Question 1

Which of the following statements is TRUE of the behavior of total fixed costs,within the relevant range?

Accepted Answer

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

Question 2

Sequoyah,Inc.reports the following information: $$\begin{array} { | l | l | l | } 
\hline \text { Units produced } & \$ 20 & \text { units } \
\hline \text { Units sold } & \$ 20 & \text { units } \
\hline \text { Sales price } & \$ 110 & \text { per unit } \
\hline \text { Direct materials } & \$ 40 & \text { per unit } \
\hline \text { Direct labor } & \$ 25 & \text { per unit } \
\hline \text { Variable manufacturing overhead } & \$ 30 & \text { per unit } \
\hline \text { Fixed manufacturing overhead } & \$ 14,000 & \text { per year } \
\hline \text { Variable selling and administrative costs } & \$ 15 & \text { per unit } \
\hline \text { Fixed selling and administrative costs } & \$ 25,000 & \text { per year } \
\hline
\end{array}$$ What is the unit product cost using variable costing?

Accepted Answer

A)  $110 
B)  $92 
C)  $95 
D)  $15 
A)  $110 
B)  $92 
C)  $95 
D)  $15

Question 3

Complete the statement,using the following terms: increase,decrease,or have no effect on.
Increases in variable costs per unit ________ contribution margin per unit and ________ the breakeven point.

Accepted Answer

Increases in variabl

Question 4

Which of the following is the correct formula for calculating total mixed cost?

Accepted Answer

A)  Total mixed cost = (Variable cost per unit / Number of units) + Total fixed cost 
B)  Total mixed cost = (Variable cost per unit × Number of units) - Total fixed cost 
C)  Total mixed cost = (Variable cost per unit × Number of units) + Total fixed cost 
D)  Total mixed cost = (Variable cost per unit / Number of units) - Total fixed cost 
A)  Total mixed cost = (Variable cost per unit / Number of units) + Total fixed cost 
B)  Total mixed cost = (Variable cost per unit × Number of units) - Total fixed cost 
C)  Total mixed cost = (Variable cost per unit × Number of units) + Total fixed cost 
D)  Total mixed cost = (Variable cost per unit / Number of units) - Total fixed cost

Question 5

A small business produces a single product and reports the following data: $$\begin{array} { | l | l | l | } 
\hline \text { Sales price } & \$ 8.50 & \text { per unit } \
\hline \text { Variable cost } & \$ 5.25 & \text { per unit } \
\hline \text { Fixed cost } & \$ 22,000 & \text { per month } \
\hline \text { Volume } & 10,000 & \text { units per month } \
\hline
\end{array}$$ The company believes that the volume will go up to 12,000 units if the company reduces its sales price to $7.50.How would this change affect operating income?

Accepted Answer

A)  It will increase by $5500. 
B)  It will increase by $10,500. 
C)  It will decrease by $5500. 
D)  It will decrease by $10,500. 
A)  It will increase by $5500. 
B)  It will increase by $10,500. 
C)  It will decrease by $5500. 
D)  It will decrease by $10,500.

Question 6

Complete the following statements:
A traditional income statement classifies costs by ________; that is,costs are classified as either ________ costs or ________ costs.
A contribution margin income statement classifies costs by ________; that is,costs are classified as either ________ costs or ________ costs.

Accepted Answer

A traditional income statement classifie

Question 7

The Doughboys Pizza Company sells pizzas in two different sizes-medium and large.The two products sell in equal numbers.The contribution margin of a medium pizza is $16,and the contribution margin of a large pizza is $18.The weighted average contribution margin is $17.

Accepted Answer

A) True 
 B)False

Question 8

If fixed costs increase,and all other factors remain the same,the margin of safety will become larger.

Accepted Answer

A) True 
 B)False

Question 9

Complete the statement,using the following terms: increase,decrease,or have no effect on.
Increases in sales price per unit ________ contribution margin per unit and ________ the breakeven point.

Accepted Answer

Increases in sales price per u

Question 10

Sunshine Blender Company sold 3000 units in October at a sales price of $45 per unit.The variable cost is $25 per unit.Calculate the total contribution margin.

Accepted Answer

A)  $135,000 
B)  $60,000 
C)  $75,000 
D)  $37,500 
A)  $135,000 
B)  $60,000 
C)  $75,000 
D)  $37,500

Question 11

Managers can use CVP relationships to conduct sensitivity analysis.

Accepted Answer

A) True 
 B)False

Question 12

During the current year,Dubois,Inc.incurred $9,000 in fixed costs and $13,000 in variable costs.If the number of units produced is halved next year,the company will incur $4,500 as fixed costs and $6,500 as variable costs.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Avia Company sells a product for $120 per unit.Variable costs are $80 per unit,and fixed costs are $1200 per month.The company expects to sell 670 units in September.The unit contribution margin is ________.

Accepted Answer

A)  $40 per unit 
B)  $80 per unit 
C)  $200 per unit 
D)  $120 per unit 
A)  $40 per unit 
B)  $80 per unit 
C)  $200 per unit 
D)  $120 per unit

Question 15

An increase in sales price per unit increases the number of units required to break even.

Accepted Answer

A) True 
 B)False

Question 16

How is the contribution margin calculated?

Accepted Answer

Contribution Margin

Question 17

When the total fixed costs decrease,the contribution margin per unit ________.

Accepted Answer

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

Question 18

Fixed costs per unit decrease as production levels decrease.

Accepted Answer

A) True 
 B)False

Question 19

When the sales price per unit decreases,the contribution margin per unit ________.

Accepted Answer

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

Question 20

Which of the following is NOT an assumption of cost-volume-profit (CVP)analysis?

Accepted Answer

A)  The only factor that affects total costs is a change in volume, which increases or decreases total variable and mixed costs. 
B)  The price per unit does not change as volume changes. 
C)  Total fixed costs do not change. 
D)  The price per unit changes as volume changes. 
A)  The only factor that affects total costs is a change in volume, which increases or decreases total variable and mixed costs. 
B)  The price per unit does not change as volume changes. 
C)  Total fixed costs do not change. 
D)  The price per unit changes as volume changes.

Exam 21: Cost-Volume-Profit Analysis

Which of the following statements is TRUE of the behavior of total fixed costs,within the relevant range?

Complete the statement,using the following terms: increase,decrease,or have no effect on. Increases in variable costs per unit ________ contribution margin per unit and ________ the breakeven point.

Which of the following is the correct formula for calculating total mixed cost?

The Doughboys Pizza Company sells pizzas in two different sizes-medium and large.The two products sell in equal numbers.The contribution margin of a medium pizza is $16,and the contribution margin of a large pizza is $18.The weighted average contribution margin is $17.

If fixed costs increase,and all other factors remain the same,the margin of safety will become larger.

Complete the statement,using the following terms: increase,decrease,or have no effect on. Increases in sales price per unit ________ contribution margin per unit and ________ the breakeven point.

Sunshine Blender Company sold 3000 units in October at a sales price of $45 per unit.The variable cost is $25 per unit.Calculate the total contribution margin.

Managers can use CVP relationships to conduct sensitivity analysis.

During the current year,Dubois,Inc.incurred $9,000 in fixed costs and $13,000 in variable costs.If the number of units produced is halved next year,the company will incur $4,500 as fixed costs and $6,500 as variable costs.

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

Avia Company sells a product for $120 per unit.Variable costs are $80 per unit,and fixed costs are $1200 per month.The company expects to sell 670 units in September.The unit contribution margin is ________.

An increase in sales price per unit increases the number of units required to break even.

How is the contribution margin calculated?

When the total fixed costs decrease,the contribution margin per unit ________.

Fixed costs per unit decrease as production levels decrease.

When the sales price per unit decreases,the contribution margin per unit ________.

Which of the following is NOT an assumption of cost-volume-profit (CVP)analysis?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets,natural Resources,and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

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

Complete the statement,using the following terms: increase,decrease,or have no effect on. Increases in variable costs per unit contribution margin per unit and the breakeven point.

Complete the statement,using the following terms: increase,decrease,or have no effect on. Increases in sales price per unit contribution margin per unit and the breakeven point.