Question 1

Costs will not change in total within the relevant range of activity.

Accepted Answer

A) True 
 B)False

Question 2

Chung, Inc.sells 100,000 wrenches for $24 per unit.Fixed costs are $700,000 and net income is $500,000.What should be reported as variable expenses in the CVP income statement?

Accepted Answer

A) $1,080,000 
B) $1,200,000 
C) $1,900,000 
D) $1,700,000 
A) $1,080,000 
B) $1,200,000 
C) $1,900,000 
D) $1,700,000

Question 3

Fixed costs are $3,000,000 and the unit contribution margin is $150.What is the break-even point?

Accepted Answer

A) $7,500,000 
B) $20,000,000 
C) 7,500 units 
D) 20,000 units 
A) $7,500,000 
B) $20,000,000 
C) 7,500 units 
D) 20,000 units

Question 4

Montoya Manufacturing has fixed costs of $3,000,000 and variable costs are 40% of sales.What are the required sales if Montoya desires net income of $300,000?

Accepted Answer

A) $5,500,000 
B) $5,000,000 
C) $8,250,000 
D) $7,500,000 
A) $5,500,000 
B) $5,000,000 
C) $8,250,000 
D) $7,500,000

Question 5

Frazier Manufacturing Company collected the following production data for the past month: $\begin{array}{rr}\text { Units Produced }&\text { Total Cost }\
1,600 & \$ 66,000 \
1,300 & 57,000 \
1,500 & 67,500 \
1,100 & 49,500
\end{array}$ If the high-low method is used, what is the monthly total cost equation?

Accepted Answer

A) Total cost = $13,200 + $33/unit 
B) Total cost = $16,500 + $30/unit 
C) Total cost = $0 + $45/unit 
D) Total cost = $9,900 + $36/unit 
A) Total cost = $13,200 + $33/unit 
B) Total cost = $16,500 + $30/unit 
C) Total cost = $0 + $45/unit 
D) Total cost = $9,900 + $36/unit

Question 6

Which of the following is not a plausible explanation of why variable costs often behave in a curvilinear fashion?

Accepted Answer

A) Labor specialization 
B) Overtime wages 
C) Total variable costs are constant within the relevant range 
D) Availability of quantity discounts 
A) Labor specialization 
B) Overtime wages 
C) Total variable costs are constant within the relevant range 
D) Availability of quantity discounts

Question 7

In CVP analysis, the term "cost"

Accepted Answer

A) includes only manufacturing costs. 
B) means cost of goods sold. 
C) includes manufacturing costs plus selling and administrative expenses. 
D) excludes all fixed manufacturing costs. 
A) includes only manufacturing costs. 
B) means cost of goods sold. 
C) includes manufacturing costs plus selling and administrative expenses. 
D) excludes all fixed manufacturing costs.

Question 8

If graphed, fixed costs that behave in a curvilinear fashion resemble a(n)

Accepted Answer

A) S-curve. 
B) inverted S-curve. 
C) straight line. 
D) stair-step pattern. 
A) S-curve. 
B) inverted S-curve. 
C) straight line. 
D) stair-step pattern.

Question 9

Target net income is the income objective for an individual product line.

Accepted Answer

A) True 
 B)False

Question 10

The high-low method is often employed in analyzing

Accepted Answer

A) fixed costs. 
B) mixed costs. 
C) variable costs. 
D) conversion costs. 
A) fixed costs. 
B) mixed costs. 
C) variable costs. 
D) conversion costs.

Question 11

Danny's Lawn Equipment has actual sales of $800,000 and a break-even point of $520,000.How much is its margin of safety ratio?

Accepted Answer

A) 35% 
B) 46% 
C) 54% 
D) 65% 
A) 35% 
B) 46% 
C) 54% 
D) 65%

Question 12

Which of the following would not be an acceptable way to express contribution margin?

Accepted Answer

A) Sales minus variable costs 
B) Sales minus unit costs 
C) Unit selling price minus unit variable costs 
D) Unit contribution margin divided by unit selling price 
A) Sales minus variable costs 
B) Sales minus unit costs 
C) Unit selling price minus unit variable costs 
D) Unit contribution margin divided by unit selling price

Question 13

A variable cost is a cost that

Accepted Answer

A) varies per unit at every level of activity. 
B) occurs at various times during the year. 
C) varies in total in proportion to changes in the level of activity. 
D) may or may not be incurred, depending on management's discretion. 
A) varies per unit at every level of activity. 
B) occurs at various times during the year. 
C) varies in total in proportion to changes in the level of activity. 
D) may or may not be incurred, depending on management's discretion.

Question 14

Within the relevant range, the variable cost per unit

Accepted Answer

A) differs at each activity level. 
B) remains constant at each activity level. 
C) increases as production increases. 
D) decreases as production increases. 
A) differs at each activity level. 
B) remains constant at each activity level. 
C) increases as production increases. 
D) decreases as production increases.

Question 15

In applying the high-low method, what is the unit variable cost? $$\begin{array} { l c c } 
\text { Month } & \text { Miles } &\text { Total Cost } \
\text { January } & 80,000 & \$ 192,000 \
\text { February } & 50,000 & 160,000 \
\text { March } & 70,000 & 188,000 \
\text { April } & 90,000 & 260,000
\end{array}$$

Accepted Answer

A) $2.88 
B) $2.50 
C) $3.20 
D) Cannot be determined from the information given. 
A) $2.88 
B) $2.50 
C) $3.20 
D) Cannot be determined from the information given.

Question 16

The trend in most companies is to have more variable costs and fewer fixed costs.

Accepted Answer

A) True 
 B)False

Question 17

Bolton Industries had actual sales of $1,000,000 when break-even sales were $600,000.What is the margin of safety ratio?

Accepted Answer

A) 40% 
B) 33% 
C) 60% 
D) 67% 
A) 40% 
B) 33% 
C) 60% 
D) 67%

Question 18

Unit contribution margin is the amount that each unit sold contributes towards the recovery of fixed costs and to income.

Accepted Answer

A) True 
 B)False

Question 19

Pascal, Inc.is planning to sell 900,000 units for $1.50 per unit.The contribution margin ratio is 20%.If Pascal will break even at this level of sales, what are the fixed costs?

Accepted Answer

A) $270,000. 
B) $630,000. 
C) $900,000. 
D) $1,020,000. 
A) $270,000. 
B) $630,000. 
C) $900,000. 
D) $1,020,000.

Question 20

Cunningham, Inc.sells MP3 players for $60 each.Variable costs are $40 per unit, and fixed costs total $120,000.How many MP3 players must Cunningham sell to earn net income of $280,000?

Accepted Answer

A) 20,000. 
B) 7,000. 
C) 5,000. 
D) 6,000. 
A) 20,000. 
B) 7,000. 
C) 5,000. 
D) 6,000.

Costs will not change in total within the relevant range of activity.

Chung, Inc.sells 100,000 wrenches for $24 per unit.Fixed costs are $700,000 and net income is $500,000.What should be reported as variable expenses in the CVP income statement?

Fixed costs are $3,000,000 and the unit contribution margin is $150.What is the break-even point?

Montoya Manufacturing has fixed costs of $3,000,000 and variable costs are 40% of sales.What are the required sales if Montoya desires net income of $300,000?

Frazier Manufacturing Company collected the following production data for the past month: Units Produced Total Cost 1,600 \ 66,000 1,300 57,000 1,500 67,500 1,100 49,500 If the high-low method is used, what is the monthly total cost equation?

Which of the following is not a plausible explanation of why variable costs often behave in a curvilinear fashion?

In CVP analysis, the term "cost"

If graphed, fixed costs that behave in a curvilinear fashion resemble a(n)

Target net income is the income objective for an individual product line.

The high-low method is often employed in analyzing

Danny's Lawn Equipment has actual sales of $800,000 and a break-even point of $520,000.How much is its margin of safety ratio?

Which of the following would not be an acceptable way to express contribution margin?

A variable cost is a cost that

Within the relevant range, the variable cost per unit

In applying the high-low method, what is the unit variable cost? Month Miles Total Cost January 80,000 \ 192,000 February 50,000 160,000 March 70,000 188,000 April 90,000 260,000

The trend in most companies is to have more variable costs and fewer fixed costs.

Bolton Industries had actual sales of $1,000,000 when break-even sales were $600,000.What is the margin of safety ratio?

Unit contribution margin is the amount that each unit sold contributes towards the recovery of fixed costs and to income.

Pascal, Inc.is planning to sell 900,000 units for $1.50 per unit.The contribution margin ratio is 20%.If Pascal will break even at this level of sales, what are the fixed costs?

Cunningham, Inc.sells MP3 players for $60 each.Variable costs are $40 per unit, and fixed costs total $120,000.How many MP3 players must Cunningham sell to earn net income of $280,000?

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

Costs will not change in total within the relevant range of activity.

Chung, Inc.sells 100,000 wrenches for $24 per unit.Fixed costs are $700,000 and net income is $500,000.What should be reported as variable expenses in the CVP income statement?

Fixed costs are $3,000,000 and the unit contribution margin is $150.What is the break-even point?

Montoya Manufacturing has fixed costs of $3,000,000 and variable costs are 40% of sales.What are the required sales if Montoya desires net income of $300,000?

Frazier Manufacturing Company collected the following production data for the past month: Units Produced Total Cost 1,600 \ 66,000 1,300 57,000 1,500 67,500 1,100 49,500 If the high-low method is used, what is the monthly total cost equation?

Which of the following is not a plausible explanation of why variable costs often behave in a curvilinear fashion?

In CVP analysis, the term "cost"

If graphed, fixed costs that behave in a curvilinear fashion resemble a(n)

Target net income is the income objective for an individual product line.

The high-low method is often employed in analyzing

Danny's Lawn Equipment has actual sales of $800,000 and a break-even point of $520,000.How much is its margin of safety ratio?

Which of the following would not be an acceptable way to express contribution margin?

A variable cost is a cost that

Within the relevant range, the variable cost per unit

In applying the high-low method, what is the unit variable cost? Month Miles Total Cost January 80,000 \ 192,000 February 50,000 160,000 March 70,000 188,000 April 90,000 260,000

The trend in most companies is to have more variable costs and fewer fixed costs.

Bolton Industries had actual sales of $1,000,000 when break-even sales were $600,000.What is the margin of safety ratio?

Unit contribution margin is the amount that each unit sold contributes towards the recovery of fixed costs and to income.

Pascal, Inc.is planning to sell 900,000 units for $1.50 per unit.The contribution margin ratio is 20%.If Pascal will break even at this level of sales, what are the fixed costs?

Cunningham, Inc.sells MP3 players for $60 each.Variable costs are $40 per unit, and fixed costs total $120,000.How many MP3 players must Cunningham sell to earn net income of $280,000?

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