Question 1

The volume of output which causes fixed costs to be equal in amount to total revenue is called the break-even point.

Accepted Answer

A) True 
 B)False

Question 2

A semi-variable cost:

Accepted Answer

A) Increases and decreases directly and proportionately with changes in volume. 
B) Changes in response to a change in volume,but not proportionately. 
C) Increases if volume increases,but remains constant if volume decreases. 
D) Changes inversely in response to a change in volume. 
A) Increases and decreases directly and proportionately with changes in volume. 
B) Changes in response to a change in volume,but not proportionately. 
C) Increases if volume increases,but remains constant if volume decreases. 
D) Changes inversely in response to a change in volume.

Question 3

Mitchum,Inc.produced different amounts of product X each month as follows:   Using the high-low method,determine:
(1)The variable expense per unit
(2)The fixed expense
(3)If Mitchum produced 410 units what would total expenses be?

Accepted Answer

The answer of Mitchum,Inc.produced different amounts of product X each...

Question 4

Cost-volume relationships
(a)What is the effect of an increase or decrease in activity upon variable costs per unit of activity?
(b)What is the effect of an increase or decrease in activity upon total fixed costs?

Accepted Answer

(a)Since total variable costs rise (or f

Question 5

In comparison to selling a product with a low contribution margin ratio,selling a product with a high contribution margin ratio always:

Accepted Answer

A) Requires less dollar sales volume to cover a given level of fixed costs. 
B) Results in a greater margin of safety. 
C) Results in higher operating income. 
D) Results in a higher contribution margin per unit sold. 
A) Requires less dollar sales volume to cover a given level of fixed costs. 
B) Results in a greater margin of safety. 
C) Results in higher operating income. 
D) Results in a higher contribution margin per unit sold.

Question 6

In cost-volume-profit analysis,the number of units sold is assumed to be equal to the number of units produced.

Accepted Answer

A) True 
 B)False

Question 7

With fixed costs,the cost per unit varies with changes in volume.

Accepted Answer

A) True 
 B)False

Question 8

The following information is available:   What is the operating income?

Accepted Answer

A) $40,000. 
B) $50,000. 
C) $8,000. 
D) $10,400. 
A) $40,000. 
B) $50,000. 
C) $8,000. 
D) $10,400.

Question 9

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 10

The range over which output may be expected to vary is called the relevant range.

Accepted Answer

A) True 
 B)False

Question 11

The high-low method is the only method to be used when determining semivariable costs.

Accepted Answer

A) True 
 B)False

Question 12

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) $425,000. 
B) $125,000. 
C) $250,000. 
D) $400,000. 
A) $425,000. 
B) $125,000. 
C) $250,000. 
D) $400,000.

Question 13

If the unit sales price is $12,variable costs are $6 per unit and fixed costs are $26,000 what is the contribution margin ratio per unit?

Accepted Answer

A) 40%. 
B) 50%. 
C) 60%. 
D) 70%. 
A) 40%. 
B) 50%. 
C) 60%. 
D) 70%.

Question 14

Estimating costs and profit
First-Class Company sells a single product.The unit selling price is $250,and variable costs are 60% of this selling price.Fixed costs are currently $68,000 per month.
(a)Calculate the monthly break-even point in units.____________ Units.
(b)First-Class is considering the acquisition of new robotic equipment.Depreciation on the new robots will increase monthly fixed costs by $8,000,but reduce variable costs to 50% of the current selling price.If First-Class acquires the robots what will be the new monthly break-even point in units? ________________________ Units.

Accepted Answer

(a)680 uni

Question 15

Management expects total sales of $40 million,a margin of safety of $10 million,and a contribution margin ratio of 45%.Which of the following estimated amounts is not consistent with this information?

Accepted Answer

A) Variable costs,$22 million. 
B) Fixed costs,$13.5 million. 
C) Operating income,$6 million. 
D) Break-even sales volume,$30 million. 
A) Variable costs,$22 million. 
B) Fixed costs,$13.5 million. 
C) Operating income,$6 million. 
D) Break-even sales volume,$30 million.

Question 16

Cost-volume-profit relationships
The following data are available for a product manufactured and sold by Logan Company:   Compute the following:
(a)Contribution margin per unit: $_______________
(b)Number of units that must be sold to break-even: _______________ units
(c)Dollar sales volume to produce income of $864,000 before taxes (round units to the next highest full unit): $_______________

Accepted Answer

(a)$84 (b)

Question 17

If the unit sales price is $7 and variable costs are $3,how many units have to be sold to earn a profit of $3,600 if fixed costs equal $5,000?

Accepted Answer

A) 900 units. 
B) 1,250 units. 
C) 1,500 units. 
D) 2,150 units. 
A) 900 units. 
B) 1,250 units. 
C) 1,500 units. 
D) 2,150 units.

Question 18

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) $90,000. 
B) $80,000. 
C) $70,000. 
D) $30,000. 
A) $90,000. 
B) $80,000. 
C) $70,000. 
D) $30,000.

Question 19

A 45% contribution margin ratio means that:

Accepted Answer

A) The company should contribute 45% of its operating income to qualified charities for maximum tax benefits. 
B) 55% of the company's revenue is consumed by fixed and variable costs. 
C) The company's revenue has increased by 45% during the current accounting period. 
D) 45% of the company's revenue is available to cover fixed costs and to contribute toward operating income. 
A) The company should contribute 45% of its operating income to qualified charities for maximum tax benefits. 
B) 55% of the company's revenue is consumed by fixed and variable costs. 
C) The company's revenue has increased by 45% during the current accounting period. 
D) 45% of the company's revenue is available to cover fixed costs and to contribute toward operating income.

Question 20

Unique Corporation manufactures two products; data are shown below:   If Unique's monthly fixed costs average $400,000,what is its break-even point expressed in sales dollars? (Rounded)

Accepted Answer

A) $1,320,462. 
B) $1,250,000. 
C) $1,400,000. 
D) $1,052,632. 
A) $1,320,462. 
B) $1,250,000. 
C) $1,400,000. 
D) $1,052,632.

Exam 20: Cost-Volume-Profit Analysis

The volume of output which causes fixed costs to be equal in amount to total revenue is called the break-even point.

A semi-variable cost:

Mitchum,Inc.produced different amounts of product X each month as follows: Using the high-low method,determine: (1)The variable expense per unit (2)The fixed expense (3)If Mitchum produced 410 units what would total expenses be?

Cost-volume relationships (a)What is the effect of an increase or decrease in activity upon variable costs per unit of activity? (b)What is the effect of an increase or decrease in activity upon total fixed costs?

In comparison to selling a product with a low contribution margin ratio,selling a product with a high contribution margin ratio always:

In cost-volume-profit analysis,the number of units sold is assumed to be equal to the number of units produced.

With fixed costs,the cost per unit varies with changes in volume.

The following information is available: What is the operating income?

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

The range over which output may be expected to vary is called the relevant range.

The high-low method is the only method to be used when determining semivariable costs.

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?

If the unit sales price is $12,variable costs are $6 per unit and fixed costs are $26,000 what is the contribution margin ratio per unit?

Management expects total sales of $40 million,a margin of safety of $10 million,and a contribution margin ratio of 45%.Which of the following estimated amounts is not consistent with this information?

If the unit sales price is $7 and variable costs are $3,how many units have to be sold to earn a profit of $3,600 if fixed costs equal $5,000?

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

A 45% contribution margin ratio means that:

Unique Corporation manufactures two products; data are shown below: If Unique's monthly fixed costs average $400,000,what is its break-even point expressed in sales dollars? (Rounded)

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

Filters