Question 1

Match each item with the correct statement below.
-Measured in units sold

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 A

Question 2

The break-even point in sales dollars is equal to the break-even units multiplied by the variable cost per unit.

Accepted Answer

A) True 
 B)False  False

Question 3

Acme Company provided the following data:
 $\begin{array}{lr}
\text { Selling price per unit } & \$ 80 \
\text { Variable cost per unit } & \$ 60 \
\text { Total fixed costs } & \$ 400,000
\end{array}$
-Refer to the Figure.How many units must Acme sell to earn a profit of $40,000?

Accepted Answer

A) 2,000 
B) 8,500 
C) 20,000 
D) 22,000 
A) 2,000 
B) 8,500 
C) 20,000 
D) 22,000 D

Question 4

What is the result when actual sales equal break-even sales?

Accepted Answer

A) the margin of safety is negative 
B) the margin of safety is positive 
C) the margin of safety equals zero 
D) the margin of safety is negative or positive 
A) the margin of safety is negative 
B) the margin of safety is positive 
C) the margin of safety equals zero 
D) the margin of safety is negative or positive

Question 5

How can a multi-product firm determine its break-even point?

Accepted Answer

The firm can determine its break-even po

Question 6

Match each item with the correct statement below.
-A measure of the sensitivity of profit changes to changes in sales volume

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 7

Which of the following is a characteristic of the cost-volume-profit graph?

Accepted Answer

A) It is hard to interpret. 
B) It reveals how costs change as sales volume remains the same. 
C) It cannot be plotted if the break-even point is known. 
D) It shows the relationship among cost, volume, and profits. 
A) It is hard to interpret. 
B) It reveals how costs change as sales volume remains the same. 
C) It cannot be plotted if the break-even point is known. 
D) It shows the relationship among cost, volume, and profits.

Question 8

TriTech Company sells a product for $12.Variable costs are $6 per unit,and total fixed costs are $6,000.How many units must Melody sell to earn an operating profit of $240?

Accepted Answer

A) 62 
B) 1,040 
C) 1,260 
D) 1,480 
A) 62 
B) 1,040 
C) 1,260 
D) 1,480

Question 9

What is the purpose of doing a cost-volume-profit (CVP)analysis?

Accepted Answer

A) CVP analysis provides managers with information used for control only. 
B) CVP analysis allows managers to do sensitivity analysis by examining the impact of various prices or costs on volume. 
C) CVP analysis shows how revenues, expenses, and profits behave as volume changes. 
D) CVP analysis is effectively used by single-product firms only. 
A) CVP analysis provides managers with information used for control only. 
B) CVP analysis allows managers to do sensitivity analysis by examining the impact of various prices or costs on volume. 
C) CVP analysis shows how revenues, expenses, and profits behave as volume changes. 
D) CVP analysis is effectively used by single-product firms only.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Diamonds in the Ruff sells only one product at a regular price of $7.50 per unit.Variable expenses are 60% of sales,and fixed expenses are $30,000.Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales.How many sales (in dollars)were required to break even at the old price of $7.50 per unit?

Accepted Answer

A) $12,000 
B) $18,000 
C) $50,000 
D) $75,000 
A) $12,000 
B) $18,000 
C) $50,000 
D) $75,000

Question 12

Given the following numbers from Books and Things, match the correct value with its appropriate term.
Books and Things normally produces 100,000 units, and the fixed overhead rate is based on this amount. Fixed selling and administrative expense is $74,000.
-Variable cost per unit

Accepted Answer

A) $12 
B) 30% 
C) $28 
D) 70% 
E) $580,000
F)14,500 
A) $12 
B) 30% 
C) $28 
D) 70% 
E) $580,000
F)14,500

Question 13

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 14

Better Bonds provided the following data:
 $$\begin{array} { l r } 
\text { Sales } & \$ 540,000 \
\text { Variable costs } & \$ 378,000 \
\text { Fixed costs } & \$ 120,000 \
\text { Expected production and salesin units } & 40,000
\end{array}$$
-Refer to the Figure.What is the break-even point in sales dollars?

Accepted Answer

A) $112,500 
B) $150,000 
C) $171,429 
D) $400,000 
A) $112,500 
B) $150,000 
C) $171,429 
D) $400,000

Question 15

Which of the following is an assumption of a cost-volume-profit analysis?

Accepted Answer

A) Selling price and costs cannot be accurately identified. 
B) Selling price and costs vary within the relevant range. 
C) Inventory levels can increase or decrease. 
D) Selling price and costs behave in a linear manner. 
A) Selling price and costs cannot be accurately identified. 
B) Selling price and costs vary within the relevant range. 
C) Inventory levels can increase or decrease. 
D) Selling price and costs behave in a linear manner.

Question 16

Date Company makes calendars. Information on cost per unit is as follows:
Fixed marketing expense totalled $13,000, and fixed administrative expense totalled $35,000. The price per calendar is $10.
 $\begin{array}{lr}
\text { Direct materials } & \$ 1.50 \
\text { Direct labour } & 1.20 \
\text { Variable overhead } & 0.90 \
\text { Variable marketing expense } & 0.40
\end{array}$
-Refer to the Figure.What is the variable expense per unit?

Accepted Answer

A) $1.30 
B) $3.70 
C) $4.00 
D) $4.60 
A) $1.30 
B) $3.70 
C) $4.00 
D) $4.60

Question 17

Suppose the contribution margin per unit decreases.What will be the effect on the break-even point in units?

Accepted Answer

A) The units will increase. 
B) The units will decrease. 
C) The units will remain the same. 
D) The units cannot be determined from the information given. 
A) The units will increase. 
B) The units will decrease. 
C) The units will remain the same. 
D) The units cannot be determined from the information given.

Question 18

Green Acres Company provides home health care. Green Acres charges $35 per hour for professional care. Variable casts are $21 per hour and fixed costs are $78,000. Next year, Green Acres expects to charge out 12,000 hours of home health care.
-Refer to the Figure.What is the contribution margin ratio?

Accepted Answer

A) 33% 
B) 40% 
C) 50% 
D) 60% 
A) 33% 
B) 40% 
C) 50% 
D) 60%

Question 19

What is the equation to calculate contribution margin?

Accepted Answer

A) contribution margin = sales revenue × variable cost ratio 
B) contribution margin ratio = contribution margin/variable costs 
C) contribution margin = fixed costs 
D) contribution margin ratio = 1 − variable cost ratio 
A) contribution margin = sales revenue × variable cost ratio 
B) contribution margin ratio = contribution margin/variable costs 
C) contribution margin = fixed costs 
D) contribution margin ratio = 1 − variable cost ratio

Question 20

What formula is used to calculate the number of units needed to earn a desired profit?

Accepted Answer

A) (fixed costs + variable costs)/sales 
B) (fixed costs + desired profit)/sales 
C) (fixed costs + desired profit)/contribution margin per unit 
D) (fixed costs + variable costs)/contribution margin per unit 
A) (fixed costs + variable costs)/sales 
B) (fixed costs + desired profit)/sales 
C) (fixed costs + desired profit)/contribution margin per unit 
D) (fixed costs + variable costs)/contribution margin per unit

Match each item with the correct statement below. -Measured in units sold

The break-even point in sales dollars is equal to the break-even units multiplied by the variable cost per unit.

Acme Company provided the following data: Selling price per unit \ 80 Variable cost per unit \ 60 Total fixed costs \ 400,000 -Refer to the Figure.How many units must Acme sell to earn a profit of $40,000?

What is the result when actual sales equal break-even sales?

How can a multi-product firm determine its break-even point?

Match each item with the correct statement below. -A measure of the sensitivity of profit changes to changes in sales volume

Which of the following is a characteristic of the cost-volume-profit graph?

TriTech Company sells a product for $12.Variable costs are $6 per unit,and total fixed costs are $6,000.How many units must Melody sell to earn an operating profit of $240?

What is the purpose of doing a cost-volume-profit (CVP)analysis?

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

Given the following numbers from Books and Things, match the correct value with its appropriate term. Books and Things normally produces 100,000 units, and the fixed overhead rate is based on this amount. Fixed selling and administrative expense is $74,000. -Variable cost per unit

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

Better Bonds provided the following data: Sales \ 540,000 Variable costs \ 378,000 Fixed costs \ 120,000 Expected production and salesin units 40,000 -Refer to the Figure.What is the break-even point in sales dollars?

Which of the following is an assumption of a cost-volume-profit analysis?

Suppose the contribution margin per unit decreases.What will be the effect on the break-even point in units?

What is the equation to calculate contribution margin?

What formula is used to calculate the number of units needed to earn a desired profit?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 4: Costvolumeprofit Analysis: a Managerial Planning Tool

Match each item with the correct statement below. -Measured in units sold

The break-even point in sales dollars is equal to the break-even units multiplied by the variable cost per unit.

Acme Company provided the following data: Selling price per unit \ 80 Variable cost per unit \ 60 Total fixed costs \ 400,000 -Refer to the Figure.How many units must Acme sell to earn a profit of $40,000?

What is the result when actual sales equal break-even sales?

How can a multi-product firm determine its break-even point?

Match each item with the correct statement below. -A measure of the sensitivity of profit changes to changes in sales volume

Which of the following is a characteristic of the cost-volume-profit graph?

TriTech Company sells a product for $12.Variable costs are $6 per unit,and total fixed costs are $6,000.How many units must Melody sell to earn an operating profit of $240?

What is the purpose of doing a cost-volume-profit (CVP)analysis?

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

Given the following numbers from Books and Things, match the correct value with its appropriate term. Books and Things normally produces 100,000 units, and the fixed overhead rate is based on this amount. Fixed selling and administrative expense is $74,000. -Variable cost per unit

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

Better Bonds provided the following data: Sales \ 540,000 Variable costs \ 378,000 Fixed costs \ 120,000 Expected production and salesin units 40,000 -Refer to the Figure.What is the break-even point in sales dollars?

Which of the following is an assumption of a cost-volume-profit analysis?

Suppose the contribution margin per unit decreases.What will be the effect on the break-even point in units?

What is the equation to calculate contribution margin?

What formula is used to calculate the number of units needed to earn a desired profit?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters