Question 1

Regression analysis takes into consideration only the highest and the lowest level of activities to predict cost behavior.

Accepted Answer

A) True 
 B)False

Question 2

An organization's theoretical operating capacity is the level at which its management expects to operate during a normal business environment.

Accepted Answer

A) True 
 B)False

Question 3

Projected cost information for a new product to be produced by Kolier Manufacturing is as follows:
   The product is to be sold for $49.
a.Compute the number of units that must be sold to earn a profit of $80,000.
b.Compute the number of units that must be sold if advertising costs rise by $12,000 and a targeted profit of $120,000 is to be obtained.
c.Use the original information and sales of 10,000 units to compute the new selling price that the company must use to obtain a profit of $200,000.
d.The most in annual sales that could be projected is 20,000 units.Determine the added amount that could be spent on fixed advertising costs if the highest possible selling price that management believes can be charged is $50 and if there is a targeted profit of $225,000.

Accepted Answer

a.
@#IMG-DLM& 
b.
@#IMG-DLM&
c.New selling price t

Question 4

Theoretical capacity reduced by normal and expected work stoppages is called

Accepted Answer

A) practical capacity. 
B) normal capacity. 
C) ideal capacity. 
D) excess capacity. 
A) practical capacity. 
B) normal capacity. 
C) ideal capacity. 
D) excess capacity.

Question 5

The new Corina watch has an expected selling price per watch of $42,the projected variable cost per unit is $24,and estimated fixed costs per month are $24,120. The expected breakeven point in sales dollars is

Accepted Answer

A) $48,240. 
B) $32,160. 
C) $40,200. 
D) $56,280. 
A) $48,240. 
B) $32,160. 
C) $40,200. 
D) $56,280.

Question 6

In terms of cost behavior,supervisory salaries and direct labor are classified as

Accepted Answer

A) fixed and variable,respectively. 
B) variable. 
C) fixed. 
D) mixed and fixed,respectively. 
A) fixed and variable,respectively. 
B) variable. 
C) fixed. 
D) mixed and fixed,respectively.

Question 7

In a breakeven graph,the slope the total cost line is dependent on the variable costs per unit.

Accepted Answer

A) True 
 B)False

Question 8

Listed below are selected costs of a sports car manufacturer at a production level of 4,000 cars.(a)Identify three variable costs.(b)Support your answer by illustrating the cost behavior pattern per unit and in total as the annual volume of cars produced increases from 4,000 cars to 8,000 cars,for one variable cost.(Note: The production increase is within the relevant range. )
Assume there are 52 weeks in a year and existing workers are working at full capacity.

Accepted Answer

a.Sports car tire cost (per tire)($100),

Question 9

a.What is the formula for breakeven units?
b.How is knowledge of the contribution margin of a product helpful?
In your answer,explain two possible benefits of computing the contribution margin of a product.

Accepted Answer

a.Breakeven (units)= Fixed Costs @#LAT-DLM& Contri

Question 10

Dapper Hat Makers is in the business of designing and producing specialty hats.The material used for derbies costs $4.50 per unit,and Dapper pays each of its two full-time employees $250 per week.If the company makes 30 derbies in a week,what is the variable cost per derby?

Accepted Answer

A) $4.50 
B) $15.00 
C) $16.67 
D) $21.17 
A) $4.50 
B) $15.00 
C) $16.67 
D) $21.17

Question 11

Service businesses do not have any overhead costs.

Accepted Answer

A) True 
 B)False

Question 12

Fusion Inc.sells a single product which has a contribution margin of $125 per unit.The fixed cost of Fusion is $195,000.If the company wants to earn $55,000 as operating income,it should sell:

Accepted Answer

A) 2,000 units. 
B) 1,560 units. 
C) 440 units. 
D) 2,500 units. 
A) 2,000 units. 
B) 1,560 units. 
C) 440 units. 
D) 2,500 units.

Question 13

Which of the following best describes the typical relationship between variable costs and volume?

Accepted Answer

A) Total variable costs increase in an erratic,unpredictable fashion with changes in volume. 
B) Total variable costs stay constant with changes in volume. 
C) Unit variable costs increase with changes in volume up to a certain point and then remain constant. 
D) Total variable costs increase in direct proportion to increases in volume. 
A) Total variable costs increase in an erratic,unpredictable fashion with changes in volume. 
B) Total variable costs stay constant with changes in volume. 
C) Unit variable costs increase with changes in volume up to a certain point and then remain constant. 
D) Total variable costs increase in direct proportion to increases in volume.

Question 14

The breakeven point is

Accepted Answer

A) where fixed and variable costs reach the upper level of the relevant range. 
B) the level of activity where all fixed costs are recovered. 
C) the level of activity where total revenue are the same as total fixed costs. 
D) the level of activity where the operating profits equal the variable costs. 
A) where fixed and variable costs reach the upper level of the relevant range. 
B) the level of activity where all fixed costs are recovered. 
C) the level of activity where total revenue are the same as total fixed costs. 
D) the level of activity where the operating profits equal the variable costs.

Question 15

A mixed costs line,plotted on a graph,will start at the Y axis at the amount of fixed cost.

Accepted Answer

A) True 
 B)False

Question 16

A digitized music tuner has been a staple in Smooth Sounds' product line for several years.Annual fixed costs of production and administration related to this product in the past have been $643,500.Variable costs of production and sales have been $17 per unit.The selling price in the past has been $28 per unit.Based on the appearance of competing products on the market,management has asked you to do the following:
a.Compute the breakeven point in units and sales dollars for the present product.
b.Compute the breakeven point in units and sales dollars if the variable costs increased by $3 per unit and the fixed costs increased by $14,375 per month.
c.Using the information from (b),an expected additional monthly advertising charge of $10,000,and a monthly sales rate of 15,000 units,compute the competitive selling price that the company must obtain in order to have a profit of $32,000 per month.(Round answers to two decimal places. )

Accepted Answer

a.
@#IMG-DLM&
b.
@#IMG-DLM&
 c

Question 17

Neverlate is world famous for its precision pocket watches.The company has estimated that variable manufacturing costs and variable selling costs per watch will be $72 and $43,respectively,for 2014.Also during 2014,the company is expecting fixed manufacturing costs to total $291,600 and fixed general and administrative expenses to amount to $253,175.The anticipated selling price of each watch is $500.Compute (a)the breakeven point in sales units and (b)the breakeven point in sales dollars.

Accepted Answer

The answer of Neverlate is world famous for its precision...

Question 18

Plunda Co.is planning production for the coming year.The information to be used is based on a projection of cost information for the current year.Projections of the following costs are as follows:
   Plunda Co.sells its product for $90.00 per unit.Compute the following,showing your calculations:
a.The breakeven point in sales units
b.The breakeven point in sales dollars
c.The sales level in both sales units and dollars if a profit of $122,400 is projected

Accepted Answer

a.
@#IMG-DLM& 
b.$90

Question 19

Which of the following decreases with increase in number of units sold?

Accepted Answer

A) Total variable costs 
B) Total fixed costs 
C) Unit variable cost 
D) Unit fixed cost 
A) Total variable costs 
B) Total fixed costs 
C) Unit variable cost 
D) Unit fixed cost

Question 20

Gross margin and contribution margin are always equal.

Accepted Answer

A) True 
 B)False

Regression analysis takes into consideration only the highest and the lowest level of activities to predict cost behavior.

An organization's theoretical operating capacity is the level at which its management expects to operate during a normal business environment.

Theoretical capacity reduced by normal and expected work stoppages is called

The new Corina watch has an expected selling price per watch of $42,the projected variable cost per unit is $24,and estimated fixed costs per month are $24,120. The expected breakeven point in sales dollars is

In terms of cost behavior,supervisory salaries and direct labor are classified as

In a breakeven graph,the slope the total cost line is dependent on the variable costs per unit.

a.What is the formula for breakeven units? b.How is knowledge of the contribution margin of a product helpful? In your answer,explain two possible benefits of computing the contribution margin of a product.

Dapper Hat Makers is in the business of designing and producing specialty hats.The material used for derbies costs $4.50 per unit,and Dapper pays each of its two full-time employees $250 per week.If the company makes 30 derbies in a week,what is the variable cost per derby?

Service businesses do not have any overhead costs.

Fusion Inc.sells a single product which has a contribution margin of $125 per unit.The fixed cost of Fusion is $195,000.If the company wants to earn $55,000 as operating income,it should sell:

Which of the following best describes the typical relationship between variable costs and volume?

The breakeven point is

A mixed costs line,plotted on a graph,will start at the Y axis at the amount of fixed cost.

Which of the following decreases with increase in number of units sold?

Gross margin and contribution margin are always equal.

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

Regression analysis takes into consideration only the highest and the lowest level of activities to predict cost behavior.

An organization's theoretical operating capacity is the level at which its management expects to operate during a normal business environment.

Theoretical capacity reduced by normal and expected work stoppages is called

The new Corina watch has an expected selling price per watch of $42,the projected variable cost per unit is $24,and estimated fixed costs per month are $24,120. The expected breakeven point in sales dollars is

In terms of cost behavior,supervisory salaries and direct labor are classified as

In a breakeven graph,the slope the total cost line is dependent on the variable costs per unit.

a.What is the formula for breakeven units? b.How is knowledge of the contribution margin of a product helpful? In your answer,explain two possible benefits of computing the contribution margin of a product.

Dapper Hat Makers is in the business of designing and producing specialty hats.The material used for derbies costs $4.50 per unit,and Dapper pays each of its two full-time employees $250 per week.If the company makes 30 derbies in a week,what is the variable cost per derby?

Service businesses do not have any overhead costs.

Fusion Inc.sells a single product which has a contribution margin of $125 per unit.The fixed cost of Fusion is $195,000.If the company wants to earn $55,000 as operating income,it should sell:

Which of the following best describes the typical relationship between variable costs and volume?

The breakeven point is

A mixed costs line,plotted on a graph,will start at the Y axis at the amount of fixed cost.

Which of the following decreases with increase in number of units sold?

Gross margin and contribution margin are always equal.

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