Question 1

Blane Company has the following data:
   What will operating income be if units sold double to 100,000 units?

Accepted Answer

The answer of Blane Company has the following data:
 ...

Question 2

The three most common cost behavior classifications are:

Accepted Answer

A)  variable costs, product costs, and sunk costs 
B)  fixed costs, variable costs, and mixed costs 
C)  variable costs, period costs, and differential costs 
D)  variable costs, sunk costs, and opportunity costs 
A)  variable costs, product costs, and sunk costs 
B)  fixed costs, variable costs, and mixed costs 
C)  variable costs, period costs, and differential costs 
D)  variable costs, sunk costs, and opportunity costs B

Question 3

For purposes of analysis, mixed costs are generally:

Accepted Answer

A)  classified as fixed costs 
B)  classified as variable costs 
C)  classified as period costs 
D)  separated into their variable and fixed cost components 
A)  classified as fixed costs 
B)  classified as variable costs 
C)  classified as period costs 
D)  separated into their variable and fixed cost components D

Question 4

Which of the following costs is a mixed cost?

Accepted Answer

A)  Salary of a factory supervisor 
B)  Electricity costs of $3 per kilowatt-hour 
C)  Rental costs of $10,000 per month plus $.30 per machine hour of use 
D)  Straight-line depreciation on factory equipment 
A)  Salary of a factory supervisor 
B)  Electricity costs of $3 per kilowatt-hour 
C)  Rental costs of $10,000 per month plus $.30 per machine hour of use 
D)  Straight-line depreciation on factory equipment

Question 5

If fixed costs are $500,000, the unit selling price is $55, and the unit variable costs are $30, what is the break-even sales (units) if fixed costs are increased by $80,000?

Accepted Answer

A)  10,545 units 
B)  19,333 units 
C)  23,200 units 
D)  25,000 units 
A)  10,545 units 
B)  19,333 units 
C)  23,200 units 
D)  25,000 units

Question 6

Carmelita Company sells 40,000 units at $18 per unit. Fixed costs are $62,000 and income from operations is $258,000. Determine the (a) variable cost per unit, (b) unit contribution margin, and (c) contribution margin ratio .

Accepted Answer

a.
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 b. $8 per unit

Question 7

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars)?

Accepted Answer

A)  $2,125,000 
B)  $ 340,000 
C)  $3,400,000 
D)  $1,416,666 
A)  $2,125,000 
B)  $ 340,000 
C)  $3,400,000 
D)  $1,416,666

Question 8

The manufacturing cost of Carrie Industries for the first three months of the year are provided below:
   Using the high-low method, determine the (a) variable cost per unit, and (b) the total fixed cost.

Accepted Answer

a. $30 per unit = ($

Question 9

The contribution margin ratio is the same as the profit-volume ratio.

Accepted Answer

A) True 
 B)False

Question 10

Absorption costing is required for financial reporting under generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 11

Costs that remain constant in total dollar amount as the level of activity changes are called:

Accepted Answer

A)  fixed costs 
B)  mixed costs 
C)  product costs 
D)  variable costs 
A)  fixed costs 
B)  mixed costs 
C)  product costs 
D)  variable costs

Question 12

Companies with large amounts of fixed costs will generally have a high operating leverage.

Accepted Answer

A) True 
 B)False

Question 13

Rusty Co. sells two products, X and Y. Last year Rusty sold 5,000 units of X's and 35,000 units of Y's. Related data are:   What was Rusty Co.'s weighted average unit variable cost?

Accepted Answer

A)  $52.50 
B)  $70.00 
C)  $120.00 
D)  $50.00 
A)  $52.50 
B)  $70.00 
C)  $120.00 
D)  $50.00

Question 14

The Keith Company reports the following data.
   Determine Keith Company's operating leverage.

Accepted Answer

8.0 = ($900,000 - $5

Question 15

Knowing how costs behave is useful to management for all the following reasons except for

Accepted Answer

A)  predicting customer demand. 
B)  predicting profits as sales and production volumes change. 
C)  estimating costs. 
D)  changing an existing product production. 
A)  predicting customer demand. 
B)  predicting profits as sales and production volumes change. 
C)  estimating costs. 
D)  changing an existing product production.

Question 16

If sales are $400,000, variable costs are 75% of sales, and operating income is $50,000, what is the operating leverage?

Accepted Answer

A)  2.5 
B)  7.5 
C)  2.0 
D)  0 
A)  2.5 
B)  7.5 
C)  2.0 
D)  0

Question 17

Currently, the unit selling price is $50, the variable cost, $34, and the total fixed costs, $108,000. A proposal is being evaluated to increase the selling price to $54.

Accepted Answer

The answer of Currently, the unit selling price is $50,...

Question 18

If fixed costs are $500,000 and variable costs are 60% of break-even sales, profit is zero when sales revenue is $930,000.

Accepted Answer

A) True 
 B)False

Question 19

Direct materials and direct labor costs are examples of variable costs of production.

Accepted Answer

A) True 
 B)False

Question 20

The range of activity over which changes in cost are of interest to management is called the relevant range.

Accepted Answer

A) True 
 B)False

Exam 19: Cost Behavior and Cost-Volume-Profit Analysis

Blane Company has the following data: What will operating income be if units sold double to 100,000 units?

The three most common cost behavior classifications are:

For purposes of analysis, mixed costs are generally:

Which of the following costs is a mixed cost?

If fixed costs are $500,000, the unit selling price is $55, and the unit variable costs are $30, what is the break-even sales (units) if fixed costs are increased by $80,000?

Carmelita Company sells 40,000 units at $18 per unit. Fixed costs are $62,000 and income from operations is $258,000. Determine the (a) variable cost per unit, (b) unit contribution margin, and (c) contribution margin ratio .

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars)?

The manufacturing cost of Carrie Industries for the first three months of the year are provided below: Using the high-low method, determine the (a) variable cost per unit, and (b) the total fixed cost.

The contribution margin ratio is the same as the profit-volume ratio.

Absorption costing is required for financial reporting under generally accepted accounting principles.

Costs that remain constant in total dollar amount as the level of activity changes are called:

Companies with large amounts of fixed costs will generally have a high operating leverage.

Rusty Co. sells two products, X and Y. Last year Rusty sold 5,000 units of X's and 35,000 units of Y's. Related data are: What was Rusty Co.'s weighted average unit variable cost?

The Keith Company reports the following data. Determine Keith Company's operating leverage.

Knowing how costs behave is useful to management for all the following reasons except for

If sales are $400,000, variable costs are 75% of sales, and operating income is $50,000, what is the operating leverage?

Currently, the unit selling price is $50, the variable cost, $34, and the total fixed costs, $108,000. A proposal is being evaluated to increase the selling price to $54.

If fixed costs are $500,000 and variable costs are 60% of break-even sales, profit is zero when sales revenue is $930,000.

Direct materials and direct labor costs are examples of variable costs of production.

The range of activity over which changes in cost are of interest to management is called the relevant range.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

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