Question 1

Only one cost driver may affect a cost at any given time.

Accepted Answer

A) True 
 B)False

Question 2

The planned or desired net income

Accepted Answer

The answer of The planned or desired net income...

Question 3

Which of the following is not a cost driver of customer services costs?

Accepted Answer

A) Hours spent servicing products are not a cost driver of customer services costs. 
B) Travel costs are not a cost driver of customer services costs. 
C) Number of service calls is not a cost driver of customer services costs. 
D) All of these answers are correct.

Question 4

A fixed cost changes in direct proportion to changes in a cost driver.

Accepted Answer

A) True 
 B)False

Question 5

Margin of safety = actual unit sales - planned unit sales.

Accepted Answer

A) True 
 B)False

Question 6

If the sales price per unit is $100, the unit variable cost is $75, and total fixed costs are $150,000, then the break?even volume in dollar sales rounded to the nearest whole dollar is _____.

Accepted Answer

A) $600,000 
B) $150,000 
C) $200,000 
D) $1,500

Question 7

On Fire Company, a producer of salsa, has the following information: $$\begin{array} { l r } 
\text { Income tax rate } & 30 \% \
\text { Selling price per unit } & \$ 5.00 \
\text { Variable cost per unit } & \$ 3.00 \
\text { Total fixed costs } & \$ 90,000.00
\end{array}$$ The contribution-margin ratio is _____.

Accepted Answer

A) 30% 
B) 40% 
C) 60% 
D) 100%

Question 8

Suppose the Holiday Inn Hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel, average daily room rents of $50, and average variable costs of $10 for each room rented.It operates 365 days per year.The percent of occupancy for the year needed to breakeven is _____.

Accepted Answer

A) 3.65% 
B) 27.4% 
C) 25% 
D) 100%

Question 9

Strongsville Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000, and the contribution margin per unit is $6.00.Strongsville's tax rate is 40%.The number of units that must be sold to earn the targeted net income is _____.

Accepted Answer

A) 14,000 units 
B) 17,000 units 
C) 19,000 units 
D) 21,500 units

Question 10

Muy Mal Company, a producer of salsa, has the following information: $$\begin{array} { l r } 
\text { Income tax rate } & 30 \% \
\text { Selling price per unit } & \$ 5.00 \
\text { Variable cost per unit } & \$ 3.00 \
\text { Total fixed costs } & \$ 90,000.00
\end{array}$$ _____ must be sold to obtain a targeted after-tax income of $14,000.

Accepted Answer

A) 45,000 units 
B) 52,000 units 
C) 55,000 units 
D) 60,000 units

Question 11

Oak Corporation sells desks at $480 per desk.The costs associated with each desk are as follows: $$\begin{array} { l r } 
\text { Direct materials } & \$ 195 \
\text { Direct labor } & 126 \
\text { Variable factory overhead } & 51
\end{array}$$ Total fixed costs for the period are $456,840.The break-even point in desks is _____.

Accepted Answer

A) 952 desks 
B) 1,228 desks 
C) 4,230 desks 
D) 5,458 desks

Question 12

The CVP graph shows how costs behave over multiple relevant ranges.

Accepted Answer

A) True 
 B)False

Question 13

The margin of safety _____.

Accepted Answer

A) equals planned unit sales less break-even unit sales 
B) shows how actual sales differ from planned sales 
C) is the sales price minus all the fixed expenses 
D) is the same as contribution margin

Question 14

The sales mix is the relative proportions or combinations of quantities of products that constitute total sales.

Accepted Answer

A) True 
 B)False

Question 15

Cost behavior pertains to how costs affect the activities of an organization.

Accepted Answer

A) True 
 B)False

Question 16

Total contribution margin / total sales = 100% - variable cost percentage.

Accepted Answer

A) True 
 B)False

Question 17

An assumption of the CVP analysis is that changes in efficiency or productivity are expected.

Accepted Answer

A) True 
 B)False

Question 18

The break-even point is located at the intersection of the total revenue line and the total expenses line on a cost-volume?profit graph.

Accepted Answer

A) True 
 B)False

Question 19

_____ is all variable costs divided by sales.

Accepted Answer

A) Gross margin 
B) Contribution-margin ratio 
C) Variable-cost ratio 
D) The sales mix

Question 20

_____ is how the activities of an organization affect its costs.

Accepted Answer

A) Cost behavior 
B) Cost driver 
C) Volume-related cost drivers 
D) None of these answers is correct

Exam 2: Introduction to Cost Behavior and Cost-Volume Relationships

Only one cost driver may affect a cost at any given time.

The planned or desired net income

Which of the following is not a cost driver of customer services costs?

A fixed cost changes in direct proportion to changes in a cost driver.

Margin of safety = actual unit sales - planned unit sales.

If the sales price per unit is $100, the unit variable cost is $75, and total fixed costs are $150,000, then the break?even volume in dollar sales rounded to the nearest whole dollar is _____.

Strongsville Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000, and the contribution margin per unit is $6.00.Strongsville's tax rate is 40%.The number of units that must be sold to earn the targeted net income is _____.

The CVP graph shows how costs behave over multiple relevant ranges.

The margin of safety _____.

The sales mix is the relative proportions or combinations of quantities of products that constitute total sales.

Cost behavior pertains to how costs affect the activities of an organization.

Total contribution margin / total sales = 100% - variable cost percentage.

An assumption of the CVP analysis is that changes in efficiency or productivity are expected.

The break-even point is located at the intersection of the total revenue line and the total expenses line on a cost-volume?profit graph.

_____ is all variable costs divided by sales.

_____ is how the activities of an organization affect its costs.