Question 1

It is possible to calculate the break-even point for individual products in a multiple product firm by separating the common and direct fixed expenses.

Accepted Answer

A) True 
 B)False

Question 2

Contribution margin ratio can be calculated in all of the following ways except

Accepted Answer

A)  fixed costs / Contribution margin per unit. 
B)  1 − Variable cost ratio. 
C)  contribution margin per unit / price. 
D)  total contribution margin / Total sales. 
E)  All of these are correct. 
A)  fixed costs / Contribution margin per unit. 
B)  1 − Variable cost ratio. 
C)  contribution margin per unit / price. 
D)  total contribution margin / Total sales. 
E)  All of these are correct.

Question 3

Match each item with the correct statement below.
-Fixed expenses that cannot be directly traced to individual segments and that are unaffected by the elimination of any one segment.

Accepted Answer

A) break-even point 
B) Common fixed expenses 
C) Contribution margin 
D) Direct fixed expenses 
E) Margin of safety
F)Operating leverage
G)Degree of operating leverage
H)Sales mix 
A) break-even point 
B) Common fixed expenses 
C) Contribution margin 
D) Direct fixed expenses 
E) Margin of safety
F)Operating leverage
G)Degree of operating leverage
H)Sales mix

Question 4

If the contribution margin ratio increases, the break-even point in sales dollars will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  double. 
A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  double.

Question 5

Paney Company makes calendars.Information on cost per unit is as follows: 
 
-  Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000.The price per calendar is $10.What is the variable expense ratio?

Accepted Answer

A)  40% 
B)  36% 
C)  50% 
D)  60% 
E)  46% 
A)  40% 
B)  36% 
C)  50% 
D)  60% 
E)  46%

Question 6

Operating leverage is the use of fixed cost to extract higher percentage changes in profits as sales activity changes.

Accepted Answer

A) True 
 B)False

Question 7

If the selling price per unit increases, the break-even point in units will

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  remain the same; however, contribution per unit will decrease. 
A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  remain the same; however, contribution per unit will decrease.

Question 8

Match each item with the correct statement below.
-measured in dollars

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 9

Given the following numbers from Webster Company, match the correct value with its appropriate term.Webster Company sells a product for $20.Unit cost information is as follows:
Webster normally produces 50,000 units and the fixed overhead rate is based on this amount.Fixed selling and administrative expense is $87,000.  
-break-even point (in units)

Accepted Answer

A) $6 
B) 30% 
C) $14 
D) 70% 
E) $290,000
F)14,500 
A) $6 
B) 30% 
C) $14 
D) 70% 
E) $290,000
F)14,500

Question 10

To find the number of units to sell to earn a targeted income, it is acceptable to simply adjust the break-even units equation by adding target income to the variable cost.

Accepted Answer

A) True 
 B)False

Question 11

Paney Company makes calendars.Information on cost per unit is as follows: 
 
- Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000.The price per calendar is $10.What is the break-even point in units?

Accepted Answer

A)  2,167 
B)  5,833 
C)  8,000 
D)  12,000 
E)  2,800 
A)  2,167 
B)  5,833 
C)  8,000 
D)  12,000 
E)  2,800

Question 12

Forward Company makes and sells power tools.The budgeted sales are $480,000, budgeted variable costs are $175,000, and budgeted fixed costs are $260,000.What is the budgeted contribution margin ratio? (Note: Round answer to two decimal places.)

Accepted Answer

A)  35.64% 
B)  63.54% 
C)  54.45% 
D)  89.50% 
E)  50.20% 
A)  35.64% 
B)  63.54% 
C)  54.45% 
D)  89.50% 
E)  50.20%

Question 13

Product 1 has a contribution margin of $6.00 per unit, and Product 2 has a contribution margin of $7.50 per unit.Total fixed costs are $300,000.Sales mix and total volume varies from one period to another.Which of the following is true?

Accepted Answer

A)  At a sales volume in excess of 25,000 units of 1 and 25,000 units of 2, operations will be profitable. 
B)  The ratio of net profit to total sales for 2 will be larger than the ratio of net profit to total sales for 1. 
C)  Variable costs are $1.50 more for 2 than for 1. 
D)  The ratio of contribution margin to total sales always will be larger for 1 than for 2. 
A)  At a sales volume in excess of 25,000 units of 1 and 25,000 units of 2, operations will be profitable. 
B)  The ratio of net profit to total sales for 2 will be larger than the ratio of net profit to total sales for 1. 
C)  Variable costs are $1.50 more for 2 than for 1. 
D)  The ratio of contribution margin to total sales always will be larger for 1 than for 2.

Question 14

The ratio of fixed expenses to the contribution margin ratio is the

Accepted Answer

A)  indifference point. 
B)  break-even point in units. 
C)  fixed cost ratio. 
D)  break-even point in sales. 
E)  sensitivity analysis. 
A)  indifference point. 
B)  break-even point in units. 
C)  fixed cost ratio. 
D)  break-even point in sales. 
E)  sensitivity analysis.

Question 15

Match each item with the correct statement below.
-Fixed costs that are directly traceable to a given segment and, consequently, disappear if the segment is eliminated.

Accepted Answer

A) break-even point 
B) Common fixed expenses 
C) Contribution margin 
D) Direct fixed expenses 
E) Margin of safety
F)Operating leverage
G)Degree of operating leverage
H)Sales mix 
A) break-even point 
B) Common fixed expenses 
C) Contribution margin 
D) Direct fixed expenses 
E) Margin of safety
F)Operating leverage
G)Degree of operating leverage
H)Sales mix

Question 16

The linear equation for revenue is price multiplied by fixed cost.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is true of operating leverage?

Accepted Answer

A)  It is the difference between price and unit variable cost. 
B)  It is the use of fixed costs to increase the percentage changes in profits as sales activity changes. 
C)  It shows how far a company's actual sales and/or units are above or below the break-even point. 
D)  It is the ratio of total contribution margin to sales or of unit contribution to price. 
E)  None of these 
A)  It is the difference between price and unit variable cost. 
B)  It is the use of fixed costs to increase the percentage changes in profits as sales activity changes. 
C)  It shows how far a company's actual sales and/or units are above or below the break-even point. 
D)  It is the ratio of total contribution margin to sales or of unit contribution to price. 
E)  None of these

Question 18

Assume the following information: 
 
What volume of sales dollars is needed to break even?

Accepted Answer

A)  $75,000 
B)  $300,000 
C)  $48,000 
D)  $12,000 
A)  $75,000 
B)  $300,000 
C)  $48,000 
D)  $12,000

Question 19

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

Accepted Answer

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

Question 20

In the equation to determine the number of units that must be sold to earn a target income, targeted income is subtracted from fixed expense in the numerator.

Accepted Answer

A) True 
 B)False

It is possible to calculate the break-even point for individual products in a multiple product firm by separating the common and direct fixed expenses.

Contribution margin ratio can be calculated in all of the following ways except

Match each item with the correct statement below. -Fixed expenses that cannot be directly traced to individual segments and that are unaffected by the elimination of any one segment.

If the contribution margin ratio increases, the break-even point in sales dollars will

Paney Company makes calendars.Information on cost per unit is as follows: - Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000.The price per calendar is $10.What is the variable expense ratio?

Operating leverage is the use of fixed cost to extract higher percentage changes in profits as sales activity changes.

If the selling price per unit increases, the break-even point in units will

Match each item with the correct statement below. -measured in dollars

To find the number of units to sell to earn a targeted income, it is acceptable to simply adjust the break-even units equation by adding target income to the variable cost.

Paney Company makes calendars.Information on cost per unit is as follows: - Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000.The price per calendar is $10.What is the break-even point in units?

Forward Company makes and sells power tools.The budgeted sales are $480,000, budgeted variable costs are $175,000, and budgeted fixed costs are $260,000.What is the budgeted contribution margin ratio? (Note: Round answer to two decimal places.)

Product 1 has a contribution margin of $6.00 per unit, and Product 2 has a contribution margin of $7.50 per unit.Total fixed costs are $300,000.Sales mix and total volume varies from one period to another.Which of the following is true?

The ratio of fixed expenses to the contribution margin ratio is the

Match each item with the correct statement below. -Fixed costs that are directly traceable to a given segment and, consequently, disappear if the segment is eliminated.

The linear equation for revenue is price multiplied by fixed cost.

Which of the following statements is true of operating leverage?

Assume the following information: What volume of sales dollars is needed to break even?

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

In the equation to determine the number of units that must be sold to earn a target income, targeted income is subtracted from fixed expense in the numerator.

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

It is possible to calculate the break-even point for individual products in a multiple product firm by separating the common and direct fixed expenses.

Contribution margin ratio can be calculated in all of the following ways except

Match each item with the correct statement below. -Fixed expenses that cannot be directly traced to individual segments and that are unaffected by the elimination of any one segment.

If the contribution margin ratio increases, the break-even point in sales dollars will

Paney Company makes calendars.Information on cost per unit is as follows: - Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000.The price per calendar is $10.What is the variable expense ratio?

Operating leverage is the use of fixed cost to extract higher percentage changes in profits as sales activity changes.

If the selling price per unit increases, the break-even point in units will

Match each item with the correct statement below. -measured in dollars

To find the number of units to sell to earn a targeted income, it is acceptable to simply adjust the break-even units equation by adding target income to the variable cost.

Paney Company makes calendars.Information on cost per unit is as follows: - Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000.The price per calendar is $10.What is the break-even point in units?

Forward Company makes and sells power tools.The budgeted sales are $480,000, budgeted variable costs are $175,000, and budgeted fixed costs are $260,000.What is the budgeted contribution margin ratio? (Note: Round answer to two decimal places.)

Product 1 has a contribution margin of $6.00 per unit, and Product 2 has a contribution margin of $7.50 per unit.Total fixed costs are $300,000.Sales mix and total volume varies from one period to another.Which of the following is true?

The ratio of fixed expenses to the contribution margin ratio is the

Match each item with the correct statement below. -Fixed costs that are directly traceable to a given segment and, consequently, disappear if the segment is eliminated.

The linear equation for revenue is price multiplied by fixed cost.

Which of the following statements is true of operating leverage?

Assume the following information: What volume of sales dollars is needed to break even?

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

In the equation to determine the number of units that must be sold to earn a target income, targeted income is subtracted from fixed expense in the numerator.

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