Question 1

ePiano makes electronic keyboards. The practice model price is $220, and its variable expenses are $190. The deluxe model price is $340, and its variable expenses are $250. The professional model price is $1,200 and its variable expenses are $800. Total fixed expenses are $187,000. In general, ePiano sells six practice models and three deluxe models for every professional model sold.
-Refer to the Figure.How many professional models are sold at break-even?

Accepted Answer

A) 220 
B) 400 
C) 440 
D) 850

Question 2

Acme Company provided the following data:
 $\begin{array}{lr}
\text { Selling price per unit } & \$ 80 \
\text { Variable cost per unit } & \$ 60 \
\text { Total fixed costs } & \$ 400,000
\end{array}$
-Refer to the Figure.What is the break-even point in units?

Accepted Answer

A) 6,667 
B) 10,000 
C) 13,333 
D) 20,000

Question 3

Direct fixed expenses are the fixed costs that are NOT traceable to the segments and would remain even if one of the segments was eliminated.

Accepted Answer

A) True 
 B)False

Question 4

Match each item with the correct statement below.
-The use of fixed costs to extract higher percentage changes in profits as sales activity changes

Accepted Answer

A) Break-even point 
B) Common fixed expenses 
C) Contribution margin 
D) Direct fixed expenses 
E) Margin of safety
F)Operating leverage
G)Degree of operating leverage
H)Sales mix

Question 5

Green Acres Company provides home health care. Green Acres charges $35 per hour for professional care. Variable casts are $21 per hour and fixed costs are $78,000. Next year, Green Acres expects to charge out 12,000 hours of home health care.
-Refer to the Figure.What is the contribution margin per hour?

Accepted Answer

A) $6.50 
B) $14.00 
C) $21.00 
D) $35.00

Question 6

Information about the K-9 Salon's two products is as follows: Suppose the sales mix in units is 70% Product X and 30% Product Y.What total monthly sales volume in units is required to break even?

Accepted Answer

A) 8,333 units 
B) 16,667 units 
C) 50,000 units 
D) 56,667 units

Question 7

Given the following numbers from Books and Things, match the correct value with its appropriate term.
Books and Things normally produces 100,000 units, and the fixed overhead rate is based on this amount. Fixed selling and administrative expense is $74,000.
-Break-even quantity (in units)

Accepted Answer

A) $12 
B) 30% 
C) $28 
D) 70% 
E) $580,000
F)14,500

Question 8

Match each item with the correct statement below.
-Measured in dollars

Accepted Answer

A) horizontal-axis of CVP graph 
B) vertical-axis of CVP graph 
C) slope of revenue line 
D) slope of cost line 
E) point where the total revenue line and the total cost line intersect

Question 9

Assume the following information: How many units must be sold to generate a before-tax profit of $45,000?
$\begin{array}{lr}
\text { Selling price per unit } & \$ 100 \
\text { Contribution margin ratio } & 50 \% \
\text { Total fixed costs } & \$ 250,000
\end{array}$

Accepted Answer

A) 2,500 units 
B) 3,000 units 
C) 3,750 units 
D) 5,900 units

Question 10

Date Company makes calendars. Information on cost per unit is as follows:
Fixed marketing expense totalled $13,000, and fixed administrative expense totalled $35,000. The price per calendar is $10.
 $\begin{array}{lr}
\text { Direct materials } & \$ 1.50 \
\text { Direct labour } & 1.20 \
\text { Variable overhead } & 0.90 \
\text { Variable marketing expense } & 0.40
\end{array}$
-Refer to the Figure.What is the variable product expense per unit?

Accepted Answer

A) $1.30 
B) $3.60 
C) $4.00 
D) $4.60

Question 11

What formula is used to calculate the sales dollars needed to earn a desired profit?

Accepted Answer

A) (fixed costs + contribution margin)/(1 − variable cost ratio) 
B) (fixed costs + desired profit)/(1 − variable cost ratio) 
C) (fixed costs + variable costs)/(1 − variable cost ratio) 
D) (fixed costs + desired profit)/(1 − sales ratio)

Question 12

If the break-even point increases,the margin of safety increases.

Accepted Answer

A) True 
 B)False

Question 13

Information for Select Team Inc.is as follows:
 $\begin{array}{ll}
\text { Sales } & \$ 700,000 \
\text { Variable costs } & \$ 100,000 \
\text { Fixed costs } & \$ 200,000
\end{array}$ A. What is the break-even point in sales doll ars?
B. What sales (in dollars) are needed to generate an operating income of $\$ 100,000$ ?

Accepted Answer

The answer of Information for Select Team Inc.is as follows:
...

Question 14

Desjardin's makes power tools. The budgeted sales are $550,000, budgeted variable costs are $230,000, and budgeted fixed costs are $227,500.
-Refer to the Figure.What is the budgeted operating income?

Accepted Answer

A) $92,500 
B) $320,000 
C) $322,500 
D) $457,500

Question 15

Plastic Gym makes children's jungle gyms and tree houses. The price of jungle gyms is $120, and its variable expenses are $90 per unit. The price of tree houses is $200, and its variable expenses are $100. Total fixed expenses are $253,750. Last year, Plastic Gym sold 12,000 gyms and 4,000 tree houses.
-Refer to the Figure.What is the sales mix of jungle gyms and tree houses (rounded down to whole numbers)?

Accepted Answer

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

Question 16

Explain why cost-volume-profit analysis can be useful to managers.

Accepted Answer

The answer of Explain why cost-volume-profit analysis can be useful...

Question 17

Suppose fixed costs increase.What will be the effect on the break-even point in units?

Accepted Answer

A) The break-even point will increase. 
B) The break-even point will decrease. 
C) The break-even point will remain the same. 
D) The break-even point will remain the same; however, contribution per unit will decrease.

Question 18

Date Company makes calendars. Information on cost per unit is as follows:
Fixed marketing expense totalled $13,000, and fixed administrative expense totalled $35,000. The price per calendar is $10.
 $\begin{array}{lr}
\text { Direct materials } & \$ 1.50 \
\text { Direct labour } & 1.20 \
\text { Variable overhead } & 0.90 \
\text { Variable marketing expense } & 0.40
\end{array}$
-Refer to the Figure.What is the contribution margin per unit?

Accepted Answer

A) $5.00 
B) $5.40 
C) $6.00 
D) $6.30

Question 19

Match each item with the correct statement below.
-The relative combination of products (or services)being sold by an organization

Accepted Answer

A) Break-even point 
B) Common fixed expenses 
C) Contribution margin 
D) Direct fixed expenses 
E) Margin of safety
F)Operating leverage
G)Degree of operating leverage
H)Sales mix

Question 20

In a normal month,the Whitewater Company generates total sales of $25,000.To do so they incur variable costs of $15,000 and fixed costs of $10,000.
Required: Determine each of the following values:
 A. Variable cost ratio
B. Contribution margin ratio
C. Monthly break-even dollar sales volume
D. Monthly margin of safety in doll ars

Accepted Answer

The answer of In a normal month,the Whitewater Company generates...

Exam 4: Costvolumeprofit Analysis: a Managerial Planning Tool

Acme Company provided the following data: $\begin{array}{lr}\text { Selling price per unit } & \$ 80 \\\text { Variable cost per unit } & \$ 60 \\\text { Total fixed costs } & \$ 400,000\end{array}$ -Refer to the Figure.What is the break-even point in units?

Direct fixed expenses are the fixed costs that are NOT traceable to the segments and would remain even if one of the segments was eliminated.

Match each item with the correct statement below. -The use of fixed costs to extract higher percentage changes in profits as sales activity changes

Information about the K-9 Salon's two products is as follows: Suppose the sales mix in units is 70% Product X and 30% Product Y.What total monthly sales volume in units is required to break even?

Given the following numbers from Books and Things, match the correct value with its appropriate term. Books and Things normally produces 100,000 units, and the fixed overhead rate is based on this amount. Fixed selling and administrative expense is $74,000. -Break-even quantity (in units)

Match each item with the correct statement below. -Measured in dollars

Assume the following information: How many units must be sold to generate a before-tax profit of $45,000? $\begin{array}{lr}\text { Selling price per unit } & \$ 100 \\\text { Contribution margin ratio } & 50 \% \\\text { Total fixed costs } & \$ 250,000\end{array}$

What formula is used to calculate the sales dollars needed to earn a desired profit?

If the break-even point increases,the margin of safety increases.

Desjardin's makes power tools. The budgeted sales are $550,000, budgeted variable costs are $230,000, and budgeted fixed costs are $227,500. -Refer to the Figure.What is the budgeted operating income?

Explain why cost-volume-profit analysis can be useful to managers.

Suppose fixed costs increase.What will be the effect on the break-even point in units?

Match each item with the correct statement below. -The relative combination of products (or services) being sold by an organization