Question 1

Use the following information to determine the margin of safety in dollars:
Unit sales ……………………… 50,000 Units
Dollar sales……………………… $500,000
Fixed costs……………………… $204,000
Variable costs ……………………… $187,500

Accepted Answer

A) $ 88,500. 
B) $108,500. 
C) $173,600. 
D) $326,400. 
E) $500,000.

Question 2

Hanover Hats produces specialty logo baseball caps for a variety of customers.Selected cost data for Hanover follows:
 direct materials cost $8,000; sales commissions,$9,000; depreciation on factory equipment,$21,000; factory labor,$16,000; factory lease,$24,000.If Hanover Hats sells 6,100 caps at an average price of $12 for each cap,what is the company's contribution margin?

Accepted Answer

The answer of Hanover Hats produces specialty logo baseball caps...

Question 3

Rudy Co.has total fixed costs of $520,000.A unit of product sells for $15 and variable costs per unit are $11.
a)Prepare a contribution margin income statement showing predicted net income (loss)if Rudy Co.sells 100,000 units for the year ended December 31.
b)At a minimum,how many units must Rudy Co.sell in order not to incur a loss?

Accepted Answer

The answer of Rudy Co.has total fixed costs of $520,000.A...

Question 4

The break-even point is the sales level at which a company neither earns a profit nor incurs a loss.

Accepted Answer

A) True 
 B)False

Question 5

Hiller Co.anticipates total fixed costs of $120,000 and variable costs equal to 40% of sales.What is the pretax income if sales are $650,000?

Accepted Answer

The answer of Hiller Co.anticipates total fixed costs of $120,000...

Question 6

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 7

A product has a contribution margin per unit of $17 and sells at $25 per unit.If the break-even point is 82,000 units,calculate (a)the variable costs per unit and (b)the total fixed costs.

Accepted Answer

The answer of A product has a contribution margin per...

Question 8

Identify items a,b,and c in the cost-volume-profit graph shown below.

Accepted Answer

The answer of Identify items a,b,and c in the cost-volume-profit...

Question 9

A company manufactures and sells a product for $120 per unit.The company's fixed costs are $68,760,and its variable costs are $90 per unit.The company's break-even point in units is:

Accepted Answer

A) 2,292. 
B) 573. 
C) 764. 
D) 327. 
E) 840.

Question 10

A CVP graph presents data on:

Accepted Answer

A) Profit and loss on a per unit basis. 
B) Profit, loss, and break-even on a total dollar basis. 
C) Profit, loss, and break-even on a per unit basis. 
D) Only profit and loss on a total basis. 
E) Profit and loss on a budget and actual basis.

Question 11

A product sells for $30 per unit and has variable costs of $18 per unit.The fixed costs are $720,000.If the variable costs per unit were to decrease to $15 per unit and fixed costs increase to $900,000,and the selling price does not change,break-even point in units would:

Accepted Answer

A) Increase by 20,000. 
B) Equal 6,000. 
C) Increase by 6,000. 
D) Decrease by 20,000. 
E) Not change.

Question 12

A firm sells two different products,A and
A.Total fixed costs for this firm are $1,260,000.Additional selling prices and cost information for both products follow:  Required:
(a) Calculate the contribution margin per composite unit.(b) Calculate the break-even point in units of each individual product.(c) If pretax income before taxes of $294,000 is desired, how many units of A and B must be sold? 
B.For each unit of B, the firm sells two units of

Accepted Answer

The answer of A firm sells two different products,A and
A.Total...

Question 13

A company manufactures and sells spotlights.Each spotlight sells for $145.The variable cost per unit is $98,and the company's total fixed costs are $235,000.Predicted sales are 15,000 units.What is the contribution margin per unit?

Accepted Answer

The answer of A company manufactures and sells spotlights.Each spotlight...

Question 14

A product sells for $200 per unit,and its variable costs per unit are $130.The fixed costs are $420,000.What is the break-even point in dollar sales?

Accepted Answer

A) $2,100. 
B) $6,000. 
C) $420,000. 
D) $646,154. 
E) $1,200,000.

Question 15

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

Accepted Answer

The answer of What is a scatter diagram?
 How is...

Question 16

Abrams Co.has total fixed costs of $240,000 and a contribution margin ratio of 40%.If rent expense increases by $5,000,how much will sales have to increase to cover this increase in costs?

Accepted Answer

The answer of Abrams Co.has total fixed costs of $240,000...

Question 17

To calculate the break-even point in units,one must know unit fixed cost,unit variable cost,and sales price.

Accepted Answer

A) True 
 B)False

Question 18

The contribution margin ratio:

Accepted Answer

A) Is the percent of each sales dollar that remains after deducting total unit variable cost. 
B) Is the percent of each sales dollar that remains after deducting total unit fixed cost. 
C) Is the percent of each sales dollar that remains to cover fixed costs and contribute to the managers' incomes. 
D) Cannot be used in conjunction with other analytical tools. 
E) Is the same as the unit contribution margin.

Question 19

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.

Question 20

Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300.Annual fixed costs are $990,000.Current sales volume is $4,200,000.Compute the break-even point in units.

Accepted Answer

A) 3,750. 
B) 10,000. 
C) 5,500. 
D) 3,300. 
E) 6,000.

Exam 21: Cost-Volume-Profit Analysis

Use the following information to determine the margin of safety in dollars: Unit sales ……………………… 50,000 Units Dollar sales……………………… $500,000 Fixed costs……………………… $204,000 Variable costs ……………………… $187,500

The break-even point is the sales level at which a company neither earns a profit nor incurs a loss.

Hiller Co.anticipates total fixed costs of $120,000 and variable costs equal to 40% of sales.What is the pretax income if sales are $650,000?

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

A product has a contribution margin per unit of $17 and sells at $25 per unit.If the break-even point is 82,000 units,calculate (a)the variable costs per unit and (b)the total fixed costs.

Identify items a,b,and c in the cost-volume-profit graph shown below.

A company manufactures and sells a product for $120 per unit.The company's fixed costs are $68,760,and its variable costs are $90 per unit.The company's break-even point in units is:

A CVP graph presents data on:

A product sells for $30 per unit and has variable costs of $18 per unit.The fixed costs are $720,000.If the variable costs per unit were to decrease to $15 per unit and fixed costs increase to $900,000,and the selling price does not change,break-even point in units would:

A company manufactures and sells spotlights.Each spotlight sells for $145.The variable cost per unit is $98,and the company's total fixed costs are $235,000.Predicted sales are 15,000 units.What is the contribution margin per unit?

A product sells for $200 per unit,and its variable costs per unit are $130.The fixed costs are $420,000.What is the break-even point in dollar sales?

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

Abrams Co.has total fixed costs of $240,000 and a contribution margin ratio of 40%.If rent expense increases by $5,000,how much will sales have to increase to cover this increase in costs?

To calculate the break-even point in units,one must know unit fixed cost,unit variable cost,and sales price.

The contribution margin ratio:

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

Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300.Annual fixed costs are $990,000.Current sales volume is $4,200,000.Compute the break-even point in units.