Question 1

Most operating decisions of management focus on a narrow range of activity called the:

Accepted Answer

A)  relevant range of production 
B)  strategic level of production 
C)  optimal level of production 
D)  tactical operating level of production 
A)  relevant range of production 
B)  strategic level of production 
C)  optimal level of production 
D)  tactical operating level of production

Question 2

The relative distribution of sales among the various products sold by a business is termed the:

Accepted Answer

A)  business's basket of goods 
B)  contribution margin mix 
C)  sales mix 
D)  product portfolio 
A)  business's basket of goods 
B)  contribution margin mix 
C)  sales mix 
D)  product portfolio

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are:   What was Carter Co.'s weighted average unit selling price?

Accepted Answer

A)  $200 
B)  $100 
C)  $ 80 
D)  $ 88 
A)  $200 
B)  $100 
C)  $ 80 
D)  $ 88

Question 5

Racer Industries has fixed costs of $900,000. Selling price per unit is $250 and variable cost per unit is $130.
Required:
a. How many units must Racer sell in order to break even?
b. How many units must Racer sell in order to earn a profit of $480,000?
c. A new employee suggests that Racer Industries sponsor a company 10-K as a form of advertising. The cost to sponsor the event is $7,200. How many more units must be sold to cover this cost?

Accepted Answer

a. $900,000 / ($250 - 130) = 7

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The systematic examination of the relationships among selling prices, volume of sales and production, costs, and profits is termed:

Accepted Answer

A)  contribution margin analysis 
B)  cost-volume-profit analysis 
C)  budgetary analysis 
D)  gross profit analysis 
A)  contribution margin analysis 
B)  cost-volume-profit analysis 
C)  budgetary analysis 
D)  gross profit analysis

Question 8

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 9

(a) If Swannanoa Company's budgeted sales are $1,000,000, fixed costs are $350,000, and variable costs are $600,000, whatis the budgeted contribution margin ratio?
(b)  If the contribution margin ratio is 30%, sales are $900,000 and fixed costs are $200,000, what is the operating profit?

Accepted Answer

(a) Contribution margin = $1,0

Question 10

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

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 11

Carrolton, Inc. currently sells widgets for $80 per unit. The variable cost is $30 per unit and total fixed costs equal $240,000 per year. Sales are currently 20,000 units annually.
The company is considering a 20% drop in selling price that they believe will raise units sold by 20%. Assuming all costs stay the same, what is the impact on income if they make this change?

Accepted Answer

Current Scenario:
SP $80
VC $30
CM $50 x

Question 12

Match the following terms with their definitions.

Accepted Answer

The answer of Match the following terms with their definitions.
...

Question 13

Calzone Co. has budgeted salary increases to factory supervisors totaling 8%. If selling prices and all other cost relationships are held constant, next year's break-even point:

Accepted Answer

A)  will decrease by 8% 
B)  will increase by 8% 
C)  cannot be determined from the data given 
D)  will increase at a rate greater than 8% 
A)  will decrease by 8% 
B)  will increase by 8% 
C)  cannot be determined from the data given 
D)  will increase at a rate greater than 8%

Question 14

Cost-volume-profit analysis can be presented in both equation form and graphic form.

Accepted Answer

A) True 
 B)False

Question 15

When a business sells more than one product at varying selling prices, the business's break-even point can be determined as long as the number of products does not exceed:

Accepted Answer

A)  two 
B)  three 
C)  fifteen 
D)  there is no limit 
A)  two 
B)  three 
C)  fifteen 
D)  there is no limit

Question 16

The Grant Company has sales of $300,000, and the break-even point in sales dollars if $225,000. Determine the company's margin of safety percentage.

Accepted Answer

25% = ($30

Question 17

Which of the following describes the behavior of the fixed cost per unit?

Accepted Answer

A)  Decreases with increasing production 
B)  Decreases with decreasing production 
C)  Remains constant with changes in production 
D)  Increases with increasing production 
A)  Decreases with increasing production 
B)  Decreases with decreasing production 
C)  Remains constant with changes in production 
D)  Increases with increasing production

Question 18

If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break-even sales (units)?

Accepted Answer

A)  3,425 units 
B)  2,381 units 
C)  2,000 units 
D)  4,808 units 
A)  3,425 units 
B)  2,381 units 
C)  2,000 units 
D)  4,808 units

Question 19

Silver River Company sells Products S and T and has made the following estimates for the coming year:
   Fixed costs are estimated at $202,400. Determine (a) the estimated sales in units of the overall product necessary to reach the break-even point for the coming year, (b) the estimated number of units of each product necessary to be sold to reach the break-even point for the coming year, and (c) the estimated sales in units of the overall product necessary to realize an operating income of $119,600 for the coming year.

Accepted Answer

The answer of Silver River Company sells Products S and...

Question 20

The Atlantic Company sells a product with a break-even point of 3,000 sales units. The variable cost is $60 per unit, and fixed costs are $270,000. Determine the (a) unit sales price, and (b) break-even points in sales units if the company desires a target profit of $36,000.

Accepted Answer

a. 3,000 units = $27

Exam 21: Cost Behavior and Cost-Volume-Profit Analysis

Most operating decisions of management focus on a narrow range of activity called the:

The relative distribution of sales among the various products sold by a business is termed the:

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

Carter Co. sells two products, Arks and Bins. Last year Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are: What was Carter Co.'s weighted average unit selling price?

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

The systematic examination of the relationships among selling prices, volume of sales and production, costs, and profits is termed:

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

(a) If Swannanoa Company's budgeted sales are $1,000,000, fixed costs are $350,000, and variable costs are $600,000, whatis the budgeted contribution margin ratio? (b) If the contribution margin ratio is 30%, sales are $900,000 and fixed costs are $200,000, what is the operating profit?

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

Match the following terms with their definitions.

Calzone Co. has budgeted salary increases to factory supervisors totaling 8%. If selling prices and all other cost relationships are held constant, next year's break-even point:

Cost-volume-profit analysis can be presented in both equation form and graphic form.

When a business sells more than one product at varying selling prices, the business's break-even point can be determined as long as the number of products does not exceed:

The Grant Company has sales of $300,000, and the break-even point in sales dollars if $225,000. Determine the company's margin of safety percentage.

Which of the following describes the behavior of the fixed cost per unit?

If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break-even sales (units)?

The Atlantic Company sells a product with a break-even point of 3,000 sales units. The variable cost is $60 per unit, and fixed costs are $270,000. Determine the (a) unit sales price, and (b) break-even points in sales units if the company desires a target profit of $36,000.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

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

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

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