Question 1

Sales mix is

Accepted Answer

A) the relative percentage in which a company sells its multiple products. 
B) the trend of sales over recent periods. 
C) the mix of variable and fixed expenses in relation to sales. 
D) a measure of leverage used by the company. 
A) the relative percentage in which a company sells its multiple products. 
B) the trend of sales over recent periods. 
C) the mix of variable and fixed expenses in relation to sales. 
D) a measure of leverage used by the company. A

Question 2

In a CVP income statement, a selling expense is generally

Accepted Answer

A) completely a variable cost. 
B) completely a fixed cost. 
C) neither a variable cost nor a fixed cost. 
D) partly a variable cost and partly a fixed cost. 
A) completely a variable cost. 
B) completely a fixed cost. 
C) neither a variable cost nor a fixed cost. 
D) partly a variable cost and partly a fixed cost. D

Question 3

Cost structure refers to the relative proportion of

Accepted Answer

A) selling expenses versus administrative expenses. 
B) selling and administrative expenses versus cost of goods sold. 
C) contribution margin versus sales. 
D) none of the above. 
A) selling expenses versus administrative expenses. 
B) selling and administrative expenses versus cost of goods sold. 
C) contribution margin versus sales. 
D) none of the above. D

Question 4

Warner Manufacturing reported sales of $2,000,000 last year (100,000 units at $20 each), when the break-even point was 80,000 units. Warner's margin of safety ratio is

Accepted Answer

A) 20%. 
B) 25%. 
C) 80%. 
D) 120%. 
A) 20%. 
B) 25%. 
C) 80%. 
D) 120%.

Question 5

The degree of operating leverage provides a measure of a company's earnings volatility.

Accepted Answer

A) True 
 B)False

Question 6

In 2016, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. The same selling price, variable expenses, and fixed expenses are expected for 2017. What is Teller's break-even point in sales dollars for 2017?

Accepted Answer

A) $900,000 
B) $2,700,000 
C) $1,800,000 
D) $2,571,429 
A) $900,000 
B) $2,700,000 
C) $1,800,000 
D) $2,571,429

Question 7

In 2016, Raleigh sold 1,000 units at $500 each, and earned net income of $40,000. Variable expenses were $300 per unit, and fixed expenses were $160,000. The same selling price is expected for 2017. Raleigh's variable cost per unit will rise by 10% in 2017 due to increasing material costs, so they are tentatively planning to cut fixed costs by $10,000. How many units must Raleigh sell in 2017 to maintain the same income level as 2016?

Accepted Answer

A) 882 
B) 1,000 
C) 1,056 
D) 1,118 
A) 882 
B) 1,000 
C) 1,056 
D) 1,118

Question 8

In a CVP income statement, cost of goods sold is generally

Accepted Answer

A) completely a variable cost. 
B) completely a fixed cost. 
C) neither a variable cost nor a fixed cost. 
D) partly a variable cost and partly a fixed cost. 
A) completely a variable cost. 
B) completely a fixed cost. 
C) neither a variable cost nor a fixed cost. 
D) partly a variable cost and partly a fixed cost.

Question 9

Use the following information for questions 
Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $6,660,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%.
-What will sales be for the Sporting Goods Division at the break-even point?

Accepted Answer

A) $5,400,000 
B) $6,300,000 
C) $10,067,442 
D) $11,700,000 
A) $5,400,000 
B) $6,300,000 
C) $10,067,442 
D) $11,700,000

Question 10

A shift from low-margin sales to high-margin sales

Accepted Answer

A) may increase net income, even though there is a decline in total units sold. 
B) will always increase net income. 
C) will always decrease net income. 
D) will always decrease units sold. 
A) may increase net income, even though there is a decline in total units sold. 
B) will always increase net income. 
C) will always decrease net income. 
D) will always decrease units sold.

Question 11

The margin of safety ratio

Accepted Answer

A) is computed as actual sales divided by break-even sales. 
B) indicates what percent decline in sales could be sustained before the company would operate at a loss. 
C) measures the ratio of fixed costs to variable costs. 
D) is used to determine the break-even point. 
A) is computed as actual sales divided by break-even sales. 
B) indicates what percent decline in sales could be sustained before the company would operate at a loss. 
C) measures the ratio of fixed costs to variable costs. 
D) is used to determine the break-even point.

Question 12

The contribution margin ratio is

Accepted Answer

A) sales divided by contribution margin. 
B) sales divided by fixed expenses. 
C) sales divided by variable expenses. 
D) contribution margin divided by sales. 
A) sales divided by contribution margin. 
B) sales divided by fixed expenses. 
C) sales divided by variable expenses. 
D) contribution margin divided by sales.

Question 13

Reducing reliance on human workers and instead investing heavily in computers and online technology will

Accepted Answer

A) reduce fixed costs and increase variable costs. 
B) reduce variable costs and increase fixed costs. 
C) have no effect on the relative proportion of fixed and variable costs. 
D) make the company less susceptible to economic swings. 
A) reduce fixed costs and increase variable costs. 
B) reduce variable costs and increase fixed costs. 
C) have no effect on the relative proportion of fixed and variable costs. 
D) make the company less susceptible to economic swings.

Question 14

Cost structure

Accepted Answer

A) refers to the relative proportion of fixed versus variable costs that a company incurs. 
B) generally has little impact on profitability. 
C) cannot be significantly changed by companies. 
D) refers to the relative proportion of operating versus nonoperating costs that a company incurs. 
A) refers to the relative proportion of fixed versus variable costs that a company incurs. 
B) generally has little impact on profitability. 
C) cannot be significantly changed by companies. 
D) refers to the relative proportion of operating versus nonoperating costs that a company incurs.

Question 15

Moonwalker's CVP income statement included sales of 5,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $110,000. Contribution margin is

Accepted Answer

A) $500,000. 
B) $300,000. 
C) $200,000. 
D) $90,000. 
A) $500,000. 
B) $300,000. 
C) $200,000. 
D) $90,000.

Question 16

Use the following information for questions 
Roosevelt Corporation has a weighted-average unit contribution margin of $30 for its two products, Standard and Supreme. Expected sales for Roosevelt are 40,000 Standard and 60,000 Supreme. Fixed expenses are $1,800,000.
-How many Standards would Roosevelt sell at the break-even point?

Accepted Answer

A) 24,000 
B) 36,000 
C) 40,000 
D) 60,000 
A) 24,000 
B) 36,000 
C) 40,000 
D) 60,000

Question 17

Cost structure refers to the relative proportion of fixed versus variable costs that a company incurs.

Accepted Answer

A) True 
 B)False

Question 18

The margin of safety ratio is

Accepted Answer

A) expected sales divided by break-even sales. 
B) expected sales less break-even sales. 
C) margin of safety in dollars divided by expected sales. 
D) margin of safety in dollars divided by break-even sales. 
A) expected sales divided by break-even sales. 
B) expected sales less break-even sales. 
C) margin of safety in dollars divided by expected sales. 
D) margin of safety in dollars divided by break-even sales.

Question 19

Ramirez Corporation sells two types of computer hard drives. The sales mix is 30% (Q-Drive) and 70% (Q-Drive Plus). Q-Drive has variable costs per unit of $90 and a selling price of $150. Q-Drive Plus has variable costs per unit of $105 and a selling price of $195. Ramirez's fixed costs are $891,000. How many units of Q-Drive would be sold at the break-even point?

Accepted Answer

A) 3,300 
B) 4,455 
C) 11,000 
D) 7,700 
A) 3,300 
B) 4,455 
C) 11,000 
D) 7,700

Question 20

The break-even point in dollars is variable costs divided by the weighted-average contribution margin ratio.

Accepted Answer

A) True 
 B)False

Sales mix is

In a CVP income statement, a selling expense is generally

Cost structure refers to the relative proportion of

Warner Manufacturing reported sales of $2,000,000 last year (100,000 units at $20 each), when the break-even point was 80,000 units. Warner's margin of safety ratio is

The degree of operating leverage provides a measure of a company's earnings volatility.

In 2016, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. The same selling price, variable expenses, and fixed expenses are expected for 2017. What is Teller's break-even point in sales dollars for 2017?

In a CVP income statement, cost of goods sold is generally

A shift from low-margin sales to high-margin sales

The margin of safety ratio

The contribution margin ratio is

Reducing reliance on human workers and instead investing heavily in computers and online technology will

Cost structure

Moonwalker's CVP income statement included sales of 5,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $110,000. Contribution margin is

Cost structure refers to the relative proportion of fixed versus variable costs that a company incurs.

The margin of safety ratio is

The break-even point in dollars is variable costs divided by the weighted-average contribution margin ratio.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters

Exam 18: Cost-Volume-Profit Analysis: Additional Issues

Sales mix is

In a CVP income statement, a selling expense is generally

Cost structure refers to the relative proportion of

Warner Manufacturing reported sales of $2,000,000 last year (100,000 units at $20 each), when the break-even point was 80,000 units. Warner's margin of safety ratio is

The degree of operating leverage provides a measure of a company's earnings volatility.

In 2016, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. The same selling price, variable expenses, and fixed expenses are expected for 2017. What is Teller's break-even point in sales dollars for 2017?

In a CVP income statement, cost of goods sold is generally

A shift from low-margin sales to high-margin sales

The margin of safety ratio

The contribution margin ratio is

Reducing reliance on human workers and instead investing heavily in computers and online technology will

Cost structure

Moonwalker's CVP income statement included sales of 5,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $110,000. Contribution margin is

Cost structure refers to the relative proportion of fixed versus variable costs that a company incurs.

The margin of safety ratio is

The break-even point in dollars is variable costs divided by the weighted-average contribution margin ratio.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters