Question 1

Match each item with the correct statement below.
-The selling price per unit

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

Question 2

Woods Company originally expected to earn operating income of $150,000 next year. Woods's degree of operating leverage is 2.4. Recently, Woods revised its plans and now expects to increase sales by 20% next year.
-Refer to the Figure.What is Woods's revised expected operating income for the coming year?

Accepted Answer

A) $62,400 
B) $130,000 
C) $156,000 
D) $222,000 
A) $62,400 
B) $130,000 
C) $156,000 
D) $222,000

Question 3

Match each item with the correct statement below.
-Fixed expenses that cannot be directly traced to individual segments and that are unaffected by the elimination of any one segment

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 4

The contribution margin ratio is equal to the 1 minus the variable cost ratio.

Accepted Answer

A) True 
 B)False

Question 5

What is total variable cost divided by sales revenue?

Accepted Answer

A) the variable cost ratio 
B) the revenue ratio 
C) the contribution ratio 
D) the sales ratio 
A) the variable cost ratio 
B) the revenue ratio 
C) the contribution ratio 
D) the sales ratio

Question 6

Bonda,Inc.sells its product for $90.It has a variable cost ratio of 50% and total fixed costs of $14,000.What is the break-even point in sales dollars?

Accepted Answer

A) $3,600 
B) $7,000 
C) $14,000 
D) $28,000 
A) $3,600 
B) $7,000 
C) $14,000 
D) $28,000

Question 7

Variable costs per unit consist of direct materials,direct labour,variable factory overhead and variable selling and administrative costs.

Accepted Answer

A) True 
 B)False

Question 8

Suppose variable costs per unit decrease.What will be the effect on sales volume at the break-even point?

Accepted Answer

A) Sales volume will increase. 
B) Sales volume will decrease. 
C) Sales volume will remain the same. 
D) Sales volume will remain the same; however, contribution margin per unit will decrease. 
A) Sales volume will increase. 
B) Sales volume will decrease. 
C) Sales volume will remain the same. 
D) Sales volume will remain the same; however, contribution margin per unit will decrease.

Question 9

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.
-Break-even point (in dollars)

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 10

The Monterra Company provided the following information:
 $\begin{array}{ll}
\text { Sales } & \$ 500,000 \
\text { Variable costs } & \$ 100,000 \
\text { Fixed costs } & \$ 200,000
\end{array}$ A. What is the contribution margin ratio?
B. What is the level of sales in doll ars necessary to generate a profit of $\$ 40,000$ ?
C. What is the contribution margin ratio if the sal es price is increased by $10 \%$ ?
D. Using the information in part $\mathrm { C }$, what level of sales in doll ars is necessary to generate a profit of $\$ 40,000$ ?

Accepted Answer

The answer of The Monterra Company provided the following information:
...

Question 11

By what amount can sales decline before losses are incurred?

Accepted Answer

A) by the contribution margin 
B) by the margin of safety 
C) by the degree of operating leverage 
D) by the fixed costs 
A) by the contribution margin 
B) by the margin of safety 
C) by the degree of operating leverage 
D) by the fixed costs

Question 12

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

Accepted Answer

A) It is difficult to interpret. 
B) It fails to reveal how costs change as sales volume changes. 
C) It can be plotted only if the break-even point is known. 
D) It can be plotted only if fixed costs are known. 
A) It is difficult to interpret. 
B) It fails to reveal how costs change as sales volume changes. 
C) It can be plotted only if the break-even point is known. 
D) It can be plotted only if fixed costs are known.

Question 13

The linear equation for revenue is price multiplied by fixed cost.

Accepted Answer

A) True 
 B)False

Question 14

Desjardin's makes power tools. The budgeted sales are $550,000, budgeted variable costs are $230,000, and budgeted fixed costs are $227,500.
-Refer to the Figure.What is the variable cost ratio?

Accepted Answer

A) 19% 
B) 42% 
C) 50% 
D) 54% 
A) 19% 
B) 42% 
C) 50% 
D) 54%

Question 15

What is the break-even point?

Accepted Answer

A) the point at which total sales are greater than total cost 
B) the point at which total sales equal total cost 
C) the point at which fixed costs equal variable costs 
D) the point at which total sales are less than total cost 
A) the point at which total sales are greater than total cost 
B) the point at which total sales equal total cost 
C) the point at which fixed costs equal variable costs 
D) the point at which total sales are less than total cost

Question 16

What fixed expenses can NOT be directly traced to individual segments?

Accepted Answer

A) direct fixed expenses 
B) common fixed expenses 
C) contribution margin 
D) overall fixed expenses 
A) direct fixed expenses 
B) common fixed expenses 
C) contribution margin 
D) overall fixed expenses

Question 17

What formula is used to calculate the degree of operating leverage?

Accepted Answer

A) contribution margin/profit 
B) profit/fixed costs 
C) profit/variable costs 
D) total sales/profit 
A) contribution margin/profit 
B) profit/fixed costs 
C) profit/variable costs 
D) total sales/profit

Question 18

What is the result when the contribution margin ratio increases?

Accepted Answer

A) The variable cost ratio decreases. 
B) The break-even point increases. 
C) The fixed costs decrease. 
D) The price decreases. 
A) The variable cost ratio decreases. 
B) The break-even point increases. 
C) The fixed costs decrease. 
D) The price decreases.

Question 19

Assume the following information: What volume of sales dollars is needed to break even?
$$\begin{array} { l r } 
\text { Variable cost ratio } & 80 \% \
\text { Total fixed costs } & \$ 60,000
\end{array}$$

Accepted Answer

A) $12,000 
B) $48,000 
C) $75,000 
D) $300,000 
A) $12,000 
B) $48,000 
C) $75,000 
D) $300,000

Question 20

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 break-even point in sales dollars?

Accepted Answer

A) $130,000 
B) $195,000 
C) $252,000 
D) $342,000 
A) $130,000 
B) $195,000 
C) $252,000 
D) $342,000

Match each item with the correct statement below. -The selling price per unit

Match each item with the correct statement below. -Fixed expenses that cannot be directly traced to individual segments and that are unaffected by the elimination of any one segment

The contribution margin ratio is equal to the 1 minus the variable cost ratio.

What is total variable cost divided by sales revenue?

Bonda,Inc.sells its product for $90.It has a variable cost ratio of 50% and total fixed costs of $14,000.What is the break-even point in sales dollars?

Variable costs per unit consist of direct materials,direct labour,variable factory overhead and variable selling and administrative costs.

Suppose variable costs per unit decrease.What will be the effect on sales volume at the break-even point?

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. -Break-even point (in dollars)

By what amount can sales decline before losses are incurred?

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

The linear equation for revenue is price multiplied by fixed cost.

Desjardin's makes power tools. The budgeted sales are $550,000, budgeted variable costs are $230,000, and budgeted fixed costs are $227,500. -Refer to the Figure.What is the variable cost ratio?

What is the break-even point?

What fixed expenses can NOT be directly traced to individual segments?

What formula is used to calculate the degree of operating leverage?

What is the result when the contribution margin ratio increases?

Assume the following information: What volume of sales dollars is needed to break even? Variable cost ratio 80\% Total fixed costs \ 60,000

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. -The selling price per unit

Match each item with the correct statement below. -Fixed expenses that cannot be directly traced to individual segments and that are unaffected by the elimination of any one segment

The contribution margin ratio is equal to the 1 minus the variable cost ratio.

What is total variable cost divided by sales revenue?

Bonda,Inc.sells its product for $90.It has a variable cost ratio of 50% and total fixed costs of $14,000.What is the break-even point in sales dollars?

Variable costs per unit consist of direct materials,direct labour,variable factory overhead and variable selling and administrative costs.

Suppose variable costs per unit decrease.What will be the effect on sales volume at the break-even point?

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. -Break-even point (in dollars)

By what amount can sales decline before losses are incurred?

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

The linear equation for revenue is price multiplied by fixed cost.

Desjardin's makes power tools. The budgeted sales are $550,000, budgeted variable costs are $230,000, and budgeted fixed costs are $227,500. -Refer to the Figure.What is the variable cost ratio?

What is the break-even point?

What fixed expenses can NOT be directly traced to individual segments?

What formula is used to calculate the degree of operating leverage?

What is the result when the contribution margin ratio increases?

Assume the following information: What volume of sales dollars is needed to break even? Variable cost ratio 80\% Total fixed costs \ 60,000

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