Question 1

The manufacturing cost per unit for absorption costing is

Accepted Answer

A) usually, but not always, higher than manufacturing cost per unit for variable costing. 
B) usually, but not always, lower than manufacturing cost per unit for variable costing. 
C) always higher than manufacturing cost per unit for variable costing. 
D) always lower than manufacturing cost per unit for variable costing. 
A) usually, but not always, higher than manufacturing cost per unit for variable costing. 
B) usually, but not always, lower than manufacturing cost per unit for variable costing. 
C) always higher than manufacturing cost per unit for variable costing. 
D) always lower than manufacturing cost per unit for variable costing.

Question 2

Variable costing is the approach used for external reporting under generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 3

For Pierce Company, sales is $500,000, variable expenses are $340,000, and fixed expenses are $140,000.Pierce's contribution margin ratio is

Accepted Answer

A) 4%. 
B) 28%. 
C) 32%. 
D) 68%. 
A) 4%. 
B) 28%. 
C) 32%. 
D) 68%.

Question 4

Hinge Manufacturing's cost of goods sold is $420,000 variable and $240,000 fixed.The company's selling and administrative expenses are $300,000 variable and $360,000 fixed.If the company's sales is $1,580,000, what is its contribution margin?

Accepted Answer

A) $260,000 
B) $860,000 
C) $920,000 
D) $980,000 
A) $260,000 
B) $860,000 
C) $920,000 
D) $980,000

Question 5

Contribution margin is the amount of revenue remaining after deducting

Accepted Answer

A) cost of goods sold. 
B) fixed costs. 
C) variable costs. 
D) contra-revenue. 
A) cost of goods sold. 
B) fixed costs. 
C) variable costs. 
D) contra-revenue.

Question 6

Curtis Corporation's contribution margin is $25 per unit for Product A and $30 for Product B. Product A requires 2 machine hours and Product B requires 4 machine hours.How much is the contribution margin per unit of limited resource for each product? $\begin{array}{ll}&A&B\
a.&\$ 12.50 & \$ 7.50 \
b.&\$ 12.50 & \$ 8.33 \
c.&\$ 10.00 & \$ 7.50 \
d.&\$ 10.00 & \$ 8.33
\end{array}$

Accepted Answer

The answer of Curtis Corporation's contribution margin is $25 per...

Question 7

Which cost is charged to the product under variable costing?

Accepted Answer

A) Variable manufacturing overhead 
B) Fixed manufacturing overhead 
C) Variable administrative expenses 
D) Fixed administrative expenses 
A) Variable manufacturing overhead 
B) Fixed manufacturing overhead 
C) Variable administrative expenses 
D) Fixed administrative expenses

Question 8

A company with a higher contribution margin ratio is

Accepted Answer

A) more sensitive to changes in sales revenue. 
B) less sensitive to changes in sales revenue. 
C) either more or less sensitive to changes in sales revenue, depending on other factors. 
D) likely to have a lower breakeven point. 
A) more sensitive to changes in sales revenue. 
B) less sensitive to changes in sales revenue. 
C) either more or less sensitive to changes in sales revenue, depending on other factors. 
D) likely to have a lower breakeven point.

Question 9

In a sales mix situation, at any level of units sold, net income will be higher if

Accepted Answer

A) more higher contribution margin units are sold than lower contribution margin units. 
B) more lower contribution margin units are sold than higher contribution margin units. 
C) more fixed expenses are incurred. 
D) weighted-average unit contribution margin decreases. 
A) more higher contribution margin units are sold than lower contribution margin units. 
B) more lower contribution margin units are sold than higher contribution margin units. 
C) more fixed expenses are incurred. 
D) weighted-average unit contribution margin decreases.

Question 10

A cost structure which relies more heavily on fixed costs makes the company

Accepted Answer

A) more sensitive to changes in sales revenue. 
B) less sensitive to changes in sales revenue. 
C) either more or less sensitive to changes in sales revenue, depending on other factors. 
D) have a lower break-even point. 
A) more sensitive to changes in sales revenue. 
B) less sensitive to changes in sales revenue. 
C) either more or less sensitive to changes in sales revenue, depending on other factors. 
D) have a lower break-even point.

Question 11

When a company is in its early stages of operation, its primary goal is to generate a target net income.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Use the following information for questions 
Sprinkle Co. sells its product for $60 per unit. During 2016, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $15, direct labor $9, and variable overhead $3. Fixed costs are: $720,000 manufacturing overhead, and $90,000 selling and administrative expenses.
-Cost of goods sold under absorption costing is

Accepted Answer

A) $1,350,000. 
B) $1,620,000. 
C) $1,950,000. 
D) $1,560,000. 
A) $1,350,000. 
B) $1,620,000. 
C) $1,950,000. 
D) $1,560,000.

Question 14

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.

Question 15

For Wilder Corporation, sales is $1,600,000 (8,000 units), fixed expenses are $480,000, and the contribution margin per unit is $80.What is the margin of safety in dollars?

Accepted Answer

A) $80,000 
B) $400,000 
C) $720,000 
D) $1,120,000 
A) $80,000 
B) $400,000 
C) $720,000 
D) $1,120,000

Question 16

Net income under absorption costing is gross profit less

Accepted Answer

A) cost of goods sold. 
B) fixed manufacturing overhead and fixed selling and administrative expenses. 
C) fixed manufacturing overhead and variable manufacturing overhead. 
D) variable selling and administrative expenses and fixed selling and administrative expenses. 
A) cost of goods sold. 
B) fixed manufacturing overhead and fixed selling and administrative expenses. 
C) fixed manufacturing overhead and variable manufacturing overhead. 
D) variable selling and administrative expenses and fixed selling and administrative expenses.

Question 17

Which of the following statements is not true?

Accepted Answer

A) Operating leverage refers to the extent to which a company's net income reacts to a given change in sales. 
B) Companies that have higher fixed costs relative to variable costs have higher operating leverage. 
C) When a company's sales revenue is increasing, high operating leverage is good because it means that profits will increase rapidly. 
D) When a company's sales revenue is decreasing, high operating leverage is good because it means that profits will decrease at a slower pace than revenues decrease. 
A) Operating leverage refers to the extent to which a company's net income reacts to a given change in sales. 
B) Companies that have higher fixed costs relative to variable costs have higher operating leverage. 
C) When a company's sales revenue is increasing, high operating leverage is good because it means that profits will increase rapidly. 
D) When a company's sales revenue is decreasing, high operating leverage is good because it means that profits will decrease at a slower pace than revenues decrease.

Question 18

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 19

Which cost is not charged to the product under variable costing?

Accepted Answer

A) Direct materials 
B) Direct labor 
C) Variable manufacturing overhead 
D) Fixed manufacturing overhead 
A) Direct materials 
B) Direct labor 
C) Variable manufacturing overhead 
D) Fixed manufacturing overhead

Question 20

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.

The manufacturing cost per unit for absorption costing is

Variable costing is the approach used for external reporting under generally accepted accounting principles.

For Pierce Company, sales is $500,000, variable expenses are $340,000, and fixed expenses are $140,000.Pierce's contribution margin ratio is

Hinge Manufacturing's cost of goods sold is $420,000 variable and $240,000 fixed.The company's selling and administrative expenses are $300,000 variable and $360,000 fixed.If the company's sales is $1,580,000, what is its contribution margin?

Contribution margin is the amount of revenue remaining after deducting

Which cost is charged to the product under variable costing?

A company with a higher contribution margin ratio is

In a sales mix situation, at any level of units sold, net income will be higher if

A cost structure which relies more heavily on fixed costs makes the company

When a company is in its early stages of operation, its primary goal is to generate a target net income.

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

In a CVP income statement, a selling expense is generally

For Wilder Corporation, sales is $1,600,000 (8,000 units), fixed expenses are $480,000, and the contribution margin per unit is $80.What is the margin of safety in dollars?

Net income under absorption costing is gross profit less

Which of the following statements is not true?

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

Which cost is not charged to the product under variable costing?

Cost structure

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

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

Time Value of Money

Filters

Exam 6: Reporting and Analyzing Inventory

The manufacturing cost per unit for absorption costing is

Variable costing is the approach used for external reporting under generally accepted accounting principles.

For Pierce Company, sales is $500,000, variable expenses are $340,000, and fixed expenses are $140,000.Pierce's contribution margin ratio is

Hinge Manufacturing's cost of goods sold is $420,000 variable and $240,000 fixed.The company's selling and administrative expenses are $300,000 variable and $360,000 fixed.If the company's sales is $1,580,000, what is its contribution margin?

Contribution margin is the amount of revenue remaining after deducting

Which cost is charged to the product under variable costing?

A company with a higher contribution margin ratio is

In a sales mix situation, at any level of units sold, net income will be higher if

A cost structure which relies more heavily on fixed costs makes the company

When a company is in its early stages of operation, its primary goal is to generate a target net income.

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

In a CVP income statement, a selling expense is generally

For Wilder Corporation, sales is $1,600,000 (8,000 units), fixed expenses are $480,000, and the contribution margin per unit is $80.What is the margin of safety in dollars?

Net income under absorption costing is gross profit less

Which of the following statements is not true?

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

Which cost is not charged to the product under variable costing?

Cost structure

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

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

Time Value of Money

Filters