Question 1

When a company desires to achieve a after-tax profit, which of the following statements is true?

Accepted Answer

A)  Fixed costs will increase. 
B)  As the tax rate increases, the number of units that need to be sold will decrease. 
C)  The before-tax profit will need to be calculated. 
D)  The contribution margin per unit will decrease. 
A)  Fixed costs will increase. 
B)  As the tax rate increases, the number of units that need to be sold will decrease. 
C)  The before-tax profit will need to be calculated. 
D)  The contribution margin per unit will decrease.

Question 2

A company's manager estimates that in the upcoming year, increasing advertising costs by $25,000 will cause sales revenue to increase by $60,000. If the company's contribution margin ratio is 35%, what will be overall effect on net operating income?

Accepted Answer

A)  Net operating income will increase by $12,250. 
B)  Net operating income will increase by $29,750. 
C)  Net operating income will increase by $35,000. 
D)  Net operating income will decrease by $4,000. 
A)  Net operating income will increase by $12,250. 
B)  Net operating income will increase by $29,750. 
C)  Net operating income will increase by $35,000. 
D)  Net operating income will decrease by $4,000.

Question 3

Assuming a company has a positive contribution margin, which of the following changes will cause net operating income to increase?

Accepted Answer

A)  A decrease in variable costs. 
B)  A decrease in the sale price 
C)  An increase in total fixed costs. 
D)  A decrease in the sales volume. 
A)  A decrease in variable costs. 
B)  A decrease in the sale price 
C)  An increase in total fixed costs. 
D)  A decrease in the sales volume.

Question 4

If a company has a positive contribution margin but net operating income is low or negative, what are some ways of increasing net operating income?

Accepted Answer

A)  Increase sales price 
B)  Increase sales volume 
C)  Decrease variable costs 
D)  All of these are ways to increase net operating income 
A)  Increase sales price 
B)  Increase sales volume 
C)  Decrease variable costs 
D)  All of these are ways to increase net operating income

Question 5

Sienna Manufacturing has the following product information:
   Required: Calculate the following based on the above information:

Accepted Answer

The answer of Sienna Manufacturing has the following product information:
...

Question 6

Which of the following statements is most likely true if Red Inc. has an operating leverage of 2.0 while Blue Corp. has an operating leverage of 1.4?

Accepted Answer

A)  Red Inc. is selling its products for a higher sales price than Blue Corp. 
B)  Red Inc.'s net operating income will be less sensitive to a change in sale volume than Blue Corp. 
C)  Blue Corp.'s fixed costs in relation to variable costs are lower than Red Inc.'s. 
D)  Blue Corp. has a lower contribution margin per unit than Red Inc. 
A)  Red Inc. is selling its products for a higher sales price than Blue Corp. 
B)  Red Inc.'s net operating income will be less sensitive to a change in sale volume than Blue Corp. 
C)  Blue Corp.'s fixed costs in relation to variable costs are lower than Red Inc.'s. 
D)  Blue Corp. has a lower contribution margin per unit than Red Inc.

Question 7

Haywood Inc. has the following information available for one of its products:   In Haywood sells one more unit, net operating income will:

Accepted Answer

A)  increase by $20.75. 
B)  increase by $12.25. 
C)  increase by $22.75. 
D)  increase by $35. 
A)  increase by $20.75. 
B)  increase by $12.25. 
C)  increase by $22.75. 
D)  increase by $35.

Question 8

Poole Products Inc. Poole Products Inc. has the following product information available:
  Refer to the Poole Products Inc. information above. What is the break-even point in units?

Accepted Answer

A)  1,029 units 
B)  1,440 units 
C)  2,400 units 
D)  5,400 units 
A)  1,029 units 
B)  1,440 units 
C)  2,400 units 
D)  5,400 units

Question 9

Laverne's Soda Shop wishes to decrease variable costs. Which of the following options should she consider?

Accepted Answer

A)  Decrease in advertising costs 
B)  Decrease in rent 
C)  Decrease in direct labor costs 
D)  Increase in equipment rentals 
A)  Decrease in advertising costs 
B)  Decrease in rent 
C)  Decrease in direct labor costs 
D)  Increase in equipment rentals

Question 10

Hillary's Restaurant has the following information available regarding last year's operations:   The company's operating leverage was:

Accepted Answer

A)  0.71. 
B)  1.50. 
C)  2.12. 
D)  1.41. 
A)  0.71. 
B)  1.50. 
C)  2.12. 
D)  1.41.

Question 11

Cost structure refers to the relative proportion of:

Accepted Answer

A)  variable costs to contribution margin. 
B)  total costs to sales. 
C)  fixed costs to variable costs. 
D)  sales price per unit to variable costs per unit. 
A)  variable costs to contribution margin. 
B)  total costs to sales. 
C)  fixed costs to variable costs. 
D)  sales price per unit to variable costs per unit.

Question 12

Cameron Corp. Cameron Corp. has the following product information:
  Refer to the Cameron Corp. information above. How many units need to be sold in order to earn a target profit of $299,950?

Accepted Answer

A)  42,850 units 
B)  51,350 units 
C)  34,350 units 
D)  125,808 units 
A)  42,850 units 
B)  51,350 units 
C)  34,350 units 
D)  125,808 units

Question 13

When calculating the break-even point in a multi-product environment, which of the following pieces of information wouldnot be relevant?

Accepted Answer

A)  Contribution margin per unit for each type of product 
B)  Each product's percentage of total sales 
C)  Total fixed costs 
D)  Fixed costs per unit 
A)  Contribution margin per unit for each type of product 
B)  Each product's percentage of total sales 
C)  Total fixed costs 
D)  Fixed costs per unit

Question 14

Eason Products has the following product information available:
   Required: If Eason is in the 40% tax bracket, how many units need to be sold in order to earn an after-tax target profit of $450,000?

Accepted Answer

Sales volume (units) to earn a

Question 15

Floyd's Barbershop has fixed costs of $3,000 per month. Floyd regularly performs 400 haircuts a month and he does not anticipate this to change. Each haircut has a variable cost of $4.00. If Floyd would like to earn a target profit of $2,000, what does he need to charge for each haircut?

Accepted Answer

A)  $12.50 
B)  $16.50 
C)  $11.50 
D)  $8.50 
A)  $12.50 
B)  $16.50 
C)  $11.50 
D)  $8.50

Question 16

Howard Enterprises has a contribution margin ratio of 65% and fixed costs of $15,000. What would sales have to be in order for Howard to earn an after-tax profit of $50,000? The company is in the 40% tax bracket.

Accepted Answer

A)  $23,077 
B)  $100,000 
C)  $151,282 
D)  $75,000 
A)  $23,077 
B)  $100,000 
C)  $151,282 
D)  $75,000

Question 17

Poole Products Inc. has the following product information available:   If Poole is in the 40% tax bracket, how many units need to be sold in order to earn an after-tax target profit of $249,000?

Accepted Answer

A)  30,067 units 
B)  12,360 units 
C)  27,667 units 
D)  31,667 units 
A)  30,067 units 
B)  12,360 units 
C)  27,667 units 
D)  31,667 units

Question 18

Harrison Inc. has a contribution margin ratio of 60% and fixed costs of $91,000.
Required:

Accepted Answer

The answer of Harrison Inc. has a contribution margin ratio...

Question 19

Carolina Products Carolina Products sells a unique item with the following information available:
  Refer to the Carolina Products information above. What is the contribution margin per unit?

Accepted Answer

A)  $25 
B)  $40 
C)  $45 
D)  $30 
A)  $25 
B)  $40 
C)  $45 
D)  $30

Question 20

Harrison Manufacturing Harrison Manufacturing has the following product information available:
  Refer to the Harrison Manufacturing information above. What is the break-even point in units?

Accepted Answer

A)  3,369 units 
B)  1,752 units 
C)  3,650 units 
D)  1,153 units 
A)  3,369 units 
B)  1,752 units 
C)  3,650 units 
D)  1,153 units

When a company desires to achieve a after-tax profit, which of the following statements is true?

A company's manager estimates that in the upcoming year, increasing advertising costs by $25,000 will cause sales revenue to increase by $60,000. If the company's contribution margin ratio is 35%, what will be overall effect on net operating income?

Assuming a company has a positive contribution margin, which of the following changes will cause net operating income to increase?

If a company has a positive contribution margin but net operating income is low or negative, what are some ways of increasing net operating income?

Sienna Manufacturing has the following product information: Required: Calculate the following based on the above information:

Which of the following statements is most likely true if Red Inc. has an operating leverage of 2.0 while Blue Corp. has an operating leverage of 1.4?

Haywood Inc. has the following information available for one of its products: In Haywood sells one more unit, net operating income will:

Poole Products Inc. Poole Products Inc. has the following product information available: Refer to the Poole Products Inc. information above. What is the break-even point in units?

Laverne's Soda Shop wishes to decrease variable costs. Which of the following options should she consider?

Hillary's Restaurant has the following information available regarding last year's operations: The company's operating leverage was:

Cost structure refers to the relative proportion of:

Cameron Corp. Cameron Corp. has the following product information: Refer to the Cameron Corp. information above. How many units need to be sold in order to earn a target profit of $299,950?

When calculating the break-even point in a multi-product environment, which of the following pieces of information wouldnot be relevant?

Eason Products has the following product information available: Required: If Eason is in the 40% tax bracket, how many units need to be sold in order to earn an after-tax target profit of $450,000?

Floyd's Barbershop has fixed costs of $3,000 per month. Floyd regularly performs 400 haircuts a month and he does not anticipate this to change. Each haircut has a variable cost of $4.00. If Floyd would like to earn a target profit of $2,000, what does he need to charge for each haircut?

Howard Enterprises has a contribution margin ratio of 65% and fixed costs of $15,000. What would sales have to be in order for Howard to earn an after-tax profit of $50,000? The company is in the 40% tax bracket.

Poole Products Inc. has the following product information available: If Poole is in the 40% tax bracket, how many units need to be sold in order to earn an after-tax target profit of $249,000?

Harrison Inc. has a contribution margin ratio of 60% and fixed costs of $91,000. Required:

Carolina Products Carolina Products sells a unique item with the following information available: Refer to the Carolina Products information above. What is the contribution margin per unit?

Harrison Manufacturing Harrison Manufacturing has the following product information available: Refer to the Harrison Manufacturing information above. What is the break-even point in units?

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Job Costing, Process Costing, and Operations Costing

Activity-Based Costing

Cost Behavior

Relevant Costs and Product Planning Decisions

Long-Term Capital Investment Decisions

The Use of Budgets in Planning and Decision Making

Variance Analysis A Tool for Cost Control and Performance Evaluation

Decentralization, Performance Evaluation, and the Balanced Scorecard

Financial Statement Analysis

The Statement of Cash Flows

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Exam 6: Cost-Volume-Profit Analysis

When a company desires to achieve a after-tax profit, which of the following statements is true?

A company's manager estimates that in the upcoming year, increasing advertising costs by $25,000 will cause sales revenue to increase by $60,000. If the company's contribution margin ratio is 35%, what will be overall effect on net operating income?

Assuming a company has a positive contribution margin, which of the following changes will cause net operating income to increase?

If a company has a positive contribution margin but net operating income is low or negative, what are some ways of increasing net operating income?

Sienna Manufacturing has the following product information: Required: Calculate the following based on the above information:

Which of the following statements is most likely true if Red Inc. has an operating leverage of 2.0 while Blue Corp. has an operating leverage of 1.4?

Haywood Inc. has the following information available for one of its products: In Haywood sells one more unit, net operating income will:

Poole Products Inc. Poole Products Inc. has the following product information available: Refer to the Poole Products Inc. information above. What is the break-even point in units?

Laverne's Soda Shop wishes to decrease variable costs. Which of the following options should she consider?

Hillary's Restaurant has the following information available regarding last year's operations: The company's operating leverage was:

Cost structure refers to the relative proportion of:

Cameron Corp. Cameron Corp. has the following product information: Refer to the Cameron Corp. information above. How many units need to be sold in order to earn a target profit of $299,950?

When calculating the break-even point in a multi-product environment, which of the following pieces of information wouldnot be relevant?

Eason Products has the following product information available: Required: If Eason is in the 40% tax bracket, how many units need to be sold in order to earn an after-tax target profit of $450,000?

Floyd's Barbershop has fixed costs of $3,000 per month. Floyd regularly performs 400 haircuts a month and he does not anticipate this to change. Each haircut has a variable cost of $4.00. If Floyd would like to earn a target profit of $2,000, what does he need to charge for each haircut?

Howard Enterprises has a contribution margin ratio of 65% and fixed costs of $15,000. What would sales have to be in order for Howard to earn an after-tax profit of $50,000? The company is in the 40% tax bracket.

Poole Products Inc. has the following product information available: If Poole is in the 40% tax bracket, how many units need to be sold in order to earn an after-tax target profit of $249,000?

Harrison Inc. has a contribution margin ratio of 60% and fixed costs of $91,000. Required:

Carolina Products Carolina Products sells a unique item with the following information available: Refer to the Carolina Products information above. What is the contribution margin per unit?

Harrison Manufacturing Harrison Manufacturing has the following product information available: Refer to the Harrison Manufacturing information above. What is the break-even point in units?

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Job Costing, Process Costing, and Operations Costing

Activity-Based Costing

Cost Behavior

Relevant Costs and Product Planning Decisions

Long-Term Capital Investment Decisions

The Use of Budgets in Planning and Decision Making

Variance Analysis A Tool for Cost Control and Performance Evaluation

Decentralization, Performance Evaluation, and the Balanced Scorecard

Financial Statement Analysis

The Statement of Cash Flows

Filters