Question 1

Changes in activity have a(n) _________ effect on fixed costs per unit.

Accepted Answer

A) positive 
B) negative 
C) inverse 
D) neutral 
A) positive 
B) negative 
C) inverse 
D) neutral

Question 2

A cost-volume-profit graph shows the amount of net income or loss at each level of sales.

Accepted Answer

A) True 
 B)False

Question 3

Wendy Industries produces only one product.Monthly fixed expenses are $12,000, monthly unit sales are 4,000, and the unit contribution margin is $10.How much is monthly net income?

Accepted Answer

A) $40,000 
B) $52,000 
C) $0 
D) $28,000 
A) $40,000 
B) $52,000 
C) $0 
D) $28,000

Question 4

April Industries sells a product with a contribution margin of $12 per unit, fixed costs of $223,200, and sales for the current year of $300,000.How much is April's break-even point?

Accepted Answer

A) 13,800 units 
B) $76,800 
C) 18,600 units 
D) 6,400 units 
A) 13,800 units 
B) $76,800 
C) 18,600 units 
D) 6,400 units

Question 5

The relevant range of activity is the activity level where the firm will earn income.

Accepted Answer

A) True 
 B)False

Question 6

Sales are $500,000 and variable costs are $330,000.What is the contribution margin ratio?

Accepted Answer

A) 52% 
B) 34% 
C) 66% 
D) Cannot be determined because amounts are not expressed per unit. 
A) 52% 
B) 34% 
C) 66% 
D) Cannot be determined because amounts are not expressed per unit.

Question 7

Which of the following is not a mixed cost?

Accepted Answer

A) Car rental fee 
B) Electricity 
C) Depreciation 
D) Telephone Expense 
A) Car rental fee 
B) Electricity 
C) Depreciation 
D) Telephone Expense

Question 8

The increased use of automation and less use of the work force in companies has caused a trend towards an increase in

Accepted Answer

A) both variable and fixed costs. 
B) fixed costs and a decrease in variable costs. 
C) variable costs and a decrease in fixed costs. 
D) variable costs and no change in fixed costs. 
A) both variable and fixed costs. 
B) fixed costs and a decrease in variable costs. 
C) variable costs and a decrease in fixed costs. 
D) variable costs and no change in fixed costs.

Question 9

Stephanie, Inc.sells its product for $40.The variable costs are $18 per unit.Fixed costs are $16,000.The company is considering the purchase of an automated machine that will result in a $2 reduction in unit variable costs and an increase of $5,000 in fixed costs.Which of the following is true about the break-even point in units?

Accepted Answer

A) It will remain unchanged. 
B) It will decrease. 
C) It will increase. 
D) It cannot be determined from the information provided. 
A) It will remain unchanged. 
B) It will decrease. 
C) It will increase. 
D) It cannot be determined from the information provided.

Question 10

Wilton Co.reported the following results from the sale of 5,000 hammers in May: sales $200,000, variable costs $120,000, fixed costs $60,000, and net income $20,000.Assume that Wilton increases the selling price of hammers by 10% on June 1.How many hammers will have to be sold in June to maintain the same level of net income?

Accepted Answer

A) 4,000 
B) 4,300 
C) 4,500 
D) 5,000 
A) 4,000 
B) 4,300 
C) 4,500 
D) 5,000

Question 11

In using the high-low method, the fixed cost

Accepted Answer

A) is determined by subtracting the total cost at the high level of activity from the total cost at the low activity level. 
B) is determined by adding the total variable cost to the total cost at the low activity level. 
C) is determined before the total variable cost. 
D) may be determined by subtracting the total variable cost from either the total cost at the low or high activity level. 
A) is determined by subtracting the total cost at the high level of activity from the total cost at the low activity level. 
B) is determined by adding the total variable cost to the total cost at the low activity level. 
C) is determined before the total variable cost. 
D) may be determined by subtracting the total variable cost from either the total cost at the low or high activity level.

Question 12

If Qualls Quality Airline cuts its domestic fares by 30%,

Accepted Answer

A) its fixed costs will decrease. 
B) profit will increase by 30%. 
C) a profit can only be earned by decreasing the number of flights. 
D) a profit can be earned either by increasing the number of passengers or by decreasing variable costs. 
A) its fixed costs will decrease. 
B) profit will increase by 30%. 
C) a profit can only be earned by decreasing the number of flights. 
D) a profit can be earned either by increasing the number of passengers or by decreasing variable costs.

Question 13

CVP analysis does not consider

Accepted Answer

A) level of activity. 
B) fixed cost per unit. 
C) variable cost per unit. 
D) sales mix. 
A) level of activity. 
B) fixed cost per unit. 
C) variable cost per unit. 
D) sales mix.

Question 14

Required sales in dollars to meet a target net income is computed by dividing

Accepted Answer

A) fixed costs plus target net income by unit contribution margin. 
B) variable costs plus target net income by unit contribution margin. 
C) fixed costs plus target net income by contribution margin ratio. 
D) total costs plus target net income by contribution margin ratio. 
A) fixed costs plus target net income by unit contribution margin. 
B) variable costs plus target net income by unit contribution margin. 
C) fixed costs plus target net income by contribution margin ratio. 
D) total costs plus target net income by contribution margin ratio.

Question 15

Variable costs for Abbey, Inc.are 25% of sales.Its selling price is $100 per unit.If Abbey sells one unit more than break-even units, how much will profit increase?

Accepted Answer

A) $75 
B) $25 
C) $50 
D) $400 
A) $75 
B) $25 
C) $50 
D) $400

Question 16

A mixed cost has both selling and administrative cost elements.

Accepted Answer

A) True 
 B)False

Question 17

Armstrong Industries has a contribution margin of $240,000 and a contribution margin ratio of 30%.How much are total variable costs?

Accepted Answer

A) $72,000 
B) $560,000 
C) $168,000 
D) $800,000 
A) $72,000 
B) $560,000 
C) $168,000 
D) $800,000

Question 18

The break-even point is where total sales equal total fixed costs.

Accepted Answer

A) True 
 B)False

Question 19

If a company had a contribution margin of $1,000,000 and a contribution margin ratio of 40%, total variable costs must have been

Accepted Answer

A) $1,500,000. 
B) $600,000. 
C) $2,500,000. 
D) $400,000. 
A) $1,500,000. 
B) $600,000. 
C) $2,500,000. 
D) $400,000.

Question 20

Sweet Manufacturing is planning to sell 400,000 hammers for $6 per unit.The contribution margin ratio is 20%.If Sweet will break even at this level of sales, what are the fixed costs?

Accepted Answer

A) $480,000 
B) $1,120,000 
C) $1,600,000 
D) $1,920,000 
A) $480,000 
B) $1,120,000 
C) $1,600,000 
D) $1,920,000

Changes in activity have a(n) _________ effect on fixed costs per unit.

A cost-volume-profit graph shows the amount of net income or loss at each level of sales.

Wendy Industries produces only one product.Monthly fixed expenses are $12,000, monthly unit sales are 4,000, and the unit contribution margin is $10.How much is monthly net income?

April Industries sells a product with a contribution margin of $12 per unit, fixed costs of $223,200, and sales for the current year of $300,000.How much is April's break-even point?

The relevant range of activity is the activity level where the firm will earn income.

Sales are $500,000 and variable costs are $330,000.What is the contribution margin ratio?

Which of the following is not a mixed cost?

The increased use of automation and less use of the work force in companies has caused a trend towards an increase in

In using the high-low method, the fixed cost

If Qualls Quality Airline cuts its domestic fares by 30%,

CVP analysis does not consider

Required sales in dollars to meet a target net income is computed by dividing

Variable costs for Abbey, Inc.are 25% of sales.Its selling price is $100 per unit.If Abbey sells one unit more than break-even units, how much will profit increase?

A mixed cost has both selling and administrative cost elements.

Armstrong Industries has a contribution margin of $240,000 and a contribution margin ratio of 30%.How much are total variable costs?

The break-even point is where total sales equal total fixed costs.

If a company had a contribution margin of $1,000,000 and a contribution margin ratio of 40%, total variable costs must have been

Sweet Manufacturing is planning to sell 400,000 hammers for $6 per unit.The contribution margin ratio is 20%.If Sweet will break even at this level of sales, what are the fixed costs?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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

Time Value of Money

Filters

Exam 5: Merchandising Operations and the Multiple-Step Income Statement

Changes in activity have a(n) _________ effect on fixed costs per unit.

A cost-volume-profit graph shows the amount of net income or loss at each level of sales.

Wendy Industries produces only one product.Monthly fixed expenses are $12,000, monthly unit sales are 4,000, and the unit contribution margin is $10.How much is monthly net income?

April Industries sells a product with a contribution margin of $12 per unit, fixed costs of $223,200, and sales for the current year of $300,000.How much is April's break-even point?

The relevant range of activity is the activity level where the firm will earn income.

Sales are $500,000 and variable costs are $330,000.What is the contribution margin ratio?

Which of the following is not a mixed cost?

The increased use of automation and less use of the work force in companies has caused a trend towards an increase in

In using the high-low method, the fixed cost

If Qualls Quality Airline cuts its domestic fares by 30%,

CVP analysis does not consider

Required sales in dollars to meet a target net income is computed by dividing

Variable costs for Abbey, Inc.are 25% of sales.Its selling price is $100 per unit.If Abbey sells one unit more than break-even units, how much will profit increase?

A mixed cost has both selling and administrative cost elements.

Armstrong Industries has a contribution margin of $240,000 and a contribution margin ratio of 30%.How much are total variable costs?

The break-even point is where total sales equal total fixed costs.

If a company had a contribution margin of $1,000,000 and a contribution margin ratio of 40%, total variable costs must have been

Sweet Manufacturing is planning to sell 400,000 hammers for $6 per unit.The contribution margin ratio is 20%.If Sweet will break even at this level of sales, what are the fixed costs?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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

Time Value of Money

Filters