysis,the number of output units is the only revenue driver.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements about net income (NI)is true?

Accepted Answer

A)  NI = operating income plus nonoperating revenue. 
B)  NI = operating income plus operating costs. 
C)  NI = operating income less income taxes. 
D)  NI = operating income less cost of goods sold. 
A)  NI = operating income plus nonoperating revenue. 
B)  NI = operating income plus operating costs. 
C)  NI = operating income less income taxes. 
D)  NI = operating income less cost of goods sold.

Question 15

What is the breakeven point in units,assuming a product's selling price is $100,fixed costs are $16,000,unit variable costs are $20,and operating income is $5,200?

Accepted Answer

A)  100 units 
B)  300 units 
C)  400 units 
D)  200 units 
A)  100 units 
B)  300 units 
C)  400 units 
D)  200 units

Question 16

A company with sales of $50,000,variable costs of $35,000,and fixed costs of $25,000 will earn a net income of $15,000.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is true of net income?

Accepted Answer

A)  Net income is operating income divided by income tax rate. 
B)  Net income is operating income plus operating revenues minus operating costs minus income taxes. 
C)  Net income is operating income plus nonoperating revenues minus nonoperating costs minus income taxes. 
D)  Net income is operating income minus nonoperating revenues minus nonoperating costs minus sales taxes. 
A)  Net income is operating income divided by income tax rate. 
B)  Net income is operating income plus operating revenues minus operating costs minus income taxes. 
C)  Net income is operating income plus nonoperating revenues minus nonoperating costs minus income taxes. 
D)  Net income is operating income minus nonoperating revenues minus nonoperating costs minus sales taxes.

Question 18

Zealz Manufacturing produces a single product that sells for $80.Variable costs per unit equal $30.The company expects total fixed costs to be $70,000 for the next month at the projected sales level of 2,000 units.In an attempt to improve performance,management is considering a number of alternative actions.Each situation is to be evaluated separately.What is the current breakeven point in terms of number of units?

Accepted Answer

A)  1,400 units 
B)  2,250 units 
C)  3,333 units 
D)  1725 units 
A)  1,400 units 
B)  2,250 units 
C)  3,333 units 
D)  1725 units

Question 19

Globus Autos sells a single product.8,000 units were sold resulting in $80,000 of sales revenue,$20,000 of variable costs,and $10,000 of fixed costs.If variable costs decrease by $1 per unit,the new margin of safety is ________.

Accepted Answer

A)  $65,000 
B)  $73,567 
C)  $68,235 
D)  $66,765 
A)  $65,000 
B)  $73,567 
C)  $68,235 
D)  $66,765

Question 20

It is assumed in CVP analysis that the unit selling price,unit variable costs,and unit fixed costs are known and constant.

Accepted Answer

A) True 
 B)False

If a company increases fixed costs,then the breakeven point will be lower.

Managers use cost-volume-profit (CVP)analysis to ________.

Breakeven point in units is ________.

If the contribution margin ratio is 0.40,targeted operating income is $80,000,and targeted sales volume in dollars is $500,000,then the degree of operating leverage is ________.

Explain net income and what implications can tax have on it that influences a manager's decision?

If a company would like to increase its degree of operating leverage it should ________.

Which of the following is true of CVP analysis?

Margin of safety measures the difference between budgeted revenues and breakeven revenues.

To apply CVP analysis in the hotel industry,which of the following is the most important measure of output?

In CVP analysis,the number of output units is the only revenue driver.

Which of the following statements about net income (NI)is true?

What is the breakeven point in units,assuming a product's selling price is $100,fixed costs are $16,000,unit variable costs are $20,and operating income is $5,200?

A company with sales of $50,000,variable costs of $35,000,and fixed costs of $25,000 will earn a net income of $15,000.

Which of the following is true of net income?

Globus Autos sells a single product.8,000 units were sold resulting in $80,000 of sales revenue,$20,000 of variable costs,and $10,000 of fixed costs.If variable costs decrease by $1 per unit,the new margin of safety is ________.

It is assumed in CVP analysis that the unit selling price,unit variable costs,and unit fixed costs are known and constant.

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

If a company increases fixed costs,then the breakeven point will be lower.

Managers use cost-volume-profit (CVP)analysis to ________.

Breakeven point in units is ________.

If the contribution margin ratio is 0.40,targeted operating income is $80,000,and targeted sales volume in dollars is $500,000,then the degree of operating leverage is ________.

Explain net income and what implications can tax have on it that influences a manager's decision?

If a company would like to increase its degree of operating leverage it should ________.

Which of the following is true of CVP analysis?

Margin of safety measures the difference between budgeted revenues and breakeven revenues.

To apply CVP analysis in the hotel industry,which of the following is the most important measure of output?

In CVP analysis,the number of output units is the only revenue driver.

Which of the following statements about net income (NI)is true?

What is the breakeven point in units,assuming a product's selling price is $100,fixed costs are $16,000,unit variable costs are $20,and operating income is $5,200?

A company with sales of $50,000,variable costs of $35,000,and fixed costs of $25,000 will earn a net income of $15,000.

Which of the following is true of net income?

Globus Autos sells a single product.8,000 units were sold resulting in $80,000 of sales revenue,$20,000 of variable costs,and $10,000 of fixed costs.If variable costs decrease by $1 per unit,the new margin of safety is ________.

It is assumed in CVP analysis that the unit selling price,unit variable costs,and unit fixed costs are known and constant.

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