Question 1

What are two concepts useful to management when assessing risk?

Accepted Answer

The two concepts are Margin of Safety an

Question 2

Which of the following is NOT an assumption used to prepare a cost-volume-profit graph?

Accepted Answer

A) Linear costs are within the relevant range. 
B) Units produced equals units sold. 
C) The sales mix is constant. 
D) The constant cost fluctuates. 
A) Linear costs are within the relevant range. 
B) Units produced equals units sold. 
C) The sales mix is constant. 
D) The constant cost fluctuates.

Question 3

Go For It Company sells go-carts at $1000 each,incurs a variable cost per unit of $600,and has a total fixed expense of $75,000.How many units must be sold to achieve a target operating income of $55,000?

Accepted Answer

A) 186 
B) 215 
C) 250 
D) 325 
A) 186 
B) 215 
C) 250 
D) 325

Question 4

Miss She makes dolls.The price of a doll is $15,and the variable expense is $7 per doll.What is the contribution margin ratio?

Accepted Answer

A) 37.5% 
B) 40.0% 
C) 53.0% 
D) 60.0% 
A) 37.5% 
B) 40.0% 
C) 53.0% 
D) 60.0%

Question 5

The cost-volume-profit graph shows the relationship between cost,volume,and operating income.

Accepted Answer

A) True 
 B)False

Question 6

Common fixed expenses are the fixed costs that are NOT traceable to the segments and would remain even if one of the segments was eliminated.

Accepted Answer

A) True 
 B)False

Question 7

If variable expenses decrease and the price increases,the break-even point decreases.

Accepted Answer

A) True 
 B)False

Question 8

Product 1 has a contribution margin of $6.00 per unit,and Product 2 has a contribution margin of $7.50 per unit.Total fixed costs are $300,000.Sales mix and total volume varies from one period to another.Which statement is true?

Accepted Answer

A) At a sales volume in excess of 25,000 units of Product 1 and 25,000 units of Product 2, operations will be profitable. 
B) The ratio of net profit to total sales for Product 2 will be larger than the ratio of net profit to total sales for Product 1. 
C) Variable costs are $1.50 more for Product 2 than for Product 1. 
D) The ratio of contribution to total sales always will be larger for Product 1 than for Product 2. 
A) At a sales volume in excess of 25,000 units of Product 1 and 25,000 units of Product 2, operations will be profitable. 
B) The ratio of net profit to total sales for Product 2 will be larger than the ratio of net profit to total sales for Product 1. 
C) Variable costs are $1.50 more for Product 2 than for Product 1. 
D) The ratio of contribution to total sales always will be larger for Product 1 than for Product 2.

Question 9

The cost-volume-profit graph depicts the relationships among cost,volume,and profits by plotting the total revenue line and the total cost line on the graph.

Accepted Answer

A) True 
 B)False

Question 10

What is operating leverage the relative mix of?

Accepted Answer

A) revenues earned and manufacturing costs 
B) fixed and variable costs 
C) high-volume and low-volume products 
D) manufacturing costs and period costs 
A) revenues earned and manufacturing costs 
B) fixed and variable costs 
C) high-volume and low-volume products 
D) manufacturing costs and period costs

Question 11

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.How many sales in dollars are needed to generate a profit of $30,000?

Accepted Answer

A) $100,000 
B) $150,000 
C) $214,286 
D) $500,000 
A) $100,000 
B) $150,000 
C) $214,286 
D) $500,000

Question 12

The impact on a firm's income resulting from a change in the number of units sold can be assessed by multiplying the unit contribution margin by the change in units sold assuming that fixed costs remain the same.

Accepted Answer

A) True 
 B)False

Question 13

Match each item with the correct statement below.
-The units sold or expected to be sold or sales revenue earned or expected to be earned above the break-even 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 14

What is the formula to calculate operating income?

Accepted Answer

A) (price × units sold) − (unit variable cost × units sold) − fixed cost 
B) (price × units sold) + (unit variable cost × units sold) + fixed cost 
C) (price + units sold) − (unit variable cost + units sold) − fixed cost 
D) (price − units sold) + (unit variable cost − units sold) + fixed cost 
A) (price × units sold) − (unit variable cost × units sold) − fixed cost 
B) (price × units sold) + (unit variable cost × units sold) + fixed cost 
C) (price + units sold) − (unit variable cost + units sold) − fixed cost 
D) (price − units sold) + (unit variable cost − units sold) + fixed cost

Question 15

What is the term for the units sold or expected to be sold,or the sales revenue earned or expected to be earned,above the break-even volume?

Accepted Answer

A) margin of safety 
B) operating leverage 
C) break-even point 
D) contribution margin 
A) margin of safety 
B) operating leverage 
C) break-even point 
D) contribution margin

Question 16

What relationship is visually portrayed by a profit-volume graph?

Accepted Answer

A) total sales and total cost 
B) profits and units sold 
C) fixed costs and variable costs 
D) total sales and units sold 
A) total sales and total cost 
B) profits and units sold 
C) fixed costs and variable costs 
D) total sales and units sold

Question 17

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 break-even point in sales dollars?

Accepted Answer

A) $21,670 
B) $28,000 
C) $58,330 
D) $80,000 
A) $21,670 
B) $28,000 
C) $58,330 
D) $80,000

Question 18

At the break-even point,revenue is equal to the contribution margin.

Accepted Answer

A) True 
 B)False

Question 19

Campbell Corporation developed the following income statement using a contribution margin approach:
The projected income statement was based on sales of 100,000 units.Thomas has the capacity to produce 120,000 units during the year.
   A.  Determine the break-even point in units.
B.The sales manager believes the company could increase sales by 8,000 units if
 advertising expenditures were increased by $\$ 22,000$. By how much will income increase or decrease if this plan is put into effect?
C. What is the maximum amount the company could pay for advertising if the sales would really increase by 8,000 units?

Accepted Answer

The answer of Campbell Corporation developed the following income statement...

Question 20

Which graph depicts the relationships among total variable costs,total fixed costs,number of units,and operating income?

Accepted Answer

A) cost graph 
B) volume graph 
C) cost-volume-profit graph 
D) break-even graph 
A) cost graph 
B) volume graph 
C) cost-volume-profit graph 
D) break-even graph

What are two concepts useful to management when assessing risk?

Which of the following is NOT an assumption used to prepare a cost-volume-profit graph?

Go For It Company sells go-carts at $1000 each,incurs a variable cost per unit of $600,and has a total fixed expense of $75,000.How many units must be sold to achieve a target operating income of $55,000?

Miss She makes dolls.The price of a doll is $15,and the variable expense is $7 per doll.What is the contribution margin ratio?

The cost-volume-profit graph shows the relationship between cost,volume,and operating income.

Common fixed expenses are the fixed costs that are NOT traceable to the segments and would remain even if one of the segments was eliminated.

If variable expenses decrease and the price increases,the break-even point decreases.

Product 1 has a contribution margin of $6.00 per unit,and Product 2 has a contribution margin of $7.50 per unit.Total fixed costs are $300,000.Sales mix and total volume varies from one period to another.Which statement is true?

The cost-volume-profit graph depicts the relationships among cost,volume,and profits by plotting the total revenue line and the total cost line on the graph.

What is operating leverage the relative mix of?

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.How many sales in dollars are needed to generate a profit of $30,000?

The impact on a firm's income resulting from a change in the number of units sold can be assessed by multiplying the unit contribution margin by the change in units sold assuming that fixed costs remain the same.

Match each item with the correct statement below. -The units sold or expected to be sold or sales revenue earned or expected to be earned above the break-even volume

What is the formula to calculate operating income?

What is the term for the units sold or expected to be sold,or the sales revenue earned or expected to be earned,above the break-even volume?

What relationship is visually portrayed by a profit-volume graph?

At the break-even point,revenue is equal to the contribution margin.

Which graph depicts the relationships among total variable costs,total fixed costs,number of units,and operating income?

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

What are two concepts useful to management when assessing risk?

Which of the following is NOT an assumption used to prepare a cost-volume-profit graph?

Go For It Company sells go-carts at $1000 each,incurs a variable cost per unit of $600,and has a total fixed expense of $75,000.How many units must be sold to achieve a target operating income of $55,000?

Miss She makes dolls.The price of a doll is $15,and the variable expense is $7 per doll.What is the contribution margin ratio?

The cost-volume-profit graph shows the relationship between cost,volume,and operating income.

Common fixed expenses are the fixed costs that are NOT traceable to the segments and would remain even if one of the segments was eliminated.

If variable expenses decrease and the price increases,the break-even point decreases.

Product 1 has a contribution margin of $6.00 per unit,and Product 2 has a contribution margin of $7.50 per unit.Total fixed costs are $300,000.Sales mix and total volume varies from one period to another.Which statement is true?

The cost-volume-profit graph depicts the relationships among cost,volume,and profits by plotting the total revenue line and the total cost line on the graph.

What is operating leverage the relative mix of?

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.How many sales in dollars are needed to generate a profit of $30,000?

The impact on a firm's income resulting from a change in the number of units sold can be assessed by multiplying the unit contribution margin by the change in units sold assuming that fixed costs remain the same.

Match each item with the correct statement below. -The units sold or expected to be sold or sales revenue earned or expected to be earned above the break-even volume

What is the formula to calculate operating income?

What is the term for the units sold or expected to be sold,or the sales revenue earned or expected to be earned,above the break-even volume?

What relationship is visually portrayed by a profit-volume graph?

At the break-even point,revenue is equal to the contribution margin.

Which graph depicts the relationships among total variable costs,total fixed costs,number of units,and operating income?

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