Question 1

The relevant activity base for a cost depends upon which base is most closely associated with the cost and the decision-making needs of management.

Accepted Answer

A) True 
 B)False

Question 2

A firm operated at 80% of capacity for the past year,during which fixed costs were $330,000,variable costs were 70% of sales,and sales were $1,000,000.Operating profit (loss)was

Accepted Answer

A)  $140,000 
B)  $(30,000) 
C)  $370,000 
D)  $670,000 
A)  $140,000 
B)  $(30,000) 
C)  $370,000 
D)  $670,000

Question 3

What was Carter Co.'s unit contribution margin of E?

Accepted Answer

A)  $24 
B)  $60 
C)  $92 
D)  $20 
A)  $24 
B)  $60 
C)  $92 
D)  $20

Question 4

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

Accepted Answer

A)  electricity per KWH to operate factory equipment 
B)  direct materials cost 
C)  insurance premiums on factory building 
D)  wages of assembly worker 
A)  electricity per KWH to operate factory equipment 
B)  direct materials cost 
C)  insurance premiums on factory building 
D)  wages of assembly worker

Question 5

Cost-volume-profit analysis cannot be used if which of the following occurs?

Accepted Answer

A)  Costs cannot be properly classified into fixed and variable costs. 
B)  The total fixed costs change. 
C)  The per-unit variable costs change. 
D)  Per-unit sales prices change. 
A)  Costs cannot be properly classified into fixed and variable costs. 
B)  The total fixed costs change. 
C)  The per-unit variable costs change. 
D)  Per-unit sales prices change.

Question 6

If fixed costs are $450,000,the unit selling price is $75,and the unit variable costs are $50,what are the old and new break-even sales (units)if the unit selling price increases by $10?

Accepted Answer

A)  6,000 units and 5,294 units 
B)  18,000 units and 6,000 units 
C)  18,000 units and 12,857 units 
D)  9,000 units and 15,000 units 
A)  6,000 units and 5,294 units 
B)  18,000 units and 6,000 units 
C)  18,000 units and 12,857 units 
D)  9,000 units and 15,000 units

Question 7

Costs that vary in total in direct proportion to changes in an activity level are called

Accepted Answer

A)  fixed costs 
B)  sunk costs 
C)  variable costs 
D)  differential costs 
A)  fixed costs 
B)  sunk costs 
C)  variable costs 
D)  differential costs

Question 8

The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed the contribution margin ratio.

Accepted Answer

A) True 
 B)False

Question 9

For the current year ending April 30,Hal Company expects fixed costs of $60,000,a unit variable cost of $70,and anticipated break-even of 1,715 sales units.
Round your answer to the nearest whole number.

Accepted Answer

The answer of For the current year ending April 30,Hal...

Question 10

Which of the graphs in Figure 21-1 illustrates the behavior of a total variable cost?

Accepted Answer

A)  Graph 2 
B)  Graph 3 
C)  Graph 4 
D)  Graph 1 
A)  Graph 2 
B)  Graph 3 
C)  Graph 4 
D)  Graph 1

Question 11

If sales are $400,000,variable costs are 80% of sales,and operating income is $40,000,what is the operating leverage?

Accepted Answer

A)  0.0 
B)  7.5 
C)  2.0 
D)  1.3 
A)  0.0 
B)  7.5 
C)  2.0 
D)  1.3

Question 12

Assuming no other changes,operating income will be the same under both the variable and absorption costing methods when the number of units manufactured equals the number of units sold.

Accepted Answer

A) True 
 B)False

Question 13

Douglas Company has a contribution margin ratio of 30%.If Douglas has $336,420 in fixed costs,what amount of sales will need to be generated in order for the company to break even?

Accepted Answer

$336,420 /

Question 14

A company has a margin of safety of 25%,a contribution margin ratio of 30%,and sales of $1,000,000.

Accepted Answer

The answer of A company has a margin of safety...

Question 15

The data required for determining the break-even point for a business are the total estimated fixed costs for a period,stated as a percentage of net sales.

Accepted Answer

A) True 
 B)False

Question 16

Direct materials and direct labor costs are examples of variable costs of production.

Accepted Answer

A) True 
 B)False

Question 17

Total variable costs change as the level of activity changes.

Accepted Answer

A) True 
 B)False

Question 18

Strait Co.manufactures office furniture.During the most productive month of the year,3,000 desks were manufactured at a total cost of $59,000.In the month of lowest production the company made 1,125 desks at a cost of $38,000.Using the high-low method of cost estimation,total fixed costs are

Accepted Answer

A)  $21,000 
B)  $25,400 
C)  $42,000 
D)  $13,000 
A)  $21,000 
B)  $25,400 
C)  $42,000 
D)  $13,000

Question 19

The cost graphs in the illustration below shows various types of cost behaviors.
For each of the following costs,identify the cost graph that best describes its cost behavior as the number of units produced and sold increases:

Accepted Answer

The answer of The cost graphs in the illustration below...

Question 20

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents

Accepted Answer

A)  the maximum possible operating loss 
B)  the maximum possible operating income 
C)  the total fixed costs 
D)  the break-even point 
A)  the maximum possible operating loss 
B)  the maximum possible operating income 
C)  the total fixed costs 
D)  the break-even point

Exam 19: Cost-Volume-Profit Analysis

The relevant activity base for a cost depends upon which base is most closely associated with the cost and the decision-making needs of management.

A firm operated at 80% of capacity for the past year,during which fixed costs were $330,000,variable costs were 70% of sales,and sales were $1,000,000.Operating profit (loss)was

What was Carter Co.'s unit contribution margin of E?

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

Cost-volume-profit analysis cannot be used if which of the following occurs?

If fixed costs are $450,000,the unit selling price is $75,and the unit variable costs are $50,what are the old and new break-even sales (units)if the unit selling price increases by $10?

Costs that vary in total in direct proportion to changes in an activity level are called

The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed the contribution margin ratio.

For the current year ending April 30,Hal Company expects fixed costs of $60,000,a unit variable cost of $70,and anticipated break-even of 1,715 sales units. Round your answer to the nearest whole number.

Which of the graphs in Figure 21-1 illustrates the behavior of a total variable cost?

If sales are $400,000,variable costs are 80% of sales,and operating income is $40,000,what is the operating leverage?

Assuming no other changes,operating income will be the same under both the variable and absorption costing methods when the number of units manufactured equals the number of units sold.

Douglas Company has a contribution margin ratio of 30%.If Douglas has $336,420 in fixed costs,what amount of sales will need to be generated in order for the company to break even?

A company has a margin of safety of 25%,a contribution margin ratio of 30%,and sales of $1,000,000.

The data required for determining the break-even point for a business are the total estimated fixed costs for a period,stated as a percentage of net sales.

Direct materials and direct labor costs are examples of variable costs of production.

Total variable costs change as the level of activity changes.

Strait Co.manufactures office furniture.During the most productive month of the year,3,000 desks were manufactured at a total cost of $59,000.In the month of lowest production the company made 1,125 desks at a cost of $38,000.Using the high-low method of cost estimation,total fixed costs are

The cost graphs in the illustration below shows various types of cost behaviors. For each of the following costs,identify the cost graph that best describes its cost behavior as the number of units produced and sold increases:

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current,installment Notes,and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

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