Question 1

Which of the following statements is true of fixed and variable costs?

Accepted Answer

A) Both costs are constant when considered on a total basis. 
B) Variable costs are constant in total,and fixed costs are constant per unit. 
C) Both costs are constant when considered on a per unit basis. 
D) Fixed costs are constant in total,and variable costs are constant per unit. 
A) Both costs are constant when considered on a total basis. 
B) Variable costs are constant in total,and fixed costs are constant per unit. 
C) Both costs are constant when considered on a per unit basis. 
D) Fixed costs are constant in total,and variable costs are constant per unit.

Question 2

One of the assumptions of CVP analysis assumes production and sales to be approximately equal.

Accepted Answer

A) True 
 B)False

Question 3

An organization's normal capacity is the average annual level of operating capacity needed to meet its expected sales demand.

Accepted Answer

A) True 
 B)False

Question 4

The breakeven point is the point at which

Accepted Answer

A) fixed costs equal variable costs. 
B) total revenues equal total costs. 
C) sales equal variable costs. 
D) fixed costs equal sales. 
A) fixed costs equal variable costs. 
B) total revenues equal total costs. 
C) sales equal variable costs. 
D) fixed costs equal sales.

Question 5

Meredith Marshall owns a home inspection business,offering her services to homeowners.She currently charges $180 per inspection but wants to know if her fee should be raised.She has provided the following data from the past six months:
  Meredith takes her daughter with her on all inspections and pays her $40 per inspection.Due to slower business in the cooler months,Meredith estimates she will average 60 inspections per month for the next six months.Prepare a schedule showing Meredith 's estimated total cost per inspection.

Accepted Answer

The answer of Meredith Marshall owns a home inspection business,offering...

Question 6

Adding a desired profit level to breakeven computations will lower the number of units required to be sold.

Accepted Answer

A) True 
 B)False

Question 7

Cost-volume-profit analysis assumes costs and revenues have a close linear approximation.

Accepted Answer

A) True 
 B)False

Question 8

As production decreases,fixed costs per unit will

Accepted Answer

A) increase. 
B) decrease. 
C) remain the same. 
D) either increase or decrease,depending on the variable cost. 
A) increase. 
B) decrease. 
C) remain the same. 
D) either increase or decrease,depending on the variable cost.

Question 9

Which of the following would not require the use of cost behavior analysis?

Accepted Answer

A) Recording the transfer of production costs from one department to another 
B) Projecting anticipated costs of a new project 
C) Buying an existing business 
D) Changing an existing product or service 
A) Recording the transfer of production costs from one department to another 
B) Projecting anticipated costs of a new project 
C) Buying an existing business 
D) Changing an existing product or service

Question 10

Cost behavior analysis is not useful to a service business.

Accepted Answer

A) True 
 B)False

Question 11

A new product,an easy to store guitar stand,is being planned,with the following cost estimates: variable cost per unit,$9,and total fixed costs,$58,000.The projected sales price is $13 each.
a.Using the contribution margin approach,compute the number of units that must be sold to break even.
b.Using the same approach and assuming that fixed costs can be reduced by $8,000,how many units must be sold to produce a profit of $65,000?
c.Given the original information and the projection that 50,000 units can be sold,compute the selling price that the producer must use to obtain a profit of $150,000.

Accepted Answer

The answer of A new product,an easy to store guitar...

Question 12

The following are monthly totals taken from the log of laser printer used by the Hardcopy Printing International.Cost was based on a flat fee plus a declining cost per copy made after a minimum number of copies had been made each month.
 
To differentiate the variable and fixed costs in the use of this machine for future planning,use the high-low method to (a)determine the variable cost per copy (round your answers to two decimal places)and (b)compute the fixed and variable costs for the months of August and December (round your answers to nearest whole number).

Accepted Answer

a.
@#IMG-DLM&
The variable cos

Question 13

Denapasa Manufacturing leases a vacuum cleaning system for a basic monthly fee plus an additional cost per hour used above a given minimum for each month.Given below is the information for the most recent six-month period on the number of machine hours of use and the total cost under this lease.
  You are to provide information for planning concerning the variable and fixed cost elements in this lease.Use the high-low method to (a)determine the variable cost per machine hour and (b)compute the fixed and variable costs for months 7 and 8.

Accepted Answer

a.
@#IMG-DLM&
The variable cos

Question 14

Which of the following is true of the engineering method of separating costs?

Accepted Answer

A) It is generally used to estimate the cost of activities and new products. 
B) It is sometimes called a time and motion study. 
C) It separates costs by performing a step-by-step analysis of various elements involved. 
D) All of these choices are correct. 
A) It is generally used to estimate the cost of activities and new products. 
B) It is sometimes called a time and motion study. 
C) It separates costs by performing a step-by-step analysis of various elements involved. 
D) All of these choices are correct.

Question 15

Unit fixed costs will be the same regardless of how many units are produced.

Accepted Answer

A) True 
 B)False

Question 16

Lilly LLC wants to make a profit of $30,000.It has variable costs of $99 per unit and fixed costs of $20,000.How much must it charge per unit if 5,000 units are sold?

Accepted Answer

A) $84 
B) $69 
C) $99 
D) $109 
A) $84 
B) $69 
C) $99 
D) $109

Question 17

Share and Care International is trying to determine how many clients must be serviced in order to cover its monthly service overhead.Using the high-low method,it has determined that the variable cost per client is $800 and that the monthly fixed overhead is $28,000. 
-Assuming an average fee of $1,200 per client,the breakeven point per month is

Accepted Answer

A) 35 clients. 
B) 80 clients. 
C) 70 clients. 
D) 55 clients. 
A) 35 clients. 
B) 80 clients. 
C) 70 clients. 
D) 55 clients.

Question 18

If the contribution margin on a new product line is $15,fixed costs are $165,000,and the total market for the product is 22,000 units,then the breakeven analysis would recommend that the company

Accepted Answer

A) abandon the new product line. 
B) decrease the sales price per unit. 
C) increase fixed costs (such as advertising)to lower the breakeven units. 
D) adopt the new product line. 
A) abandon the new product line. 
B) decrease the sales price per unit. 
C) increase fixed costs (such as advertising)to lower the breakeven units. 
D) adopt the new product line.

Question 19

Practical capacity and engineering capacity are synonymous terms.

Accepted Answer

A) True 
 B)False

Question 20

Cristy Lake Inc.sold goods worth $144,000 in 2014.It sells each unit for $5.50 and has a 30 percent contribution margin.The company's fixed costs amount to $33,000. Calculate Cristy's breakeven point in units.

Accepted Answer

A) 43,200 units 
B) 9,900 units 
C) 26,182 units 
D) 20,000 units 
A) 43,200 units 
B) 9,900 units 
C) 26,182 units 
D) 20,000 units

Which of the following statements is true of fixed and variable costs?

One of the assumptions of CVP analysis assumes production and sales to be approximately equal.

An organization's normal capacity is the average annual level of operating capacity needed to meet its expected sales demand.

The breakeven point is the point at which

Adding a desired profit level to breakeven computations will lower the number of units required to be sold.

Cost-volume-profit analysis assumes costs and revenues have a close linear approximation.

As production decreases,fixed costs per unit will

Which of the following would not require the use of cost behavior analysis?

Cost behavior analysis is not useful to a service business.

Which of the following is true of the engineering method of separating costs?

Unit fixed costs will be the same regardless of how many units are produced.

Lilly LLC wants to make a profit of $30,000.It has variable costs of $99 per unit and fixed costs of $20,000.How much must it charge per unit if 5,000 units are sold?

If the contribution margin on a new product line is $15,fixed costs are $165,000,and the total market for the product is 22,000 units,then the breakeven analysis would recommend that the company

Practical capacity and engineering capacity are synonymous terms.

Cristy Lake Inc.sold goods worth $144,000 in 2014.It sells each unit for $5.50 and has a 30 percent contribution margin.The company's fixed costs amount to $33,000. Calculate Cristy's breakeven point in units.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis and Capital Budgeting

Filters

Exam 21: Cost-Volume-Profit Analysis

Which of the following statements is true of fixed and variable costs?

One of the assumptions of CVP analysis assumes production and sales to be approximately equal.

An organization's normal capacity is the average annual level of operating capacity needed to meet its expected sales demand.

The breakeven point is the point at which

Adding a desired profit level to breakeven computations will lower the number of units required to be sold.

Cost-volume-profit analysis assumes costs and revenues have a close linear approximation.

As production decreases,fixed costs per unit will

Which of the following would not require the use of cost behavior analysis?

Cost behavior analysis is not useful to a service business.

Which of the following is true of the engineering method of separating costs?

Unit fixed costs will be the same regardless of how many units are produced.

Lilly LLC wants to make a profit of $30,000.It has variable costs of $99 per unit and fixed costs of $20,000.How much must it charge per unit if 5,000 units are sold?

If the contribution margin on a new product line is $15,fixed costs are $165,000,and the total market for the product is 22,000 units,then the breakeven analysis would recommend that the company

Practical capacity and engineering capacity are synonymous terms.

Cristy Lake Inc.sold goods worth $144,000 in 2014.It sells each unit for $5.50 and has a 30 percent contribution margin.The company's fixed costs amount to $33,000. Calculate Cristy's breakeven point in units.

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis and Capital Budgeting

Filters