Question 1

Fixed costs divided by contribution margin per unit equals breakeven point in unit sales.

Accepted Answer

A) True 
 B)False

Question 2

Operating leverage predicts the effects fixed costs have on changes in operating income when ________.

Accepted Answer

A) production is discontinued 
B) there are no sales returns 
C) variable costs change 
D) sales volume changes 
A) production is discontinued 
B) there are no sales returns 
C) variable costs change 
D) sales volume changes

Question 3

Within the relevant range,the total fixed costs and the variable cost per unit remain the same.

Accepted Answer

A) True 
 B)False

Question 4

The relevant range of Zhang Company is between 110,000 units and 190,000 units per month.If the company produces beyond 190,000 units per month ________.

Accepted Answer

A) the fixed costs will remain the same,but the variable cost per unit may change 
B) the fixed costs may change,but the variable cost per unit will remain the same 
C) the fixed costs and the variable cost per unit will not change 
D) both the fixed costs and the variable cost per unit may change 
A) the fixed costs will remain the same,but the variable cost per unit may change 
B) the fixed costs may change,but the variable cost per unit will remain the same 
C) the fixed costs and the variable cost per unit will not change 
D) both the fixed costs and the variable cost per unit may change

Question 5

The fixed costs per unit will ________.

Accepted Answer

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

Question 6

When there is no beginning Finished Goods Inventory and all the goods that are produced are sold,the operating income ________.

Accepted Answer

A) will be higher under absorption costing than variable costing 
B) will be lower under absorption costing than variable costing 
C) will be higher than the gross profit under variable costing 
D) will be the same for both absorption costing and variable costing 
A) will be higher under absorption costing than variable costing 
B) will be lower under absorption costing than variable costing 
C) will be higher than the gross profit under variable costing 
D) will be the same for both absorption costing and variable costing

Question 7

Which of the following is the right 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 8

The high-low method is used to ________.

Accepted Answer

A) determine the highest price that can be charged for a product 
B) separate mixed costs into their variable and fixed components 
C) identify the relevant and irrelevant costs of a business 
D) determine the sales level at highest capacity 
A) determine the highest price that can be charged for a product 
B) separate mixed costs into their variable and fixed components 
C) identify the relevant and irrelevant costs of a business 
D) determine the sales level at highest capacity

Question 9

Haywood Company has fixed costs of $30,000 per month.Highest production volume during the year was in January when 110,000 units were produced,90,000 units were sold,and total costs of $650,000 were incurred.In June,the company produced only 60,000 units.What was the total cost incurred in June?

Accepted Answer

A) $537,600 
B) $368,400 
C) $650,000 
D) $433,333 
A) $537,600 
B) $368,400 
C) $650,000 
D) $433,333

Question 10

Absorption costing is required by the Generally Accepted Accounting Principles (GAAP)for financial statements issued to investors,creditors,and other external users.

Accepted Answer

A) True 
 B)False

Question 11

The following data has been provided by Zimtex,Inc.for the year ended December 31,2017.
   
There are no beginning inventories.Prepare an income statement using the contribution margin format.

Accepted Answer

@#IMG-DLM& @#IMG-DLM&
Explanation:
*Variable costs

Question 12

Which of the following the correct formula for calculating contribution margin ratio?

Accepted Answer

A) Contribution margin ratio = Contribution margin + Net sales revenue 
B) Contribution margin ratio = Contribution margin / Net sales revenue 
C) Contribution margin ratio = Contribution margin × Net sales revenue 
D) Contribution margin ratio = Contribution margin - Net sales revenue 
A) Contribution margin ratio = Contribution margin + Net sales revenue 
B) Contribution margin ratio = Contribution margin / Net sales revenue 
C) Contribution margin ratio = Contribution margin × Net sales revenue 
D) Contribution margin ratio = Contribution margin - Net sales revenue

Question 13

Satinwood Company sells two product finishes-Mahogany and Aspen.Satinwood predicts that it will sell 7,200 units of Mahogany and 5,600 units of Aspen in the next period.The unit contribution margins are $3.15 and $6.30,respectively.What is the weighted-average unit contribution margin?

Accepted Answer

A) $10.35 per product 
B) $2.27 per product 
C) $8.05 per product 
D) $4.53 per product 
A) $10.35 per product 
B) $2.27 per product 
C) $8.05 per product 
D) $4.53 per product

Question 14

Dayton Company has fixed costs of $350,000.Total costs,both fixed and variable,are $450,000 when 40,000 units are produced.Calculate the total costs if the volume increases to 65,000 units.

Accepted Answer

A) $800,000 
B) $1,062,500 
C) $512,500 
D) $450,000 
A) $800,000 
B) $1,062,500 
C) $512,500 
D) $450,000

Question 15

The amount by which sales can decrease before the company incurs an operating loss is called breakeven point.

Accepted Answer

A) True 
 B)False

Question 16

Keys Spas,Inc.reports the following information for August:
 
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 17

When the total variable costs are deducted from total mixed costs,we obtain ________.

Accepted Answer

A) mixed cost per unit 
B) variable cost per unit 
C) total high-low costs 
D) total fixed costs 
A) mixed cost per unit 
B) variable cost per unit 
C) total high-low costs 
D) total fixed costs

Question 18

When the selling 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 19

Frittata,Inc.started the year with 200 units in the Finished Goods Inventory account.It produced 600 units during the year and sold 800 units.If Frittata uses variable costing,________.

Accepted Answer

A) its operating income for the period will be higher than under absorption costing 
B) its operating income for the period will be lower than under absorption costing 
C) its value of ending Finished Goods Inventory reported in the balance sheet will be higher than under absorption costing 
D) its operating income will be the same as under absorption costing 
A) its operating income for the period will be higher than under absorption costing 
B) its operating income for the period will be lower than under absorption costing 
C) its value of ending Finished Goods Inventory reported in the balance sheet will be higher than under absorption costing 
D) its operating income will be the same as under absorption costing

Question 20

The contribution margin format of the income statement categorizes costs by their behavior.

Accepted Answer

A) True 
 B)False

Exam 21: Cost-Volume-Profit Analysis

Fixed costs divided by contribution margin per unit equals breakeven point in unit sales.

Operating leverage predicts the effects fixed costs have on changes in operating income when ________.

Within the relevant range,the total fixed costs and the variable cost per unit remain the same.

The relevant range of Zhang Company is between 110,000 units and 190,000 units per month.If the company produces beyond 190,000 units per month ________.

The fixed costs per unit will ________.

When there is no beginning Finished Goods Inventory and all the goods that are produced are sold,the operating income ________.

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

The high-low method is used to ________.

Haywood Company has fixed costs of $30,000 per month.Highest production volume during the year was in January when 110,000 units were produced,90,000 units were sold,and total costs of $650,000 were incurred.In June,the company produced only 60,000 units.What was the total cost incurred in June?

Absorption costing is required by the Generally Accepted Accounting Principles (GAAP)for financial statements issued to investors,creditors,and other external users.

The following data has been provided by Zimtex,Inc.for the year ended December 31,2017. There are no beginning inventories.Prepare an income statement using the contribution margin format.

Which of the following the correct formula for calculating contribution margin ratio?

Satinwood Company sells two product finishes-Mahogany and Aspen.Satinwood predicts that it will sell 7,200 units of Mahogany and 5,600 units of Aspen in the next period.The unit contribution margins are $3.15 and $6.30,respectively.What is the weighted-average unit contribution margin?

Dayton Company has fixed costs of $350,000.Total costs,both fixed and variable,are $450,000 when 40,000 units are produced.Calculate the total costs if the volume increases to 65,000 units.

The amount by which sales can decrease before the company incurs an operating loss is called breakeven point.

Keys Spas,Inc.reports the following information for August: Calculate the contribution margin for August.

When the total variable costs are deducted from total mixed costs,we obtain ________.

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

Frittata,Inc.started the year with 200 units in the Finished Goods Inventory account.It produced 600 units during the year and sold 800 units.If Frittata uses variable costing,________.

The contribution margin format of the income statement categorizes costs by their behavior.

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

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