Question 1

If a business had sales of $4,000,000 and a margin of safety of 25%, what was the break-even point?

Accepted Answer

A)  $5,000,000 
B)  $3,000,000 
C)  $12,000,000 
D)  $1,000,000 
A)  $5,000,000 
B)  $3,000,000 
C)  $12,000,000 
D)  $1,000,000

Question 2

If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would:

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  increase or decrease, depending upon the percentage increase in wage rates. 
A)  decrease. 
B)  increase. 
C)  remain the same. 
D)  increase or decrease, depending upon the percentage increase in wage rates.

Question 3

Which of the following is an example of a cost that remains the same in total as the number of units produced changes?

Accepted Answer

A)  Direct labor 
B)  Salary of a factory supervisor 
C)  Depreciation on factory equipment under units of production method 
D)  Direct materials 
A)  Direct labor 
B)  Salary of a factory supervisor 
C)  Depreciation on factory equipment under units of production method 
D)  Direct materials

Question 4

Monthly rent on a factory building is an example of a fixed cost.

Accepted Answer

A) True 
 B)False

Question 5

Total fixed costs remain constant as the level of activity changes within the relevant range.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following graphs illustrates the nature of a mixed cost?

Accepted Answer

A)  Graph 2 
B)  Graph 3 
C)  Graph 4 
D)  Graph 1   
A)  Graph 2 
B)  Graph 3 
C)  Graph 4 
D)  Graph 1

Question 7

DeGiaimo Co. has an operating leverage of 5. If next year's sales are expected to increase by 10%, then the company's operating income will increase by 50%.

Accepted Answer

A) True 
 B)False

Question 8

Variable costs are costs that vary in total in direct proportion to changes in the activity level.

Accepted Answer

A) True 
 B)False

Question 9

Rouney Co. has budgeted that factory supervisors' salary will increase by 10%. If selling prices and all other cost relationships are held constant, next year's break-even point would:

Accepted Answer

A)  decrease by 10%. 
B)  increase by 10%. 
C)  remain constant. 
D)  increase at a rate greater than 10%. 
A)  decrease by 10%. 
B)  increase by 10%. 
C)  remain constant. 
D)  increase at a rate greater than 10%.

Question 10

If fixed costs are $250,000, the unit selling price is $105, and the unit variable cost is $65, what is the break-even sales (in units)?

Accepted Answer

A)  6,250 units 
B)  2,381 units 
C)  10,000 units 
D)  3,846 units 
A)  6,250 units 
B)  2,381 units 
C)  10,000 units 
D)  3,846 units

Question 11

With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. Such an analysis is called:

Accepted Answer

A)  "what if" or sensitivity analysis. 
B)  vary the data analysis. 
C)  computer-aided analysis. 
D)  data gathering. 
A)  "what if" or sensitivity analysis. 
B)  vary the data analysis. 
C)  computer-aided analysis. 
D)  data gathering.

Question 12

If the volume of sales is $4,000,000 and sales at the break-even point amount to $3,200,000, the margin of safety will be 20%.

Accepted Answer

A) True 
 B)False

Question 13

For purpose of analysis, mixed costs can generally be separated into their variable and fixed components.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following graphs illustrates the behavior of a total variable cost?

Accepted Answer

A)  Graph 2 
B)  Graph 3 
C)  Graph 4 
D)  Graph 1   
A)  Graph 2 
B)  Graph 3 
C)  Graph 4 
D)  Graph 1

Question 15

Break-even analysis is a type of cost-volume-profit analysis.

Accepted Answer

A) True 
 B)False

Question 16

A production supervisor's salary that does not vary with the number of units produced is an example of a fixed cost.

Accepted Answer

A) True 
 B)False

Question 17

The fixed cost per unit varies with changes in the level of activity.

Accepted Answer

A) True 
 B)False

Question 18

Winston Co. manufactures office furniture. During the most productive month of the year, 3,500 desks were manufactured at a total cost of $84,400. In its slowest month, the company made 1,100 desks at a cost of $46,000. Using the high-low method of cost estimation, total fixed costs are:

Accepted Answer

A)  $56,000. 
B)  $28,400. 
C)  $17,600. 
D)  $29,900. 
A)  $56,000. 
B)  $28,400. 
C)  $17,600. 
D)  $29,900.

Question 19

Currently, fixed costs are $561,000 and the unit contribution margin is $10. What would be the break-even point in units if variable cost is decreased by $0.50 per unit?

Accepted Answer

A)  59,053 units 
B)  56,100 units 
C)  53,429 units 
D)  60,000 units 
A)  59,053 units 
B)  56,100 units 
C)  53,429 units 
D)  60,000 units

Question 20

Which of the following activity bases would be the most appropriate for food costs of a hospital?

Accepted Answer

A)  Number of cooks scheduled to work 
B)  Number of x-rays taken 
C)  Number of patients who are admitted in the hospital 
D)  Number of scheduled surgeries 
A)  Number of cooks scheduled to work 
B)  Number of x-rays taken 
C)  Number of patients who are admitted in the hospital 
D)  Number of scheduled surgeries

If a business had sales of $4,000,000 and a margin of safety of 25%, what was the break-even point?

If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would:

Which of the following is an example of a cost that remains the same in total as the number of units produced changes?

Monthly rent on a factory building is an example of a fixed cost.

Total fixed costs remain constant as the level of activity changes within the relevant range.

Which of the following graphs illustrates the nature of a mixed cost?

DeGiaimo Co. has an operating leverage of 5. If next year's sales are expected to increase by 10%, then the company's operating income will increase by 50%.

Variable costs are costs that vary in total in direct proportion to changes in the activity level.

Rouney Co. has budgeted that factory supervisors' salary will increase by 10%. If selling prices and all other cost relationships are held constant, next year's break-even point would:

If fixed costs are $250,000, the unit selling price is $105, and the unit variable cost is $65, what is the break-even sales (in units)?

With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. Such an analysis is called:

If the volume of sales is $4,000,000 and sales at the break-even point amount to $3,200,000, the margin of safety will be 20%.

For purpose of analysis, mixed costs can generally be separated into their variable and fixed components.

Which of the following graphs illustrates the behavior of a total variable cost?

Break-even analysis is a type of cost-volume-profit analysis.

A production supervisor's salary that does not vary with the number of units produced is an example of a fixed cost.

The fixed cost per unit varies with changes in the level of activity.

Winston Co. manufactures office furniture. During the most productive month of the year, 3,500 desks were manufactured at a total cost of $84,400. In its slowest month, the company made 1,100 desks at a cost of $46,000. Using the high-low method of cost estimation, total fixed costs are:

Currently, fixed costs are $561,000 and the unit contribution margin is $10. What would be the break-even point in units if variable cost is decreased by $0.50 per unit?

Which of the following activity bases would be the most appropriate for food costs of a hospital?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, Internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 11: Cost Behavior and Cost-Volume-Profit Analysis

If a business had sales of $4,000,000 and a margin of safety of 25%, what was the break-even point?

If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would:

Which of the following is an example of a cost that remains the same in total as the number of units produced changes?

Monthly rent on a factory building is an example of a fixed cost.

Total fixed costs remain constant as the level of activity changes within the relevant range.

Which of the following graphs illustrates the nature of a mixed cost?

DeGiaimo Co. has an operating leverage of 5. If next year's sales are expected to increase by 10%, then the company's operating income will increase by 50%.

Variable costs are costs that vary in total in direct proportion to changes in the activity level.

Rouney Co. has budgeted that factory supervisors' salary will increase by 10%. If selling prices and all other cost relationships are held constant, next year's break-even point would:

If fixed costs are $250,000, the unit selling price is $105, and the unit variable cost is $65, what is the break-even sales (in units)?

With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. Such an analysis is called:

If the volume of sales is $4,000,000 and sales at the break-even point amount to $3,200,000, the margin of safety will be 20%.

For purpose of analysis, mixed costs can generally be separated into their variable and fixed components.

Which of the following graphs illustrates the behavior of a total variable cost?

Break-even analysis is a type of cost-volume-profit analysis.

A production supervisor's salary that does not vary with the number of units produced is an example of a fixed cost.

The fixed cost per unit varies with changes in the level of activity.

Winston Co. manufactures office furniture. During the most productive month of the year, 3,500 desks were manufactured at a total cost of $84,400. In its slowest month, the company made 1,100 desks at a cost of $46,000. Using the high-low method of cost estimation, total fixed costs are:

Currently, fixed costs are $561,000 and the unit contribution margin is $10. What would be the break-even point in units if variable cost is decreased by $0.50 per unit?

Which of the following activity bases would be the most appropriate for food costs of a hospital?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, Internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters