Question 1

Economies of scale can be achieved by using facilities more intensively.

Accepted Answer

A) True 
 B)False

Question 2

Relevant range
What is meant by the phrase relevant range of activity?

Accepted Answer

The relevant range represents the operat

Question 3

The Parry company's breakeven point in units is 20,000. Assuming that variable costs are 30% and fixed costs are $100,000, what is the company's projected operating income if sales are $750,000?

Accepted Answer

A)  $125,000. 
B)  $100,000. 
C)  $250,000. 
D)  $400,000. 
A)  $125,000. 
B)  $100,000. 
C)  $250,000. 
D)  $400,000.

Question 4

The contribution margin per unit for product no. CK74 is:

Accepted Answer

A)  $26. 
B)  $80.19. 
C)  $117. 
D)  $63. 
A)  $26. 
B)  $80.19. 
C)  $117. 
D)  $63.

Question 5

Margin of safety is the dollar amount by which actual sales volume exceeds the break-even sales volume.

Accepted Answer

A) True 
 B)False

Question 6

All other things held constant, how will an increase in selling price affect the break-even point measured in units?

Accepted Answer

A)  The break-even point will decrease. 
B)  The break-even point will increase. 
C)  The break-even point will remain constant. 
D)  The effect on the break-even point can't be predicted with certainty. 
A)  The break-even point will decrease. 
B)  The break-even point will increase. 
C)  The break-even point will remain constant. 
D)  The effect on the break-even point can't be predicted with certainty.

Question 7

As volume increases, per unit variable costs stay the same.

Accepted Answer

A) True 
 B)False

Question 8

Refer to the information above. Grayson's monthly break-even point expressed in sales dollars is:

Accepted Answer

A)  $1,000,000. 
B)  $1,285,714. 
C)  $1,153,846. 
D)  $2,285,714. 
A)  $1,000,000. 
B)  $1,285,714. 
C)  $1,153,846. 
D)  $2,285,714.

Question 9

What is the company's monthly break-even point expressed in sales dollars? $___________

Accepted Answer

The answer of What is the company's monthly break-even point...

Question 10

In cost-volume-profit analysis, income tax expense:

Accepted Answer

A)  Is included among the monthly operating expenses as a variable cost. 
B)  Is considered a fixed cost of doing business. 
C)  Is treated as a semi-variable cost that is partially dependent upon sales volume. 
D)  Is generally ignored. 
A)  Is included among the monthly operating expenses as a variable cost. 
B)  Is considered a fixed cost of doing business. 
C)  Is treated as a semi-variable cost that is partially dependent upon sales volume. 
D)  Is generally ignored.

Question 11

A company with monthly revenue of $120,000, variable costs of $50,000, and fixed costs of $40,000 has a contribution margin of:

Accepted Answer

A)  $120,000. 
B)  $80,000. 
C)  $70,000. 
D)  $35,000. 
A)  $120,000. 
B)  $80,000. 
C)  $70,000. 
D)  $35,000.

Question 12

High-low method
The following information is available regarding the total manufacturing overhead costs of Paymore, Inc., for five months in 2012:
 
(a) Using the high-low method, compute the following:
(1) The variable element of overhead cost per machine-hour:
(2) The fixed element of monthly overhead cost:
(b) Use the cost relationship determined in part (a) to estimate the total manufacturing overhead costs for July 2012, given that 7,250 machine-hours are scheduled.

Accepted Answer

(a) 
(1) $0.60 per machine-hou

Question 13

Costs which increase in total amount in direct proportion to an increase in output are called variable costs.

Accepted Answer

A) True 
 B)False

Question 14

At the proposed increased selling price of $190 per unit, what dollar volume of sales per month is required to break-even? (Rounded)

Accepted Answer

A)  $19,747. 
B)  $10,400. 
C)  $9,123. 
D)  $18,480. 
A)  $19,747. 
B)  $10,400. 
C)  $9,123. 
D)  $18,480.

Question 15

Which of the following is an example of a fixed cost for an airline?

Accepted Answer

A)  Depreciation on the corporate headquarters. 
B)  Fuel costs. 
C)  Income taxes expense. 
D)  Passengers' meals. 
A)  Depreciation on the corporate headquarters. 
B)  Fuel costs. 
C)  Income taxes expense. 
D)  Passengers' meals.

Question 16

High-low method
The following information is available regarding the total repair costs of Alexander Design Company for six months of 2012:
 
(a) Using the high-low method, compute the following:
(1) The variable element of repair cost per unit of production: $__________________ per unit
(2) The fixed element of the monthly maintenance cost: $___________________ (b) Use the cost relationship determined in part a to estimate the total maintenance cost for July 2012, given that production is scheduled for 2,300 units. $____________________

Accepted Answer

(a) 
(1)7.20
(2) 4,0

Question 17

The number of units of CK74 that Ruby must sell to break- even is (rounded, if necessary):

Accepted Answer

A)  30,000. 
B)  20,500. 
C)  8,200. 
D)  12,300. 
A)  30,000. 
B)  20,500. 
C)  8,200. 
D)  12,300.

Question 18

What is the contribution margin ratio of Sultan 's product?

Accepted Answer

A)  25%. 
B)  75%. 
C)  60%. 
D)  40%. 
A)  25%. 
B)  75%. 
C)  60%. 
D)  40%.

Question 19

If the unit sales price is $12, variable costs are $6 per unit and fixed costs are $36,000 what are the sales in dollars necessary to break-even?

Accepted Answer

A)  $90,000. 
B)  $72,000. 
C)  $70,000. 
D)  $60,000. 
A)  $90,000. 
B)  $72,000. 
C)  $70,000. 
D)  $60,000.

Question 20

Driver Company manufactures two products. Data concerning these products are shown below: If the company's fixed costs are $320,000, what level of sales must it generate to break-even?

Accepted Answer

A)  $914,286. 
B)  $457,143. 
C)  $320,000. 
D)  $1,000,000. 
A)  $914,286. 
B)  $457,143. 
C)  $320,000. 
D)  $1,000,000.

Exam 20: Cost-Volume-Profit Analysis

Economies of scale can be achieved by using facilities more intensively.

Relevant range What is meant by the phrase relevant range of activity?

The Parry company's breakeven point in units is 20,000. Assuming that variable costs are 30% and fixed costs are $100,000, what is the company's projected operating income if sales are $750,000?

The contribution margin per unit for product no. CK74 is:

Margin of safety is the dollar amount by which actual sales volume exceeds the break-even sales volume.

All other things held constant, how will an increase in selling price affect the break-even point measured in units?

As volume increases, per unit variable costs stay the same.

Refer to the information above. Grayson's monthly break-even point expressed in sales dollars is:

What is the company's monthly break-even point expressed in sales dollars? $___________

In cost-volume-profit analysis, income tax expense:

A company with monthly revenue of $120,000, variable costs of $50,000, and fixed costs of $40,000 has a contribution margin of:

Costs which increase in total amount in direct proportion to an increase in output are called variable costs.

At the proposed increased selling price of $190 per unit, what dollar volume of sales per month is required to break-even? (Rounded)

Which of the following is an example of a fixed cost for an airline?

The number of units of CK74 that Ruby must sell to break- even is (rounded, if necessary):

What is the contribution margin ratio of Sultan 's product?

If the unit sales price is $12, variable costs are $6 per unit and fixed costs are $36,000 what are the sales in dollars necessary to break-even?

Driver Company manufactures two products. Data concerning these products are shown below: If the company's fixed costs are $320,000, what level of sales must it generate to break-even?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

Filters