Question 1

Understanding cost behavior helps managers in planning the optimal mix of services or products to offer.

Accepted Answer

A) True 
 B)False  True

Question 2

In cost-volume-profit analysis,sales revenue is computed by multiplying units sold by the selling price per unit,and the targeted profit is projected by management.

Accepted Answer

A) True 
 B)False  True

Question 3

Lakeside has gathered the following data in order to calculate the weighted-average breakeven point:  The weighted-average breakeven point is

Accepted Answer

A)  11,429 units.
B)  10,000 units.
C)  5,333 units.
D)  10,667 units. B

Question 4

All variable costs except manufacturing costs are subtracted from sales to determine the total contribution margin.

Accepted Answer

A) True 
 B)False

Question 5

Hike Sports Corporation's income statement data for last year is as follows:  What is Hike's breakeven point in dollars?

Accepted Answer

A)  $100,000
B)  $18,000
C)  $142,000
D)  $48,000

Question 6

Which of the following costs is most likely to remain fixed within a relevant range?

Accepted Answer

A)  Indirect labor
B)  Property taxes
C)  Operating supplies
D)  Direct labor

Question 7

Which of the following costs is a variable manufacturing cost?

Accepted Answer

A)  Machinery depreciation (calculated with the units-of-production method) 
B)  Rent expenses for factory building
C)  Factory equipment depreciation (calculated with the straight line method) 
D)  Telephone charges

Question 8

Edward Cheezer's Inc.makes and sells frozen four-cheese pizzas,New York-style.The expected selling price is $10 per pizza.The projected variable cost per pizza is $6.The estimated fixed costs per month are $10,000. 
-The number of pizzas that must be sold to obtain a monthly profit of $20,000 is

Accepted Answer

A)  2,000 pizzas.
B)  5,000 pizzas.
C)  2,500 pizzas.
D)  7,500 pizzas.

Question 9

The point at which the total cost line intersects with the total revenue line is the breakeven point.

Accepted Answer

A) True 
 B)False

Question 10

Walton reported sales of $640,000,fixed costs of $314,000,and a profit of $92,000.If the contribution margin is $8 per unit,how many units did Walton sell?

Accepted Answer

A)  11,500 units
B)  31,125 units
C)  50,750 units
D)  70,375 units

Question 11

Threshold Inc.has provided the following data:  The sales mix for Products A,B,and C is

Accepted Answer

A)  62.5 percent,12.5 percent,and 25 percent,respectively.
B)  40 percent,20 percent,and 40 percent,respectively.
C)  100 percent,25 percent,and 50 percent,respectively.
D)  44 percent,33 percent,and 23 percent,respectively.

Question 12

Theoretical capacity refers to

Accepted Answer

A)  the actual activity level at which a business is operating.
B)  the maximum productive output possible for a business.
C)  an output level that allows for normal work stoppages.
D)  the operating capacity that will meet expected sales demand.

Question 13

Contribution margin is calculated by deducting total fixed costs from total sales.

Accepted Answer

A) True 
 B)False

Question 14

Excerpts from cost-volume-profit analysis of Nutshell Inc.indicate fixed costs of $85,000,a contribution margin per unit of $40,a selling price of $95,and a sales level of 4,000 units.What must be the targeted level of profit?

Accepted Answer

A)  $116,875
B)  $103,125
C)  $85,000
D)  $75,000

Question 15

Contribution margin income statement helps managers to view revenue and cost relationships on a per unit basis or as a percentage of sales.

Accepted Answer

A) True 
 B)False

Question 16

Myrid Inc.sells each crystal goblet that it produces for $75.The contribution margin per goblet is $20.Total monthly fixed costs are estimated to be $82,600.How many units should Myrid sell in a month to breakeven? (Round your answer to the nearest whole number. )

Accepted Answer

A)  4,130 goblets.
B)  1,101 goblets.
C)  1,502 goblets.
D)  869 goblets.

Question 17

J & C Stacy Enterprises is expecting to earn a profit of $180,000 in 2014.The company manufactures wrought iron lamps.Each lamp requires variable costs of $13 for direct materials,$9 for direct labor,and $12 for overhead.Total variable costs are thus $34 per lamp.Fixed costs for 2014 are expected to be $630,000.Each lamp will sell for $79.
a.Determine how many lamps the company must sell to earn its targeted profit,and convert this amount to sales dollars.
b.Compute breakeven sales in dollars.
c.Explain the dollar difference between breakeven sales dollars and the sales dollars necessary to earn the targeted profit.Use the contribution margin as part of your explanation.

Accepted Answer

The answer of J & C Stacy Enterprises is expecting...

Question 18

A project breaks even when total revenues less variable costs equals fixed costs.

Accepted Answer

A) True 
 B)False

Question 19

In terms of cost behavior,telephone expenses are often classified as

Accepted Answer

A)  sunk costs.
B)  variable costs.
C)  fixed costs.
D)  mixed costs.

Question 20

Using the high-low method and the information below,compute the monthly total fixed costs for Coral Corporation.

Accepted Answer

A)  $8,000
B)  $2,420
C)  $5,500
D)  $5,580

Exam 21: Cost-Volume-Profit Analysis

Understanding cost behavior helps managers in planning the optimal mix of services or products to offer.

In cost-volume-profit analysis,sales revenue is computed by multiplying units sold by the selling price per unit,and the targeted profit is projected by management.

Lakeside has gathered the following data in order to calculate the weighted-average breakeven point: The weighted-average breakeven point is

All variable costs except manufacturing costs are subtracted from sales to determine the total contribution margin.

Hike Sports Corporation's income statement data for last year is as follows: What is Hike's breakeven point in dollars?

Which of the following costs is most likely to remain fixed within a relevant range?

Which of the following costs is a variable manufacturing cost?

Edward Cheezer's Inc.makes and sells frozen four-cheese pizzas,New York-style.The expected selling price is $10 per pizza.The projected variable cost per pizza is $6.The estimated fixed costs per month are $10,000. -The number of pizzas that must be sold to obtain a monthly profit of $20,000 is

The point at which the total cost line intersects with the total revenue line is the breakeven point.

Walton reported sales of $640,000,fixed costs of $314,000,and a profit of $92,000.If the contribution margin is $8 per unit,how many units did Walton sell?

Threshold Inc.has provided the following data: The sales mix for Products A,B,and C is

Theoretical capacity refers to

Contribution margin is calculated by deducting total fixed costs from total sales.

Excerpts from cost-volume-profit analysis of Nutshell Inc.indicate fixed costs of $85,000,a contribution margin per unit of $40,a selling price of $95,and a sales level of 4,000 units.What must be the targeted level of profit?

Contribution margin income statement helps managers to view revenue and cost relationships on a per unit basis or as a percentage of sales.

Myrid Inc.sells each crystal goblet that it produces for $75.The contribution margin per goblet is $20.Total monthly fixed costs are estimated to be $82,600.How many units should Myrid sell in a month to breakeven? (Round your answer to the nearest whole number. )

A project breaks even when total revenues less variable costs equals fixed costs.

In terms of cost behavior,telephone expenses are often classified as

Using the high-low method and the information below,compute the monthly total fixed costs for Coral Corporation.