Question 1

In a graph of cost-volume-profit analysis,the

Accepted Answer

A) total revenue line typically begins at a required minimum level. 
B) slope of the total cost line is dependent on the variable cost per unit. 
C) total cost line normally begins at zero. 
D) sales level at which total cost and total revenue lines intersect is also equal to fixed costs. 
A) total revenue line typically begins at a required minimum level. 
B) slope of the total cost line is dependent on the variable cost per unit. 
C) total cost line normally begins at zero. 
D) sales level at which total cost and total revenue lines intersect is also equal to fixed costs.

Question 2

Excerpts from a cost-volume-profit analysis indicate fixed costs of $30,000,a variable cost per unit of $36,a selling price of $60,and a sales level of $125,000.The targeted level of profit must be

Accepted Answer

A) $20,000. 
B) $50,000. 
C) $95,000. 
D) $75,000. 
A) $20,000. 
B) $50,000. 
C) $95,000. 
D) $75,000.

Question 3

Using the contribution margin approach,find the contribution margin ratio for Consumer Products if the selling price per unit is $15,the variable cost per unit is $7.50,and the fixed costs are $8,000.

Accepted Answer

A) 25% 
B) 75% 
C) 50% 
D) 100% 
A) 25% 
B) 75% 
C) 50% 
D) 100%

Question 4

Contribution margin is calculated by deducting variable costs from sales.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following equations represents a breakeven point?

Accepted Answer

A) Sales Price + Variable Cost Fixed Cost = 0 
B) Variable Cost Fixed Cost = Sales Price 
C) Sales Price + Fixed Cost = Variable Cost 
D) Sales Price Variable Cost = Fixed Cost 
A) Sales Price + Variable Cost Fixed Cost = 0 
B) Variable Cost Fixed Cost = Sales Price 
C) Sales Price + Fixed Cost = Variable Cost 
D) Sales Price Variable Cost = Fixed Cost

Question 6

Breakeven sales in dollars can be obtained without knowing the dollar value of contribution margin per unit.

Accepted Answer

A) True 
 B)False

Question 7

At the breakeven point,the total contribution margin

Accepted Answer

A) is at the maximum. 
B) minus total fixed costs equals a negative number. 
C) equals fixed costs. 
D) is at the minimum. 
A) is at the maximum. 
B) minus total fixed costs equals a negative number. 
C) equals fixed costs. 
D) is at the minimum.

Question 8

The sales mix is the proportion of each product's unit sales relative to the company's total unit sales.

Accepted Answer

A) True 
 B)False

Question 9

The unit contribution margin of a product cannot be more than its selling price.

Accepted Answer

A) True 
 B)False

Question 10

The Raquet Business is planning to manufacture a new type of tennis ball.Each tennis ball would sell for $3.75 and would require $1.75 in variable costs.In addition,annual fixed costs associated with the project would total $64,000.
a.Use the contribution margin approach to calculate:
(1)the breakeven point in units
(2)the breakeven point in dollars
b.Determine the operating income or loss at a sales volume of 30,000 tennis balls.
c.Determine the number of tennis balls that must be sold to earn a profit of $80,000.

Accepted Answer

a. (1)$64,000 F@#LAT-DLM& ($3.75 - $1.75

Question 11

A contribution margin income statement is formatted to emphasize cost behavior rather than organizational functions.

Accepted Answer

A) True 
 B)False

Question 12

If fixed costs are increased,then a breakeven analysis with an adjustment for profit will yield an increase in targeted sales units.

Accepted Answer

A) True 
 B)False

Question 13

Depreciation cost of a controller's computer calculated using the straight-line method is an example of a variable cost.

Accepted Answer

A) True 
 B)False

Question 14

Breakeven is when total fixed costs equal total revenues.

Accepted Answer

A) True 
 B)False

Question 15

In 2014,a small publishing company sold 60,000 copies of Super Travel paperbacks (its only product)at $5 per book;total fixed costs were $15,000;and total variable costs were $3 per book.What is this company's breakeven point in units?

Accepted Answer

A) 10,500 units 
B) 7,500 units 
C) 30,000 units 
D) 15,000 units 
A) 10,500 units 
B) 7,500 units 
C) 30,000 units 
D) 15,000 units

Question 16

The engineering method of separating costs is sometimes called a regression analysis.

Accepted Answer

A) True 
 B)False

Question 17

The weighted-average breakeven point is the breakeven point for the entire company.

Accepted Answer

A) True 
 B)False

Question 18

CVP analysis can also be applied by a company selling multiple products.

Accepted Answer

A) True 
 B)False

Question 19

The high-low method

Accepted Answer

A) calculates variable costs per unit by dividing the difference in the high and low activity levels by the high and low costs. 
B) gives accurate results of cost estimation,irrespective of the relevant range. 
C) helps in determining the fixed and variable components of a mixed cost. 
D) is based on the premise that all data points are necessary to define a linear cost-volume relationship. 
A) calculates variable costs per unit by dividing the difference in the high and low activity levels by the high and low costs. 
B) gives accurate results of cost estimation,irrespective of the relevant range. 
C) helps in determining the fixed and variable components of a mixed cost. 
D) is based on the premise that all data points are necessary to define a linear cost-volume relationship.

Question 20

Field Legal Services is trying to determine the variable and fixed elements of its service overhead.The following data have been collected from recent activity:   The formula for total service overhead costs is

Accepted Answer

A) $5,600 + $140 per case. 
B) $5,600 + $40 per case. 
C) $7,823 + $134.62 per case. 
D) $7,080 + $140 per case. 
A) $5,600 + $140 per case. 
B) $5,600 + $40 per case. 
C) $7,823 + $134.62 per case. 
D) $7,080 + $140 per case.

Exam 21: Cost-Volume-Profit Analysis

In a graph of cost-volume-profit analysis,the

Excerpts from a cost-volume-profit analysis indicate fixed costs of $30,000,a variable cost per unit of $36,a selling price of $60,and a sales level of $125,000.The targeted level of profit must be

Using the contribution margin approach,find the contribution margin ratio for Consumer Products if the selling price per unit is $15,the variable cost per unit is $7.50,and the fixed costs are $8,000.

Contribution margin is calculated by deducting variable costs from sales.

Which of the following equations represents a breakeven point?

Breakeven sales in dollars can be obtained without knowing the dollar value of contribution margin per unit.

At the breakeven point,the total contribution margin

The sales mix is the proportion of each product's unit sales relative to the company's total unit sales.

The unit contribution margin of a product cannot be more than its selling price.

A contribution margin income statement is formatted to emphasize cost behavior rather than organizational functions.

If fixed costs are increased,then a breakeven analysis with an adjustment for profit will yield an increase in targeted sales units.

Depreciation cost of a controller's computer calculated using the straight-line method is an example of a variable cost.

Breakeven is when total fixed costs equal total revenues.

In 2014,a small publishing company sold 60,000 copies of Super Travel paperbacks (its only product)at $5 per book;total fixed costs were $15,000;and total variable costs were $3 per book.What is this company's breakeven point in units?

The engineering method of separating costs is sometimes called a regression analysis.

The weighted-average breakeven point is the breakeven point for the entire company.

CVP analysis can also be applied by a company selling multiple products.

The high-low method

Field Legal Services is trying to determine the variable and fixed elements of its service overhead.The following data have been collected from recent activity: The formula for total service overhead costs is

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Foundations of Financial Reporting and the Classified Balance Sheet

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Costing Systems: Job Order Costing

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