Shelton Company Below is an income statement for Shelton Company: $\begin{array}{ll} \text { Sales } & \$ 600,000 \\ \text { Variable costs } & \underline{(150,000)} \\ \text { Contribution margin } & \$ 450,000 \\ \text { Fixed costs } & \underline{(300,000)} \\ \text { Profit before taxes } & \underline{\$ 150,000} \end{array}$ Refer to Shelton Company.What was Shelton's margin of safety?

A) $150,000 B) $175,000 C) $200,000 D) $300,000 A) $150,000 B) $175,000 C) $200,000 D) $300,000

Mark Smith Company Below is an income statement for Mark Smith Company: $\begin{array}{ll} \text { Sales } & \$ 400,000 \\ \text { Variable costs } & (\underline{200,000}) \\ \text { Contribution margin } & \$ 200,000 \\ \text { Fixed costs } & (\underline{125,000}) \\ \text { Profit before taxes }& \underline{\$ 75,000} \end{array}$ Refer to Mark Smith Company.What was the company's margin of safety?

A) $ 37,500 B) $ 75,000 C) $125,000 D) $150,000 A) $ 37,500 B) $ 75,000 C) $125,000 D) $150,000

Alford,Brooks,and Fitch Companies Below are income statements that apply to three companies: Alford,Brooks,and Fitch: $\begin{array}{lccc} &\text { AlfordCo.}&\text {BrooksCo.}&\text {FitchCo }\\\hline \text { Sales } & \$ 100 & \$ 100 & \$ 100 \\ \text { Variable costs } & (\underline{10}) & (\underline{20}) & (\underline{30}) \\ \text { Contribution margin } & \$ 90 & \$ 80 & \$ 70 \\ \text { Fixed costs } & (\underline{30}) & (\underline{20}) & (\underline{10}) \\ \text{Profit before taxes:}&\$ 60 &\$ 60 &\$ 60 \end{array}$ Refer to Alford,Brooks,and Fitch Companies.Within the relevant range,if sales go up by $1 for each firm,which firm will experience the greatest increase in profit?

A) Alpha Company B) Beta Company C) Fitch Company D) can't be determined from the information given A) Alpha Company B) Beta Company C) Fitch Company D) can't be determined from the information given

Palmer Company Below is an income statement for Palmer Company: $\begin{array}{ll} \text { Sales } & \$ 400,000 \\ \text { Variable costs } & \underline{(125,000)} \\ \text { Contribution margin } & \$ 275,000 \\ \text { Fixed costs } & \underline{(200,000)} \\ \text { Profit before taxes } & \underline{\$ 75,000} \end{array}$ Refer to Palmer Company.What is Palmer's degree of operating leverage?

A) 3.67 B) 5.33 C) 1.45 D) 2.67 A) 3.67 B) 5.33 C) 1.45 D) 2.67

Smith Company reported the following results from sales of 5,000 units of Product A for June: $\begin{array}{ll} \text { Sales } & \$ 200,000 \\ \text { Variable costs } & ({120,000}) \\ \text { Fixed costs } & (\underline{60,000})\\ \text { Operating income } & \underline{\$ 20,000} \end{array}$ Assume that Smith increases the selling price of Product A by 10 percent in July.How many units of Product A would have to be sold in July to generate an operating income of $20,000?

A) 4,000 B) 4,300 C) 4,545 D) 5,000 A) 4,000 B) 4,300 C) 4,545 D) 5,000

Jordan Company Jordan Company manufactures a single product.Each unit sells for $15.The firm's projected costs are listed below: $\begin{array}{ll} \text { Variable costs per unt: }\\ ~~\text { Prochıction } & \$ 5 \\ ~~\text { SG\&A } & \$ 1 \\ \text { Fixed costs: } & \\ ~~\text { Prochıction } & \$ 40,000 \\ ~~\text { SG\&A } & \$ 60,000 \\ ~~\text { Estimated volume } & 20,000 \text { units } \end{array}$ Refer to Jordan Company.What is Jordan's projected degree of operating leverage for the current year?

A) 2.25 B) 1.80 C) 3.75 D) 1.67 A) 2.25 B) 1.80 C) 3.75 D) 1.67

Moonbeam Corporation Moonbeam Corporation manufactures and sells two products: A and B The operating results of the company are as follows: $\begin{array}{lll} &\text{Product A}&\text{Product B}\\\hline \text { Sales in units } & 2,000 & 3,000 \\ \text { Sales price per unit } & \$ 10 & \$ 5 \\ \text { Variable costs per unit } & 7 & 3 \end{array}$ In addition,the company incurred total fixed costs in the amount of $9,000. Refer to Moonbeam Corporation.How many units would the company have needed to sell to produce a profit of $12,000?

A) 8,750 B) 20,000 C) 10,000 D) 8,400 A) 8,750 B) 20,000 C) 10,000 D) 8,400

John Anderson Company Below is an income statement for John Anderson Company: $\begin{array}{ll} \text { Sales } & \$ 300,000 \\ \text { Variable costs } & \underline{(150,000)} \\ \text { Contribution margin } & \$ 150,000 \\ \text { Fixed costs } & \underline{(100,000)} \\ \text { Profit before taxes } & \underline{\$ 50,000} \end{array}$ Refer to John Anderson Company.What was the company's margin of safety?

A) $50,000 B) $100,000 C) $150,000 D) $25,000 A) $50,000 B) $100,000 C) $150,000 D) $25,000

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

Shelton Company Below is an income statement for Shelton Company: Sales \ 600,000 Variable costs Contribution margin \ 450,000 Fixed costs Profit before taxes Refer to Shelton Company.What was Shelton's margin of safety?

(Multiple Choice)

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Question 41

If a company's variable costs per unit were to increase but its unit selling price stays constant,the effect on a profit-volume graph would be that the

(Multiple Choice)

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Question 42

Mark Smith Company Below is an income statement for Mark Smith Company: Sales \ 400,000 Variable costs () Contribution margin \ 200,000 Fixed costs () Profit before taxes Refer to Mark Smith Company.What was the company's margin of safety?

(Multiple Choice)

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Question 43

Which of the following factors is involved in studying cost-volume-profit relationships?

(Multiple Choice)

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Question 44

Alford,Brooks,and Fitch Companies Below are income statements that apply to three companies: Alford,Brooks,and Fitch: AlfordCo. BrooksCo. FitchCo Sales \ 100 \ 100 \ 100 Variable costs () () () Contribution margin \ 90 \ 80 \ 70 Fixed costs () () () Profit before taxes: \ 60 \ 60 \ 60 Refer to Alford,Brooks,and Fitch Companies.Within the relevant range,if sales go up by $1 for each firm,which firm will experience the greatest increase in profit?

(Multiple Choice)

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Question 45

Palmer Company Below is an income statement for Palmer Company: Sales \ 400,000 Variable costs Contribution margin \ 275,000 Fixed costs Profit before taxes Refer to Palmer Company.What is Palmer's degree of operating leverage?

(Multiple Choice)

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Question 46

In a CVP graph,the area between the total cost line and the total fixed cost line yields the

(Multiple Choice)

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Question 47

In CVP analysis,sales and production are assumed to be equal.

(True/False)

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Question 48

Consider the equation X = Sales - [(CM/Sales)´ (Sales)].What is X?

(Multiple Choice)

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Question 49

Sunshine Company manufactures a single product.In the prior year,the company had sales of $90,000,variable costs of $50,000,and fixed costs of $30,000.Sunshine expects its cost structure and sales price per unit to remain the same in the current year,however total sales are expected to increase by 20 percent.If the current year projections are realized,net income should exceed the prior year's net income by:

(Multiple Choice)

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Question 50

After the level of volume exceeds the break-even point

(Multiple Choice)

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Question 51

Absorption costing is more useful than variable costing in determining a company's break-even point.

(True/False)

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Question 52

Smith Company reported the following results from sales of 5,000 units of Product A for June: Sales \ 200,000 Variable costs ( 120,000 ) Fixed costs () Operating income Assume that Smith increases the selling price of Product A by 10 percent in July.How many units of Product A would have to be sold in July to generate an operating income of $20,000?

(Multiple Choice)

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Question 53

The margin of safety is a key concept of CVP analysis.The margin of safety is the

(Multiple Choice)

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Question 54

Jordan Company Jordan Company manufactures a single product.Each unit sells for $15.The firm's projected costs are listed below: Variable costs per unt: \nobreakspace\nobreakspace Prochıction \ 5 \nobreakspace\nobreakspace SG\&A \ 1 Fixed costs: \nobreakspace\nobreakspace Prochıction \ 40,000 \nobreakspace\nobreakspace SG\&A \ 60,000 \nobreakspace\nobreakspace Estimated volume 20,000 units Refer to Jordan Company.What is Jordan's projected degree of operating leverage for the current year?

(Multiple Choice)

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Question 55

Fixed costs per unit remain constant with levels of production.

(True/False)

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Question 56

There is an inverse relationship between degree of operating leverage and the margin of safety.

(True/False)

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Question 57

Moonbeam Corporation Moonbeam Corporation manufactures and sells two products: A and B The operating results of the company are as follows: Product A Product B Sales in units 2,000 3,000 Sales price per unit \ 10 \ 5 Variable costs per unit 7 3 In addition,the company incurred total fixed costs in the amount of $9,000. Refer to Moonbeam Corporation.How many units would the company have needed to sell to produce a profit of $12,000?

(Multiple Choice)

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Question 58

John Anderson Company Below is an income statement for John Anderson Company: Sales \ 300,000 Variable costs Contribution margin \ 150,000 Fixed costs Profit before taxes Refer to John Anderson Company.What was the company's margin of safety?

(Multiple Choice)

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Question 59

If a firm's net income does not change as its volume changes,the firm('s)

(Multiple Choice)

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Question 60

Shelton Company Below is an income statement for Shelton Company: Sales \ 600,000 Variable costs Contribution margin \ 450,000 Fixed costs Profit before taxes Refer to Shelton Company.What was Shelton's margin of safety?

If a company's variable costs per unit were to increase but its unit selling price stays constant,the effect on a profit-volume graph would be that the

Mark Smith Company Below is an income statement for Mark Smith Company: Sales \ 400,000 Variable costs () Contribution margin \ 200,000 Fixed costs () Profit before taxes Refer to Mark Smith Company.What was the company's margin of safety?

Which of the following factors is involved in studying cost-volume-profit relationships?

Palmer Company Below is an income statement for Palmer Company: Sales \ 400,000 Variable costs Contribution margin \ 275,000 Fixed costs Profit before taxes Refer to Palmer Company.What is Palmer's degree of operating leverage?

In a CVP graph,the area between the total cost line and the total fixed cost line yields the

In CVP analysis,sales and production are assumed to be equal.

Consider the equation X = Sales - [(CM/Sales)´ (Sales)].What is X?

After the level of volume exceeds the break-even point

Absorption costing is more useful than variable costing in determining a company's break-even point.

The margin of safety is a key concept of CVP analysis.The margin of safety is the

Fixed costs per unit remain constant with levels of production.

There is an inverse relationship between degree of operating leverage and the margin of safety.

John Anderson Company Below is an income statement for John Anderson Company: Sales \ 300,000 Variable costs Contribution margin \ 150,000 Fixed costs Profit before taxes Refer to John Anderson Company.What was the company's margin of safety?

If a firm's net income does not change as its volume changes,the firm('s)

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