Question 1

A variable costing income statement is used for ________.

Accepted Answer

A)  filing income tax returns 
B)  external reporting purposes 
C)  determining the amount of gross profit 
D)  internal decision-making purposes 
A)  filing income tax returns 
B)  external reporting purposes 
C)  determining the amount of gross profit 
D)  internal decision-making purposes

Question 2

Miranda was reviewing the water bill for her dog day care and spa and determined that her highest bill,$5,000,occurred in July when she washed 500 dogs and her lowest bill,$3,600,occurred in February when she washed 325 dogs.What was the variable cost per dog associated with Miranda's water bill?

Accepted Answer

A)  $7.20 
B)  $11.08 
C)  $10.00 
D)  $8.00 
A)  $7.20 
B)  $11.08 
C)  $10.00 
D)  $8.00

Question 3

Following GAAP,the income statement issued to investors and creditors must ________.

Accepted Answer

A)  be prepared in the traditional format 
B)  be prepared using variable costing 
C)  be prepared in the contribution margin format 
D)  show the value of contribution margin 
A)  be prepared in the traditional format 
B)  be prepared using variable costing 
C)  be prepared in the contribution margin format 
D)  show the value of contribution margin

Question 4

Americana Replics is owned and operated by a craftsman who makes replicas of historic firearms for museums,sportsmen,and collectors.He is currently producing 63 flintlock muskets per month.Cost data for the muskets are as follows: $$\begin{array} { | l | l | } 
\hline \text { Price per unit } & \$ 750 \
\hline \text { Variable costs per unit } & 480 \
\hline \text { Fixed costs per month } & 8,400 \
\hline
\end{array}$$ If Rustic expects to sell 60 units per month,how much is his margin of safety expressed in sales revenue? (Round unit calculations up to the next whole unit.)

Accepted Answer

A)  $36,600 
B)  $31,875 
C)  $21,000 
D)  $13,440 
A)  $36,600 
B)  $31,875 
C)  $21,000 
D)  $13,440

Question 5

If the volume of activity doubles in the relevant range,total variable costs will also double.

Accepted Answer

A) True 
 B)False

Question 6

Keys Spas,Inc.reports the following information for August: $$\begin{array} { | l | r | } 
\hline \text { Sales Revenue } & \$ 740,000 \
\hline \text { Variable Costs } & 230,000 \
\hline \text { Fixed Costs } & 100,000 \
\hline
\end{array}$$ Calculate the contribution margin for August.

Accepted Answer

A)  $130,000 
B)  $510,000 
C)  $410,000 
D)  $640,000 
A)  $130,000 
B)  $510,000 
C)  $410,000 
D)  $640,000

Question 7

In the graph below,the area between the lines AC and OB after point 'E' represents ________.

Accepted Answer

A)  fixed costs 
B)  breakeven point 
C)  operating loss 
D)  operating income 
A)  fixed costs 
B)  breakeven point 
C)  operating loss 
D)  operating income

Question 8

The following data has been provided by Zimtex,Inc.for the year ended December 31,2017.
 $$\begin{array} { | l |r | l|} 
\hline \text { Units produced and sold } & 5,500& \text { units } \
\hline \text { Sales price } & \$ 300& \text { per unit } \
\hline \text { Direct materials } & \$ 90& \text { per unit } \
\hline \text { Direct labor } & \$ 50& \text { per unit } \
\hline \text { Variable manufacturing overhead } & \$ 40& \text { per unit } \
\hline \text { Fixed manufacturing overhead } & \$ 110,000 &\text { per year } \
\hline \text { Fixed selling and administrative costs } & \$ 150,000 &\text { per year } \
\hline
\end{array}$$ There are no beginning inventories.Prepare an income statement using the contribution margin format.

Accepted Answer

Zimtex, Inc.
Income Statement
Year Ended

Question 9

The traditional income statement format calculates operating income as gross profit minus selling and administrative expenses.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following will lower the breakeven point?

Accepted Answer

A)  a decrease in the sales price per unit 
B)  an increase in total fixed costs 
C)  an increase in the variable costs per unit 
D)  an increase in the sales price per unit 
A)  a decrease in the sales price per unit 
B)  an increase in total fixed costs 
C)  an increase in the variable costs per unit 
D)  an increase in the sales price per unit

Question 11

Which of the following will appear as a line item in the income statement prepared under variable costing?

Accepted Answer

A)  Contribution Margin 
B)  Total Cost of Goods Sold 
C)  Work-in-Process Inventory 
D)  Gross Profit 
A)  Contribution Margin 
B)  Total Cost of Goods Sold 
C)  Work-in-Process Inventory 
D)  Gross Profit

Question 12

When the variable cost per unit increases,the total number of units required to breakeven also increases.

Accepted Answer

A) True 
 B)False

Question 13

Miranda was reviewing the water bill for her dog day care and spa and determined that her highest bill,$4,600,occurred in July when she washed 500 dogs and her lowest bill,$3,200,occurred in February when she washed 175 dogs.What was the fixed cost associated with Miranda's water bill?

Accepted Answer

A)  $3,845.75 
B)  $4,600 
C)  $2,445 
D)  $4.31 
A)  $3,845.75 
B)  $4,600 
C)  $2,445 
D)  $4.31

Question 14

Variable cost per unit,within the relevant range,will ________.

Accepted Answer

A)  increase as production decreases 
B)  decrease as production decreases 
C)  remain the same as production levels change 
D)  decrease as production increases 
A)  increase as production decreases 
B)  decrease as production decreases 
C)  remain the same as production levels change 
D)  decrease as production increases

Question 15

When more units are sold than produced,operating income is less under absorption costing.

Accepted Answer

A) True 
 B)False

Question 16

When the variable cost per unit decreases,the contribution margin on each unit sold also decreases.

Accepted Answer

A) True 
 B)False

Question 17

When the total fixed costs decreases,the breakeven point ________.

Accepted Answer

A)  increases 
B)  decreases 
C)  remains the same 
D)  increases proportionately 
A)  increases 
B)  decreases 
C)  remains the same 
D)  increases proportionately

Question 18

The sales mix provides the weights that make up total product sales.

Accepted Answer

A) True 
 B)False

Question 19

Managers can use CVP relationships to conduct sensitivity analysis.

Accepted Answer

A) True 
 B)False

Question 20

Under absorption costing,the more units added to ending Finished Goods Inventory,the less fixed manufacturing overhead is '"hidden" in ending Finished Goods Inventory at the end of the accounting period.

Accepted Answer

A) True 
 B)False

A variable costing income statement is used for ________.

Miranda was reviewing the water bill for her dog day care and spa and determined that her highest bill,$5,000,occurred in July when she washed 500 dogs and her lowest bill,$3,600,occurred in February when she washed 325 dogs.What was the variable cost per dog associated with Miranda's water bill?

Following GAAP,the income statement issued to investors and creditors must ________.

If the volume of activity doubles in the relevant range,total variable costs will also double.

Keys Spas,Inc.reports the following information for August: Sales Revenue \ 740,000 Variable Costs 230,000 Fixed Costs 100,000 Calculate the contribution margin for August.

In the graph below,the area between the lines AC and OB after point 'E' represents ________.

The traditional income statement format calculates operating income as gross profit minus selling and administrative expenses.

Which of the following will lower the breakeven point?

Which of the following will appear as a line item in the income statement prepared under variable costing?

When the variable cost per unit increases,the total number of units required to breakeven also increases.

Miranda was reviewing the water bill for her dog day care and spa and determined that her highest bill,$4,600,occurred in July when she washed 500 dogs and her lowest bill,$3,200,occurred in February when she washed 175 dogs.What was the fixed cost associated with Miranda's water bill?

Variable cost per unit,within the relevant range,will ________.

When more units are sold than produced,operating income is less under absorption costing.

When the variable cost per unit decreases,the contribution margin on each unit sold also decreases.

When the total fixed costs decreases,the breakeven point ________.

The sales mix provides the weights that make up total product sales.

Managers can use CVP relationships to conduct sensitivity analysis.

Under absorption costing,the more units added to ending Finished Goods Inventory,the less fixed manufacturing overhead is '"hidden" in ending Finished Goods Inventory at the end of the accounting period.

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 21: Cost-Volume-Profit Analysis

A variable costing income statement is used for ________.

Miranda was reviewing the water bill for her dog day care and spa and determined that her highest bill,$5,000,occurred in July when she washed 500 dogs and her lowest bill,$3,600,occurred in February when she washed 325 dogs.What was the variable cost per dog associated with Miranda's water bill?

Following GAAP,the income statement issued to investors and creditors must ________.

If the volume of activity doubles in the relevant range,total variable costs will also double.

Keys Spas,Inc.reports the following information for August: Sales Revenue \ 740,000 Variable Costs 230,000 Fixed Costs 100,000 Calculate the contribution margin for August.

In the graph below,the area between the lines AC and OB after point 'E' represents ________.

The traditional income statement format calculates operating income as gross profit minus selling and administrative expenses.

Which of the following will lower the breakeven point?

Which of the following will appear as a line item in the income statement prepared under variable costing?

When the variable cost per unit increases,the total number of units required to breakeven also increases.

Miranda was reviewing the water bill for her dog day care and spa and determined that her highest bill,$4,600,occurred in July when she washed 500 dogs and her lowest bill,$3,200,occurred in February when she washed 175 dogs.What was the fixed cost associated with Miranda's water bill?

Variable cost per unit,within the relevant range,will ________.

When more units are sold than produced,operating income is less under absorption costing.

When the variable cost per unit decreases,the contribution margin on each unit sold also decreases.

When the total fixed costs decreases,the breakeven point ________.

The sales mix provides the weights that make up total product sales.

Managers can use CVP relationships to conduct sensitivity analysis.

Under absorption costing,the more units added to ending Finished Goods Inventory,the less fixed manufacturing overhead is '"hidden" in ending Finished Goods Inventory at the end of the accounting period.

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters