Question 1

Most firms would like to earn operating income equal to the break-even point.

Accepted Answer

A) True 
 B)False  False

Question 2

A company provided the following data:

How much sales in dollars is necessary to generate a profit of $40,000? (Note: Round contribution margin ratio and sales in dollars to two decimal places.)

Accepted Answer

A)  $528,000.50 
B)  $513,513.51 
C)  $214,286.62 
D)  $100,000.00 
E)  $150,000.50 
A)  $528,000.50 
B)  $513,513.51 
C)  $214,286.62 
D)  $100,000.00 
E)  $150,000.50 B

Question 3

The break-even point is when

Accepted Answer

A)  the company is operating at a loss. 
B)  total revenue equals total cost. 
C)  the company is earning a small profit. 
D)  total sales equal variable costs. 
E)  total sales equals operating income. 
A)  the company is operating at a loss. 
B)  total revenue equals total cost. 
C)  the company is earning a small profit. 
D)  total sales equal variable costs. 
E)  total sales equals operating income. B

Question 4

Which of the following is not an assumption used to prepare a cost-volume-profit graph?

Accepted Answer

A)  There are identifiable linear revenue and linear cost functions that remain constant over the relevant range. 
B)  Selling prices and costs are known with certainty. 
C)  The sales mix is known with certainty for multiple-product break-even settings. 
D)  Units produced always result in finished goods inventories. 
E)  ​None of these are assumptions is used in preparing cost-volume-profit graphs. 
A)  There are identifiable linear revenue and linear cost functions that remain constant over the relevant range. 
B)  Selling prices and costs are known with certainty. 
C)  The sales mix is known with certainty for multiple-product break-even settings. 
D)  Units produced always result in finished goods inventories. 
E)  ​None of these are assumptions is used in preparing cost-volume-profit graphs.

Question 5

The margin of safety measures the units sold or the revenue earned above the break-even volume.

Accepted Answer

A) True 
 B)False

Question 6

The ________________________ is the point where total revenue equals total cost.

Accepted Answer

The answer of The ________________________ is the point where total...

Question 7

Planet Company sells a product for $16 per unit, variable cost is $12 per unit, and the total fixed cost is $6,000.What is the break-even point in units?

Accepted Answer

A)  640 units 
B)  1,500 units 
C)  1,210 units 
D)  1,360 units 
E)  1,700 units 
A)  640 units 
B)  1,500 units 
C)  1,210 units 
D)  1,360 units 
E)  1,700 units

Question 8

The break-even point is where total sales revenue equals total cost.

Accepted Answer

A) True 
 B)False

Question 9

On a cost-volume-profit graph, the break-even point is where

Accepted Answer

A)  the revenue line intersects the profit line. 
B)  the revenue line intersects the total cost line. 
C)  the fixed cost line intersects the variable cost line. 
D)  the contribution margin line intersects the fixed cost line. 
E)  All of these are correct. 
A)  the revenue line intersects the profit line. 
B)  the revenue line intersects the total cost line. 
C)  the fixed cost line intersects the variable cost line. 
D)  the contribution margin line intersects the fixed cost line. 
E)  All of these are correct.

Question 10

Standlar Company makes wireless speakers.The standard model price is $360 and variable expenses are $210.The deluxe model price is $500 and variable expenses are $300.The superior model price is $1,600 and variable expense per unit is $600.Total fixed expenses are $300,000.Generally, Standlar sells 8 standard models and 4 deluxe models for every superior model sold.
- What is the number of deluxe models sold at break-even?

Accepted Answer

A)  250 
B)  500 
C)  400 
D)  100 
E)  1,000 
A)  250 
B)  500 
C)  400 
D)  100 
E)  1,000

Question 11

Elite Company had originally expected to earn operating income of $140,000 in the coming year.Elite's degree of operating leverage is 2.6.Recently, Elite revised its plans and now expects to increase sales by 25% next year.What is the percent change in operating income expected by Elite in the coming year?

Accepted Answer

A)  8% 
B)  65% 
C)  20% 
D)  54% 
E)  30% 
A)  8% 
B)  65% 
C)  20% 
D)  54% 
E)  30%

Question 12

Match each item with the correct statement below.
-variable cost per unit

Accepted Answer

A) horizontal-axis of CVP graph 
B) vertical-axis of CVP graph 
C) slope of revenue line 
D) slope of cost line 
E) point where the total revenue line and the total cost line intersect 
A) horizontal-axis of CVP graph 
B) vertical-axis of CVP graph 
C) slope of revenue line 
D) slope of cost line 
E) point where the total revenue line and the total cost line intersect

Question 13

In a multi-product firm, if the sales mix changes, the break-even points for each product will not change.

Accepted Answer

A) True 
 B)False

Question 14

If the break-even volume for a company is 600 units and the company is currently selling 1,000 units than the 400 units would represent the company's ____________________.

Accepted Answer

The answer of If the break-even volume for a company...

Question 15

Which statement is true about cost-volume profit (CVP) analysis?

Accepted Answer

A)  CVP analysis is a powerful tool for planning and decision making. 
B)  CVP analysis allows managers to do sensitivity analysis by examining the impact of various prices or cost levels on profit. 
C)  CVP analysis shows how revenues, expenses, and profits behave as volume changes. 
D)  CVP analysis can be used in both single-product and multi-product firms. 
E)  All of these statements are true. 
A)  CVP analysis is a powerful tool for planning and decision making. 
B)  CVP analysis allows managers to do sensitivity analysis by examining the impact of various prices or cost levels on profit. 
C)  CVP analysis shows how revenues, expenses, and profits behave as volume changes. 
D)  CVP analysis can be used in both single-product and multi-product firms. 
E)  All of these statements are true.

Question 16

Fixed costs that are not traceable to the segments and would remain even if one of the segments was eliminated are called:

Accepted Answer

A)  uncertain expenses. 
B)  total fixed expenses. 
C)  direct fixed expenses. 
D)  common fixed expenses. 
E)  marginal expenses. 
A)  uncertain expenses. 
B)  total fixed expenses. 
C)  direct fixed expenses. 
D)  common fixed expenses. 
E)  marginal expenses.

Question 17

Hill & Scott Company sells a product for $20.Variable costs are $15 per unit, and total fixed costs are $7,000.How many units must be sold by Hill & Scott to earn a profit of $1,000?

Accepted Answer

A)  1,600 units 
B)  1,400 units 
C)  1,040 units 
D)  62 units 
E)  247 units 
A)  1,600 units 
B)  1,400 units 
C)  1,040 units 
D)  62 units 
E)  247 units

Question 18

Thompson Company makes and sells power tools.The budgeted sales are $450,000, the budgeted variable costs are $150,000, and the budgeted total fixed cost is $230,000.What is the budgeted operating income?

Accepted Answer

A)  $73,000 
B)  $227,500 
C)  $70,000 
D)  $84,500 
E)  $567,000 
A)  $73,000 
B)  $227,500 
C)  $70,000 
D)  $84,500 
E)  $567,000

Question 19

A "what-if" technique used to see what impact a change in an underlying variable has on the answer is a:

Accepted Answer

A)  break-even point. 
B)  cost-volume-profit analysis. 
C)  indifference point. 
D)  degree of operating leverage. 
E)  sensitivity analysis. 
A)  break-even point. 
B)  cost-volume-profit analysis. 
C)  indifference point. 
D)  degree of operating leverage. 
E)  sensitivity analysis.

Question 20

Standlar Company makes wireless speakers.The standard model price is $360 and variable expenses are $210.The deluxe model price is $500 and variable expenses are $300.The superior model price is $1,600 and variable expense per unit is $600.Total fixed expenses are $300,000.Generally, Standlar sells 8 standard models and 4 deluxe models for every superior model sold.
- What is the number of superior models sold at break-even?

Accepted Answer

A)  200 
B)  800 
C)  400 
D)  1,600 
E)  100 
A)  200 
B)  800 
C)  400 
D)  1,600 
E)  100

Most firms would like to earn operating income equal to the break-even point.

A company provided the following data: How much sales in dollars is necessary to generate a profit of $40,000? (Note: Round contribution margin ratio and sales in dollars to two decimal places.)

The break-even point is when

Which of the following is not an assumption used to prepare a cost-volume-profit graph?

The margin of safety measures the units sold or the revenue earned above the break-even volume.

The ________________________ is the point where total revenue equals total cost.

Planet Company sells a product for $16 per unit, variable cost is $12 per unit, and the total fixed cost is $6,000.What is the break-even point in units?

The break-even point is where total sales revenue equals total cost.

On a cost-volume-profit graph, the break-even point is where

Match each item with the correct statement below. -variable cost per unit

In a multi-product firm, if the sales mix changes, the break-even points for each product will not change.

If the break-even volume for a company is 600 units and the company is currently selling 1,000 units than the 400 units would represent the company's ____________________.

Which statement is true about cost-volume profit (CVP) analysis?

Fixed costs that are not traceable to the segments and would remain even if one of the segments was eliminated are called:

Hill & Scott Company sells a product for $20.Variable costs are $15 per unit, and total fixed costs are $7,000.How many units must be sold by Hill & Scott to earn a profit of $1,000?

Thompson Company makes and sells power tools.The budgeted sales are $450,000, the budgeted variable costs are $150,000, and the budgeted total fixed cost is $230,000.What is the budgeted operating income?

A "what-if" technique used to see what impact a change in an underlying variable has on the answer is a:

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior, Cost Forecasting, and Segmented Income Statements

Job-Order Costing and Normal Cost Overhead Application

Activity-Based Costing and Management

Process Costing

Tactical Decision-Making and Relevant Costing

Profit Planning and Flexible Budgets

Standard Costing and Variance Analysis

Performance Evaluation and Decentralization

Capital Investment Decisions

Emerging Topics in Managerial Accounting: Sustainability, Quality Cost, Lean Accounting, International Issues, Enterprise Risk Management, the Managerial Accountant in Forensicfraud Accounting

Statement of Cash Flows

Financial Statement Analysis

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Exam 7: Cost-Volume-Profit Analysis

Most firms would like to earn operating income equal to the break-even point.

A company provided the following data: How much sales in dollars is necessary to generate a profit of $40,000? (Note: Round contribution margin ratio and sales in dollars to two decimal places.)

The break-even point is when

Which of the following is not an assumption used to prepare a cost-volume-profit graph?

The margin of safety measures the units sold or the revenue earned above the break-even volume.

The ________________________ is the point where total revenue equals total cost.

Planet Company sells a product for $16 per unit, variable cost is $12 per unit, and the total fixed cost is $6,000.What is the break-even point in units?

The break-even point is where total sales revenue equals total cost.

On a cost-volume-profit graph, the break-even point is where

Match each item with the correct statement below. -variable cost per unit

In a multi-product firm, if the sales mix changes, the break-even points for each product will not change.

If the break-even volume for a company is 600 units and the company is currently selling 1,000 units than the 400 units would represent the company's ____________________.

Which statement is true about cost-volume profit (CVP) analysis?

Fixed costs that are not traceable to the segments and would remain even if one of the segments was eliminated are called:

Hill & Scott Company sells a product for $20.Variable costs are $15 per unit, and total fixed costs are $7,000.How many units must be sold by Hill & Scott to earn a profit of $1,000?

Thompson Company makes and sells power tools.The budgeted sales are $450,000, the budgeted variable costs are $150,000, and the budgeted total fixed cost is $230,000.What is the budgeted operating income?

A "what-if" technique used to see what impact a change in an underlying variable has on the answer is a:

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior, Cost Forecasting, and Segmented Income Statements

Job-Order Costing and Normal Cost Overhead Application

Activity-Based Costing and Management

Process Costing

Tactical Decision-Making and Relevant Costing

Profit Planning and Flexible Budgets

Standard Costing and Variance Analysis

Performance Evaluation and Decentralization

Capital Investment Decisions

Emerging Topics in Managerial Accounting: Sustainability, Quality Cost, Lean Accounting, International Issues, Enterprise Risk Management, the Managerial Accountant in Forensicfraud Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters