Question 1

At the current selling price of $70 per unit, what dollar volume of sales per month is required for Accents to earn a monthly operating income of $15,000?

Accepted Answer

A)  $25,000. 
B)  $30,000. 
C)  $45,000. 
D)  Some other amount. 
A)  $25,000. 
B)  $30,000. 
C)  $45,000. 
D)  Some other amount.

Question 2

Using the high-low method, Duke & Duchess's monthly overhead cost is closest to which of the following?

Accepted Answer

A)  $59,413. 
B)  $12,495. 
C)  $12,250. 
D)  $46,918. 
A)  $59,413. 
B)  $12,495. 
C)  $12,250. 
D)  $46,918.

Question 3

If Rhinefold generates $1,400,000 in monthly sales, it will earn a monthly operating income of $__________.

Accepted Answer

The answer of If Rhinefold generates $1,400,000 in monthly sales,...

Question 4

When cost-volume-profit analysis is used, the need for a cost accounting system is eliminated.

Accepted Answer

A) True 
 B)False

Question 5

Variable costs are usually transformed into fixed costs when a business operates at less than full capacity.

Accepted Answer

A) True 
 B)False

Question 6

The cost formula for Ratnere's monthly overhead cost can be expressed as:

Accepted Answer

A)  $2.65 average cost per unit. 
B)  $1.75 average cost per unit. 
C)  $24,000 fixed cost plus $1.00 per unit. 
D)  $72,000 fixed cost + $2.00 per unit. 
A)  $2.65 average cost per unit. 
B)  $1.75 average cost per unit. 
C)  $24,000 fixed cost plus $1.00 per unit. 
D)  $72,000 fixed cost + $2.00 per unit.

Question 7

At the current selling price of $170 per unit, the contribution margin ratio is:

Accepted Answer

A)  23.5%. 
B)  76%. 
C)  34%. 
D)  21%. 
A)  23.5%. 
B)  76%. 
C)  34%. 
D)  21%.

Question 8

The higher the unit contribution margin, the higher the volume of unit sales required to cover a given amount of fixed costs.

Accepted Answer

A) True 
 B)False

Question 9

The dollar sales volume necessary to produce monthly operating income of $12,000 before taxes is:

Accepted Answer

A)  $188,000. 
B)  $186,000. 
C)  $288,000. 
D)  $248,000. 
A)  $188,000. 
B)  $186,000. 
C)  $288,000. 
D)  $248,000.

Question 10

Sales of products with high contribution margins often are described as quantity sales.

Accepted Answer

A) True 
 B)False

Question 11

The Davidson company's breakeven point in units is 40,000. Assuming that variable costs are 40% and fixed costs are $300,000, what is the company's projected operating income if sales are $1,000,000?

Accepted Answer

A)  $750,000. 
B)  $100,000. 
C)  $250,000. 
D)  $400,000. 
A)  $750,000. 
B)  $100,000. 
C)  $250,000. 
D)  $400,000.

Question 12

Marston Company sells a single product at a sales price of $50 per unit. Fixed costs total $15,000 per month, and variable costs amount to $20 per unit. If management reduces the sales price of this product by $5 per unit, the sales volume needed for the company to break even will:

Accepted Answer

A)  Increase by $5,000. 
B)  Increase by $4,500. 
C)  Increase by $2,000. 
D)  Remain unchanged. 
A)  Increase by $5,000. 
B)  Increase by $4,500. 
C)  Increase by $2,000. 
D)  Remain unchanged.

Question 13

At the current selling price of $170 per unit, what dollar volume of sales per month is required for Grand Gimmicks to break-even?

Accepted Answer

A)  $6,178. 
B)  $8,299. 
C)  $26,553. 
D)  $20,800. 
A)  $6,178. 
B)  $8,299. 
C)  $26,553. 
D)  $20,800.

Question 14

If monthly fixed costs are $21,000 and the contribution margin ratio is 42%, the monthly sales volume required to break even is:

Accepted Answer

A)  $8,820. 
B)  $50,000. 
C)  $78,000. 
D)  $39,207. 
A)  $8,820. 
B)  $50,000. 
C)  $78,000. 
D)  $39,207.

Question 15

In the area of cost-volume-profit analysis, the contribution margin ratio shows how much each dollar of sales contributes to:

Accepted Answer

A)  Covering the fixed costs of the business and providing operating income. 
B)  Fixed expenses and variable expenses. 
C)  Variable expenses and interest charges. 
D)  Variable expenses when production is at normal capacity. 
A)  Covering the fixed costs of the business and providing operating income. 
B)  Fixed expenses and variable expenses. 
C)  Variable expenses and interest charges. 
D)  Variable expenses when production is at normal capacity.

Question 16

A manufacturing company produced the following report:
 
Required:
(1) How many units would have to be sold to break-even?
(2) If fixed overhead were to increase by $1,800 what would the break-even point in units be?
(3) What is operating income if sales increase by 25%?

Accepted Answer

(1) 113 units rounde

Question 17

What is the monthly sales volume in dollars necessary to break-even?

Accepted Answer

A)  $82,500. 
B)  $66,500. 
C)  $97,059. 
D)  $77,500. 
A)  $82,500. 
B)  $66,500. 
C)  $97,059. 
D)  $77,500.

Question 18

How will a company's contribution margin be affected by an investment in equipment that increases fixed costs in order to achieve a reduction in direct labor cost?

Accepted Answer

A)  Contribution margin will increase. 
B)  Contribution margin will fall. 
C)  Contribution margin will either increase or decrease depending on the relative magnitudes of the changes in fixed and variable costs. 
D)  Contribution margin will remain the same. 
A)  Contribution margin will increase. 
B)  Contribution margin will fall. 
C)  Contribution margin will either increase or decrease depending on the relative magnitudes of the changes in fixed and variable costs. 
D)  Contribution margin will remain the same.

Question 19

One characteristic common to all types of costs is the tendency to rise and fall in direct proportion to changes in the volume of business output.

Accepted Answer

A) True 
 B)False

Question 20

At the original selling price of $50 per unit, what dollar volume of sales per month is required for Paulsen to earn a monthly operating income of $5,000?

Accepted Answer

The answer of At the original selling price of $50...

Exam 20: Cost-Volume-Profit Analysis

At the current selling price of $70 per unit, what dollar volume of sales per month is required for Accents to earn a monthly operating income of $15,000?

Using the high-low method, Duke & Duchess's monthly overhead cost is closest to which of the following?

If Rhinefold generates $1,400,000 in monthly sales, it will earn a monthly operating income of $__________.

When cost-volume-profit analysis is used, the need for a cost accounting system is eliminated.

Variable costs are usually transformed into fixed costs when a business operates at less than full capacity.

The cost formula for Ratnere's monthly overhead cost can be expressed as:

At the current selling price of $170 per unit, the contribution margin ratio is:

The higher the unit contribution margin, the higher the volume of unit sales required to cover a given amount of fixed costs.

The dollar sales volume necessary to produce monthly operating income of $12,000 before taxes is:

Sales of products with high contribution margins often are described as quantity sales.

The Davidson company's breakeven point in units is 40,000. Assuming that variable costs are 40% and fixed costs are $300,000, what is the company's projected operating income if sales are $1,000,000?

Marston Company sells a single product at a sales price of $50 per unit. Fixed costs total $15,000 per month, and variable costs amount to $20 per unit. If management reduces the sales price of this product by $5 per unit, the sales volume needed for the company to break even will:

At the current selling price of $170 per unit, what dollar volume of sales per month is required for Grand Gimmicks to break-even?

If monthly fixed costs are $21,000 and the contribution margin ratio is 42%, the monthly sales volume required to break even is:

In the area of cost-volume-profit analysis, the contribution margin ratio shows how much each dollar of sales contributes to:

A manufacturing company produced the following report: Required: (1) How many units would have to be sold to break-even? (2) If fixed overhead were to increase by $1,800 what would the break-even point in units be? (3) What is operating income if sales increase by 25%?

What is the monthly sales volume in dollars necessary to break-even?

How will a company's contribution margin be affected by an investment in equipment that increases fixed costs in order to achieve a reduction in direct labor cost?

One characteristic common to all types of costs is the tendency to rise and fall in direct proportion to changes in the volume of business output.

At the original selling price of $50 per unit, what dollar volume of sales per month is required for Paulsen to earn a monthly operating income of $5,000?

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

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