Question 1

When there are multiple cost drivers the simple CVP formula of Q = (FC + OI)/CMU can still be used.

Accepted Answer

A) True 
 B)False

Question 2

Jacob's Manufacturing sales is equal to production.If Jacob's Manufacturing presented a Financial Accounting Income Statement emphasizing gross margin showing operating income of $180,000.A Contribution Income Statement emphasizing contribution margin would show a different operating income.

Accepted Answer

A) True 
 B)False

Question 3

If the sales mix shifts toward the lower-contribution-margin product,the breakeven quantity will decrease.

Accepted Answer

A) True 
 B)False

Question 4

If a company's sales mix is 2 units of product A for every 3 units of product B,and the company sells 3,000 units in total of both products,only 2,000 units of product A will be sold.

Accepted Answer

A) True 
 B)False

Question 5

Answer the following questions using the information below:
The following information is for the Jeffries Corporation:
     Total fixed costs$\quad\quad\quad \$ 75,000 $
-Assume the sales mix consists of three units of Product A and one unit of Product B.If the sales mix shifts to four units of Product A and one unit of Product B,then the weighted-average contribution margin will ________.

Accepted Answer

A) increase per unit 
B) stay the same 
C) decrease per unit 
D) cannot be determined from this information 
A) increase per unit 
B) stay the same 
C) decrease per unit 
D) cannot be determined from this information

Question 6

The degree of operating leverage at a specific level of sales helps the managers calculate the effect that potential changes in sales will have on operating income.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an assumption of CVP analysis?

Accepted Answer

A) Total costs can be divided into a fixed component and a component that is variable with respect to the level of output. 
B) When graphed,total costs curve upward. 
C) The unit-selling price is variable as it is subject to demand and supply. 
D) Total costs can be divided into inventoriable and period costs with respect to the level of output. 
A) Total costs can be divided into a fixed component and a component that is variable with respect to the level of output. 
B) When graphed,total costs curve upward. 
C) The unit-selling price is variable as it is subject to demand and supply. 
D) Total costs can be divided into inventoriable and period costs with respect to the level of output.

Question 8

Tony Manufacturing produces a single product that sells for $100.Variable costs per unit equal $45.The company expects total fixed costs to be $78,000 for the next month at the projected sales level of 3,000 units.In an attempt to improve performance,management is considering a number of alternative actions.Each situation is to be evaluated separately.Suppose management believes that a $85,000 increase in the monthly advertising expense will result in a considerable increase in sales.Sales must increase by ________ to justify this additional expenditure?

Accepted Answer

A) 850 units 
B) 1,546 units 
C) 1,412 units 
D) 1,419 units 
A) 850 units 
B) 1,546 units 
C) 1,412 units 
D) 1,419 units

Question 9

The shorter the time horizon,the lower the percentage of total costs considered fixed.

Accepted Answer

A) True 
 B)False

Question 10

Suppose a company decided to automate a production line.Explain what effects this would have on a company's cost structure using CVP terminology.Could these changes have any possible negative effect on the firm?

Accepted Answer

An automated production line would incre

Question 11

Sales of Blistre Autos are 380,000,variable cost is 230,000,fixed cost is 90,000 tax rate is 40%.Calculate the operating leverage of the company.

Accepted Answer

A) 1)50 times 
B) 4)17 times 
C) 1)53 times 
D) 2)50 times 
A) 1)50 times 
B) 4)17 times 
C) 1)53 times 
D) 2)50 times

Question 12

Slickware sells porcelain cups.The breakeven point is 5,000 units.The variable cost per unit is $12 and the fixed costs are $20,000.What is the selling price?

Accepted Answer

A) $16 
B) $24 
C) $28 
D) $20 
A) $16 
B) $24 
C) $28 
D) $20

Question 13

Sparkle Jewelry sells 800 units resulting in $9,000 of sales revenue,$3,000 of variable costs,and $1,500 of fixed costs.Contribution margin per unit is ________.(Round the final answer to the nearest cent. )

Accepted Answer

A) $13.75 
B) $11.25 
C) $7.50 
D) $5.00 
A) $13.75 
B) $11.25 
C) $7.50 
D) $5.00

Question 14

Dental Comfort Services provides dental cleanings to its patients.The selling price of a cleaning is $150 and the variable costs associated are $85.The monthly relevant fixed costs are $10,000.
Required:
a.What is the breakeven point in cleanings?
b.What is the margin of safety in dollars,assuming sales total $30,000?
c.What is the breakeven level in cleanings,assuming variable costs decrease by 20%?
d.What is the breakeven level in dollars,assuming the selling price goes down by 10% and fixed costs

Accepted Answer

a.N = Breakeven units
 @#IMG-DLM&_TB5540

Question 15

Companies that are substituting variable costs for fixed costs receive a greater per unit return above the breakeven point.

Accepted Answer

A) True 
 B)False

Question 16

Answer the following questions using the information below:
The following information is for Alex Corp:
 $\begin{array}{cc}
\text { Product X: Revenue } & \$ 15.00 \
\text { Variable Cost } & \$ 2.50
\end{array}$    
-If the sales mix shifts to one unit of Product X and two units of Product Y,then the weighted-average contribution margin will ________.

Accepted Answer

A) increase per unit 
B) stay the same 
C) decrease per unit 
D) decrease by $0.50 per unit 
A) increase per unit 
B) stay the same 
C) decrease per unit 
D) decrease by $0.50 per unit

Question 17

Gross Margin will always be greater than contribution margin.

Accepted Answer

A) True 
 B)False

Question 18

If variable costs per unit increase,then the breakeven point will decrease.

Accepted Answer

A) True 
 B)False

Question 19

The following information is for the Jeffries Corporation:

What is the operating income of Jeffries Corporation,assuming actual sales total 35,600 units,and the sales mix is three units of Product A and one unit of Product B?

Accepted Answer

A) $35,000 
B) $178,000 
C) $667,500 
D) $321,000 
A) $35,000 
B) $178,000 
C) $667,500 
D) $321,000

Question 20

The following information is for the Jeffries Corporation:

What is the breakeven point,assuming the sales mix consists of three units of Product A and one unit of

Accepted Answer

A) 14,500 units of A and 4,833 units of B 
B) 39,150 units of A and 13,050 units of B 
C) 87,000 units of A and 0 units of B 
D) 13,050 units of A and 39,150 units of B 
A) 14,500 units of A and 4,833 units of B 
B) 39,150 units of A and 13,050 units of B 
C) 87,000 units of A and 0 units of B 
D) 13,050 units of A and 39,150 units of B

When there are multiple cost drivers the simple CVP formula of Q = (FC + OI)/CMU can still be used.

Jacob's Manufacturing sales is equal to production.If Jacob's Manufacturing presented a Financial Accounting Income Statement emphasizing gross margin showing operating income of $180,000.A Contribution Income Statement emphasizing contribution margin would show a different operating income.

If the sales mix shifts toward the lower-contribution-margin product,the breakeven quantity will decrease.

If a company's sales mix is 2 units of product A for every 3 units of product B,and the company sells 3,000 units in total of both products,only 2,000 units of product A will be sold.

The degree of operating leverage at a specific level of sales helps the managers calculate the effect that potential changes in sales will have on operating income.

Which of the following is an assumption of CVP analysis?

The shorter the time horizon,the lower the percentage of total costs considered fixed.

Suppose a company decided to automate a production line.Explain what effects this would have on a company's cost structure using CVP terminology.Could these changes have any possible negative effect on the firm?

Sales of Blistre Autos are 380,000,variable cost is 230,000,fixed cost is 90,000 tax rate is 40%.Calculate the operating leverage of the company.

Slickware sells porcelain cups.The breakeven point is 5,000 units.The variable cost per unit is $12 and the fixed costs are $20,000.What is the selling price?

Sparkle Jewelry sells 800 units resulting in $9,000 of sales revenue,$3,000 of variable costs,and $1,500 of fixed costs.Contribution margin per unit is ________.(Round the final answer to the nearest cent. )

Companies that are substituting variable costs for fixed costs receive a greater per unit return above the breakeven point.

Gross Margin will always be greater than contribution margin.

If variable costs per unit increase,then the breakeven point will decrease.

The following information is for the Jeffries Corporation: What is the operating income of Jeffries Corporation,assuming actual sales total 35,600 units,and the sales mix is three units of Product A and one unit of Product B?

The following information is for the Jeffries Corporation: What is the breakeven point,assuming the sales mix consists of three units of Product A and one unit of

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 3: Cost-Volume-Profit Analysis

When there are multiple cost drivers the simple CVP formula of Q = (FC + OI)/CMU can still be used.

Jacob's Manufacturing sales is equal to production.If Jacob's Manufacturing presented a Financial Accounting Income Statement emphasizing gross margin showing operating income of $180,000.A Contribution Income Statement emphasizing contribution margin would show a different operating income.

If the sales mix shifts toward the lower-contribution-margin product,the breakeven quantity will decrease.

If a company's sales mix is 2 units of product A for every 3 units of product B,and the company sells 3,000 units in total of both products,only 2,000 units of product A will be sold.

The degree of operating leverage at a specific level of sales helps the managers calculate the effect that potential changes in sales will have on operating income.

Which of the following is an assumption of CVP analysis?

The shorter the time horizon,the lower the percentage of total costs considered fixed.

Suppose a company decided to automate a production line.Explain what effects this would have on a company's cost structure using CVP terminology.Could these changes have any possible negative effect on the firm?

Sales of Blistre Autos are 380,000,variable cost is 230,000,fixed cost is 90,000 tax rate is 40%.Calculate the operating leverage of the company.

Slickware sells porcelain cups.The breakeven point is 5,000 units.The variable cost per unit is $12 and the fixed costs are $20,000.What is the selling price?

Sparkle Jewelry sells 800 units resulting in $9,000 of sales revenue,$3,000 of variable costs,and $1,500 of fixed costs.Contribution margin per unit is ________.(Round the final answer to the nearest cent. )

Companies that are substituting variable costs for fixed costs receive a greater per unit return above the breakeven point.

Answer the following questions using the information below: The following information is for Alex Corp: Product X: Revenue \ 15.00 Variable Cost \ 2.50 -If the sales mix shifts to one unit of Product X and two units of Product Y,then the weighted-average contribution margin will ________.

Gross Margin will always be greater than contribution margin.

If variable costs per unit increase,then the breakeven point will decrease.

The following information is for the Jeffries Corporation: What is the operating income of Jeffries Corporation,assuming actual sales total 35,600 units,and the sales mix is three units of Product A and one unit of Product B?

The following information is for the Jeffries Corporation: What is the breakeven point,assuming the sales mix consists of three units of Product A and one unit of

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters