Question 1

In a multiple-product firm,the product that has the highest contribution margin per unit will

Accepted Answer

A) generate more profit for each $1 of sales than the other products. 
B) have the highest contribution margin ratio. 
C) generate the most profit for each unit sold. 
D) have the lowest variable costs per unit. 
A) generate more profit for each $1 of sales than the other products. 
B) have the highest contribution margin ratio. 
C) generate the most profit for each unit sold. 
D) have the lowest variable costs per unit. C

Question 2

In a CVP graph,the area between the total cost line and the total revenue line represents total

Accepted Answer

A) contribution margin. 
B) variable costs. 
C) fixed costs. 
D) profit. 
A) contribution margin. 
B) variable costs. 
C) fixed costs. 
D) profit. D

Question 3

Sunglo Corporation Sunglo Corporation manufactures and sells two products: A and B The operating results of the company are as follows: $\begin{array}{lll}
&\text{Product A}&\text{Product B}\\hline
\text { Sales in units } & 3,000 & 4,000 \
\text { Sales price per unit } & \$ 12 & \$ 7 \
\text { Variable costs per unit } & 6 & 4
\end{array}$ In addition,the company incurred total fixed costs in the amount of $10,000.
Refer to Sunglo Corporation.If the company had sold a total of 10,500 units,consistent with CVP assumptions,how many of those units would be Product B?

Accepted Answer

A) 5,250 
B) 6,000 
C) 7,000 
D) 7,875 
A) 5,250 
B) 6,000 
C) 7,000 
D) 7,875 B

Question 4

Andrew is interested in entering the catfish farming business.He estimates if he enters this business,his fixed costs would be $50,000 per year and his variable costs would equal 30 percent of sales.If each catfish sells for $2,how many catfish would Andrew need to sell to generate a profit that is equal to 10 percent of sales?

Accepted Answer

A) 40,000 
B) 41,667 
C) 35,000 
D) No level of sales can generate a 10 percent net return on sales. 
A) 40,000 
B) 41,667 
C) 35,000 
D) No level of sales can generate a 10 percent net return on sales.

Question 5

Pratt Corporation
Information relating to the current operations of Pratt Corporation follows:
 $\begin{array}{ll}
\text { Sales } & \$ 120,000 \
\text { Variable costs } & (\underline{36,000}) \
\text { Contribution margin } & \$ 84,000 \
\text { Fixed costs } & (\underline{\$ 70,000}) \
\text { Profit before taxes } & \$ 14,000
\end{array}$ Refer to Pratt Corporation.Pratt's break-even point was 1,000 units.Compute Pratt's sales price per unit.

Accepted Answer

The break-even point is found by dividin

Question 6

How do changes in volume affect the break-even point?

Accepted Answer

Within the relevant range,the

Question 7

The excess of budgeted or actual sales over sales at break-even point is referred to as ______________________________.

Accepted Answer

The answer of The excess of budgeted or actual sales...

Question 8

Dawson Corporation
Dawson Corporation predicts it will produce and sell 40,000 units of its sole product in the current year.At that level of volume,it projects a sales price of $30 per unit,a contribution margin ratio of 40 percent,and fixed costs of $5 per unit.
Refer to Dawson Corporation.What would the company's projected profit be if it produced and sold 30,000 units?

Accepted Answer

The answer of Dawson Corporation
Dawson Corporation predicts it will produce...

Question 9

On a CVP graph,the total fixed cost line parallels the x-axis.

Accepted Answer

A) True 
 B)False

Question 10

The __________________________________________________ is computed by dividing the contribution margin by profit before tax.

Accepted Answer

degree of

Question 11

The contribution margin ratio always increases when the

Accepted Answer

A) variable costs as a percentage of net sales increase. 
B) variable costs as a percentage of net sales decrease. 
C) break-even point increases. 
D) break-even point decreases. 
A) variable costs as a percentage of net sales increase. 
B) variable costs as a percentage of net sales decrease. 
C) break-even point increases. 
D) break-even point decreases.

Question 12

Sunglo Corporation Sunglo Corporation manufactures and sells two products: A and B)The operating results of the company are as follows: $\begin{array}{lll}
&\text{Product A}&\text{Product B}\\hline
\text { Sales in units } & 3,000 & 4,000 \
\text { Sales price per unit } & \$ 12 & \$ 7 \
\text { Variable costs per unit } & 6 & 4
\end{array}$ In addition,the company incurred total fixed costs in the amount of $10,000.
Refer to Sunglo Corporation.How many units would the company need to sell to produce a before-tax profit of $20,000?

Accepted Answer

A) 6,000 
B) 6,250 
C) 6,923 
D) 7,000 
A) 6,000 
B) 6,250 
C) 6,923 
D) 7,000

Question 13

On a CVP graph,the total cost line intersects the y-axis at zero.

Accepted Answer

A) True 
 B)False

Question 14

As projected net income increases the

Accepted Answer

A) degree of operating leverage declines. 
B) margin of safety stays constant. 
C) break-even point goes down. 
D) contribution margin ratio goes up. 
A) degree of operating leverage declines. 
B) margin of safety stays constant. 
C) break-even point goes down. 
D) contribution margin ratio goes up.

Question 15

Ford Company The following information relates to financial projections of Ford Company:
$\begin{array}{ll}
\text { Projected sales } & 75,000 \text { units } \
\text { Projected variable costs } & \$ 3.00 \text { per unit } \
\text { Projected fixed costs } & \$ 60,000 \text { per year } \
\text { Projected unit sales price } & \$ 8.00
\end{array}$ Refer to Ford Company.How many units would Ford Company need to sell to earn a profit before taxes of $15,000?

Accepted Answer

A) 9,375 
B) 12,000 
C) 15,000 
D) 37,500 
A) 9,375 
B) 12,000 
C) 15,000 
D) 37,500

Question 16

Ideal Company Ideal Company produces and sells a single product.Information on its costs follow:
$\begin{array}{ll}
\text{Variable costs:}\
~~\text { SG\&A } & \$ 2 \text { per unit } \
~~\text { Production } & \$ 4 \text { per unit } \
\text { Fixed costs: } & \
~~\text { SG\&A } & \$ 12,000 \text { per year }\
~~\text { Production } & \$ 15,000 \text { per year } 
\end{array}$ Refer to Ideal Company.In the upcoming year,Ideal Company estimates that it will produce and sell 4,000 units.The variable costs per unit and the total fixed costs are expected to be the same as in the current year.However,it anticipates a sales price of $16 per unit.What is Ideal Company's projected margin of safety for the coming year?

Accepted Answer

A) $7,000 
B) $20,800 
C) $18,400 
D) $13,000 
A) $7,000 
B) $20,800 
C) $18,400 
D) $13,000

Question 17

Castle Corporation
The following questions are based on the following data pertaining to two types of products manufactured by Castle Corporation:
 $\begin{array}{|l|l|l|}
\hline & \text { Per unit } & \
\hline & \text { Sales price } & \text { Variable costs } \
\hline \text { Prochuct } Y & \$ 120 & \$ 70 \
\hline \text { Prochuct Z } & \$ 500 & \$ 200 \
\hline
\end{array}$ Fixed costs total $300,000 annually.The expected mix in units is 60 percent for Product Y and 40 percent for Product Z.
Refer to Castle Corporation.How much is Castle's break-even point sales in units?

Accepted Answer

BEP units = FC/(unit SP - unit VC)or uni

Question 18

Cowboy Duds Corporation manufactures a western-style hat that sells for $10 per unit.This is its sole product and it has projected the break-even point at 50,000 units in the coming period.If fixed costs are projected at $100,000,what is the projected contribution margin ratio?

Accepted Answer

A) 80 percent 
B) 20 percent 
C) 40 percent 
D) 60 percent 
A) 80 percent 
B) 20 percent 
C) 40 percent 
D) 60 percent

Question 19

The following information pertains to Apollo Company's cost-volume-profit relationships: $\begin{array}{ll}
\text { Break-even point in units sold } & 1,500 \
\text { Variable costs per urit } & \$ 700 \
\text { Total fixed costs } & \$ 225,000
\end{array}$ How much will be contributed to profit before taxes by the 1,501st unit sold?

Accepted Answer

A) $850 
B) $700 
C) $150 
D) $0 
A) $850 
B) $700 
C) $150 
D) $0

Question 20

If a company's fixed costs were to increase,the effect on a profit-volume graph would be that the

Accepted Answer

A) contribution margin line would shift upward parallel to the present line. 
B) contribution margin line would shift downward parallel to the present line. 
C) slope of the contribution margin line would be more pronounced (steeper). 
D) slope of the contribution margin line would be less pronounced (flatter). 
A) contribution margin line would shift upward parallel to the present line. 
B) contribution margin line would shift downward parallel to the present line. 
C) slope of the contribution margin line would be more pronounced (steeper). 
D) slope of the contribution margin line would be less pronounced (flatter).

In a multiple-product firm,the product that has the highest contribution margin per unit will

In a CVP graph,the area between the total cost line and the total revenue line represents total

How do changes in volume affect the break-even point?

The excess of budgeted or actual sales over sales at break-even point is referred to as ______________________________.

On a CVP graph,the total fixed cost line parallels the x-axis.

The __________________________________________________ is computed by dividing the contribution margin by profit before tax.

The contribution margin ratio always increases when the

On a CVP graph,the total cost line intersects the y-axis at zero.

As projected net income increases the

Cowboy Duds Corporation manufactures a western-style hat that sells for $10 per unit.This is its sole product and it has projected the break-even point at 50,000 units in the coming period.If fixed costs are projected at $100,000,what is the projected contribution margin ratio?

The following information pertains to Apollo Company's cost-volume-profit relationships: Break-even point in units sold 1,500 Variable costs per urit \ 700 Total fixed costs \ 225,000 How much will be contributed to profit before taxes by the 1,501st unit sold?

If a company's fixed costs were to increase,the effect on a profit-volume graph would be that the

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting, support Department Allocations, and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

Exam 9: Break-Even Point and Cost-Volume-Profit Analysis

In a multiple-product firm,the product that has the highest contribution margin per unit will

In a CVP graph,the area between the total cost line and the total revenue line represents total

How do changes in volume affect the break-even point?

The excess of budgeted or actual sales over sales at break-even point is referred to as ______________________________.

On a CVP graph,the total fixed cost line parallels the x-axis.

The __________________________________________________ is computed by dividing the contribution margin by profit before tax.

The contribution margin ratio always increases when the

On a CVP graph,the total cost line intersects the y-axis at zero.

As projected net income increases the

Cowboy Duds Corporation manufactures a western-style hat that sells for $10 per unit.This is its sole product and it has projected the break-even point at 50,000 units in the coming period.If fixed costs are projected at $100,000,what is the projected contribution margin ratio?

The following information pertains to Apollo Company's cost-volume-profit relationships: Break-even point in units sold 1,500 Variable costs per urit \ 700 Total fixed costs \ 225,000 How much will be contributed to profit before taxes by the 1,501st unit sold?

If a company's fixed costs were to increase,the effect on a profit-volume graph would be that the

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting, support Department Allocations, and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters