Question 1

Given the following costs and activities for Dance Company electrical costs, use the high-low method to calculate Dance's variable electrical costs per machine hour.

Accepted Answer

A)  $2.08 
B)  $6.00 
C)  $0.60 
D)  $1.20

Question 2

When Isaiah Company has fixed costs of $120,000 and the contribution margin is $30, the break-even point is

Accepted Answer

A)  16,000 units 
B)  8,000 units 
C)  6,000 units 
D)  4,000 units

Question 3

For purposes of analysis, mixed costs can generally be separated into their variable and fixed components.

Accepted Answer

A) True 
 B)False

Question 4

Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low method of cost estimation, total fixed costs are

Accepted Answer

A)  $61,875 
B)  $33,875 
C)  $24,750 
D)  cannot be determined from the data given

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Given the following:
Variable cost as a percentage of sales = 60% Unit variable cost = $30
Fixed costs = $200,000
What is the break-even point in units?

Accepted Answer

The answer of Given the following:
Variable cost as a percentage...

Question 7

A firm operated at 80% of capacity for the past year, during which fixed costs were $330,000, variable costs were 70% of sales, and sales were $1,000,000. Operating profit loss) was

Accepted Answer

A)  $140,000 
B)  $30,000) 
C)  $370,000 
D)  $670,000

Question 8

Figure 21-1
-Which of the graphs in Figure 21-1 illustrates the nature of a mixed cost?

Accepted Answer

A)  Graph 2 
B)  Graph 3 
C)  Graph 4 
D)  Graph 1

Question 9

What would Timmer's net income be for the year using variable costing?

Accepted Answer

A)  $114,000 
B)  $110,000 
C)  $ 4,000 
D)  $106,000

Question 10

Assume that Corn Co. sold 8,000 units of Product A and 2,000 units of Product B during the past year. The unit contribution margins for Products A and B are $30 and $60, respectively. Corn has fixed costs of $378,000. The break-even point in units is

Accepted Answer

A)  8,000 units 
B)  6,300 units 
C)  12,600 units 
D)  10,500 units

Question 11

Penny Company sells 25,000 units at $59 per unit. Variable costs are $29 per unit, and loss from operations is $50,000). Determine the a) unit contribution margin b) contribution margin ratio, and c) fixed costs per unit at production of 25,000 units.

Accepted Answer

The answer of Penny Company sells 25,000 units at $59...

Question 12

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

Question 13

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

Accepted Answer

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

Question 14

Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000?

Accepted Answer

A)  $8,000 increase 
B)  $8,000 decrease 
C)  $30,000 decrease 
D)  $30,000 increase

Question 15

Spice Inc.'s unit selling price is $60, the unit variable costs are $35, fixed costs are $125,000, and current sales are 10,000 units. How much will operating income change if sales increase by 8,000 units?

Accepted Answer

A)  $150,000 decrease 
B)  $175,000 increase 
C)  $200,000 increase 
D)  $150,000 increase

Question 16

When units manufactured exceed units sold:

Accepted Answer

A)  variable costing income equals absorption costing income 
B)  variable costing income is less than absorption costing income 
C)  variable costing income is greater than absorption costing income 
D)  variable costing income is greater by the number of units produced multiplied by the variable cost ratio.

Question 17

The manufacturing cost of Mocha Industries for three months of the year are provided below: $$\begin{array} { | l | l | l | } 
\hline & \text { Total Cost } & \text { Production } \
\hline \text { April } & \$ 63,100 & 1,100 \text { units } \
\hline \text { May } & 80,920 & 1,800 \
\hline \text { June } & 100,900 & 2,600 \
\hline
\end{array}$$ Using the high-low method, determine the a) variable cost per unit, and b) the total fixed costs.

Accepted Answer

The answer of The manufacturing cost of Mocha Industries for...

Question 18

The Klein Company reports the following data:
Sales
$980,000
Variable costs
500,000
Fixed costs
350,000
Determine Klein Company's operating leverage. Round your answer to two decimal places.

Accepted Answer

The answer of The Klein Company reports the following data:
Sales
$980,000
Variable...

Question 19

The fixed cost per unit varies with changes in the level of activity.

Accepted Answer

A) True 
 B)False

Question 20

Copper Hill Inc. manufactures laser printers within a relevant range of production of 70,000 to 100,000 printers per year. The following partially completed manufacturing cost schedule has been prepared:  Complete the preceding cost schedule, identifying each cost by the appropriate letter a) through o).

Accepted Answer

The answer of Copper Hill Inc. manufactures laser printers within...

Exam 19: Cost Behavior and Cost-Volume-Profit Analysis

Given the following costs and activities for Dance Company electrical costs, use the high-low method to calculate Dance's variable electrical costs per machine hour.

When Isaiah Company has fixed costs of $120,000 and the contribution margin is $30, the break-even point is

For purposes of analysis, mixed costs can generally be separated into their variable and fixed components.

Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low method of cost estimation, total fixed costs are

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

Given the following: Variable cost as a percentage of sales = 60% Unit variable cost = $30 Fixed costs = $200,000 What is the break-even point in units?

A firm operated at 80% of capacity for the past year, during which fixed costs were $330,000, variable costs were 70% of sales, and sales were $1,000,000. Operating profit loss) was

Figure 21-1 -Which of the graphs in Figure 21-1 illustrates the nature of a mixed cost?

What would Timmer's net income be for the year using variable costing?

Assume that Corn Co. sold 8,000 units of Product A and 2,000 units of Product B during the past year. The unit contribution margins for Products A and B are $30 and $60, respectively. Corn has fixed costs of $378,000. The break-even point in units is

Penny Company sells 25,000 units at $59 per unit. Variable costs are $29 per unit, and loss from operations is $50,000). Determine the a) unit contribution margin b) contribution margin ratio, and c) fixed costs per unit at production of 25,000 units.

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

Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000?

Spice Inc.'s unit selling price is $60, the unit variable costs are $35, fixed costs are $125,000, and current sales are 10,000 units. How much will operating income change if sales increase by 8,000 units?

When units manufactured exceed units sold:

The Klein Company reports the following data: Sales $980,000 Variable costs 500,000 Fixed costs 350,000 Determine Klein Company's operating leverage. Round your answer to two decimal places.

The fixed cost per unit varies with changes in the level of activity.