Question 1

A cost that changes in proportion to changes in volume of activity is a(n):

Accepted Answer

A)  Differential cost. 
B)  Fixed cost. 
C)  Incremental cost. 
D)  Variable cost. 
E)  Product cost. 
A)  Differential cost. 
B)  Fixed cost. 
C)  Incremental cost. 
D)  Variable cost. 
E)  Product cost.

Question 2

Torville Company's contribution margin income statement is presented below. Sales for the current period consisted of 5,000 units. Determine the company's break-even point in dollars.

Accepted Answer

Per unit costs:
Sales price =

Question 3

In Davis Corporation's most recent fiscal year, the company reported pretax earnings of $215,000. Fixed costs totaled $325,800, the unit selling price of the firm's only product was $60, and the variable costs per unit were 40% of the selling price. Based on this information, the firm's break-even point in units was:

Accepted Answer

A)  13,575 units. 
B)  15,023 units. 
C)  13,750 units. 
D)  9,050 units. 
E)  8,750 units. 
A)  13,575 units. 
B)  15,023 units. 
C)  13,750 units. 
D)  9,050 units. 
E)  8,750 units.

Question 4

There are at least three different methods to separate costs into fixed and variable. These methods are the ______________, ______________, and _______________ methods.

Accepted Answer

Scatter Diagram, Hig

Question 5

When graphing cost-volume-profit data on a CVP chart:

Accepted Answer

A)  Units are plotted on the horizontal axis; costs on the vertical axis. 
B)  Units are plotted on the vertical axis; costs on the horizontal axis. 
C)  Both units and costs are plotted on the horizontal axis. 
D)  Both units and cost are plotted on the vertical axis. 
E)  Data points always represent expected future points. 
A)  Units are plotted on the horizontal axis; costs on the vertical axis. 
B)  Units are plotted on the vertical axis; costs on the horizontal axis. 
C)  Both units and costs are plotted on the horizontal axis. 
D)  Both units and cost are plotted on the vertical axis. 
E)  Data points always represent expected future points.

Question 6

A firm produces and sells a product with a contribution margin of $32 per unit. The firm is presently selling 90,000 units and earning $240,000 in after-tax income. Taxes are $80,000 at a 25% tax rate. If the firm desires to increase its after-tax income to $300,000, how many more units must it sell?

Accepted Answer

Target increase in pretax inco

Question 7

The contribution margin per unit is the price at which a unit must be sold in order for the company to break even.

Accepted Answer

A) True 
 B)False

Question 8

The contribution margin per unit expressed as a percentage of the product's selling price is the:

Accepted Answer

A)  Volume variance. 
B)  Margin of safety. 
C)  Contribution margin ratio. 
D)  Break-even point. 
E)  Rate of return on sales. 
A)  Volume variance. 
B)  Margin of safety. 
C)  Contribution margin ratio. 
D)  Break-even point. 
E)  Rate of return on sales.

Question 9

What is a scatter diagram? How is a scatter diagram used to estimate cost behavior?

Accepted Answer

A scatter diagram displays past cost dat

Question 10

Degree of operating leverage (DOL) is defined as total contribution margin in dollars divided by pretax income.

Accepted Answer

A) True 
 B)False

A cost that changes in proportion to changes in volume of activity is a(n):

Torville Company's contribution margin income statement is presented below. Sales for the current period consisted of 5,000 units. Determine the company's break-even point in dollars.

There are at least three different methods to separate costs into fixed and variable. These methods are the , , and ___ methods.

When graphing cost-volume-profit data on a CVP chart:

The contribution margin per unit is the price at which a unit must be sold in order for the company to break even.

The contribution margin per unit expressed as a percentage of the product's selling price is the:

What is a scatter diagram? How is a scatter diagram used to estimate cost behavior?

Degree of operating leverage (DOL) is defined as total contribution margin in dollars divided by pretax income.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Filters

Exam 22: Cost-Volume-Profit Analysis

A cost that changes in proportion to changes in volume of activity is a(n):

Torville Company's contribution margin income statement is presented below. Sales for the current period consisted of 5,000 units. Determine the company's break-even point in dollars.

There are at least three different methods to separate costs into fixed and variable. These methods are the ______________, ______________, and _______________ methods.

When graphing cost-volume-profit data on a CVP chart:

The contribution margin per unit is the price at which a unit must be sold in order for the company to break even.

The contribution margin per unit expressed as a percentage of the product's selling price is the:

What is a scatter diagram? How is a scatter diagram used to estimate cost behavior?

Degree of operating leverage (DOL) is defined as total contribution margin in dollars divided by pretax income.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Filters

There are at least three different methods to separate costs into fixed and variable. These methods are the , , and ___ methods.