Question 1

If direct materials cost per unit decreases, the amount of sales necessary to earn a desired amount of profit will decrease.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

Accepted Answer

A)  electricity per KWH to operate factory equipment 
B)  direct materials cost 
C)  insurance premiums on factory building 
D)  wages of assembly worker 
A)  electricity per KWH to operate factory equipment 
B)  direct materials cost 
C)  insurance premiums on factory building 
D)  wages of assembly worker

Question 3

If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio?

Accepted Answer

A)  38% 
B)  26.8% 
C)  11.8% 
D)  62% 
A)  38% 
B)  26.8% 
C)  11.8% 
D)  62%

Question 4

Atlantic Company sells a product with a break-even point of 3,000 sales units. The variable cost is $60 per unit, and fixed costs are $270,000.?Determine the 
(a) unit sales price and 
(b) break-even point in sales units if the company desires a target profit of $36,000. If required, round answer to nearest whole number.

Accepted Answer

a. $270,000/ ($X - $

Question 5

Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000?

Accepted Answer

A)  $8,000 increase 
B)  $8,000 decrease 
C)  $30,000 decrease 
D)  $30,000 increase 
A)  $8,000 increase 
B)  $8,000 decrease 
C)  $30,000 decrease 
D)  $30,000 increase

Question 6

Match the following terms with their definitions.
-The excess of sales revenues over variable costs

Accepted Answer

A) Relevant range 
B) Break-even point 
C) Contribution margin 
D) Fixed costs 
E) Variable costs 
A) Relevant range 
B) Break-even point 
C) Contribution margin 
D) Fixed costs 
E) Variable costs

Question 7

Reynold's Grocery has fixed costs of $350,000, the unit selling price is $29, and the unit variable costs are $20. What are the break-even sales in units (rounded to a whole number) if the variable costs are decreased by $4?

Accepted Answer

A)  26,923 units 
B)  12,069 units 
C)  21,875 units 
D)  38,889 units 
A)  26,923 units 
B)  12,069 units 
C)  21,875 units 
D)  38,889 units

Question 8

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

Accepted Answer

A)  electricity per KWH to operate factory equipment 
B)  direct materials cost 
C)  straight-line depreciation on factory equipment 
D)  wages of assembly worker 
A)  electricity per KWH to operate factory equipment 
B)  direct materials cost 
C)  straight-line depreciation on factory equipment 
D)  wages of assembly worker

Question 9

In an absorption costing income statement, the manufacturing margin is the excess of sales over the variable cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 10

Rental charges of $40,000 per year plus $3 for each machine hour over 18,000 hours are an example of a fixed cost.

Accepted Answer

A) True 
 B)False

Question 11

The data required for determining the break-even point for a business are the total estimated fixed costs for a period, stated as a percentage of net sales.

Accepted Answer

A) True 
 B)False

Question 12

The manufacturing cost of Calico Industries for three months of the year are provided below.​   Using the high-low method, the variable cost per unit and the total fixed costs are

Accepted Answer

A)  $0.78 per unit and $4,000 
B)  $0.40 per unit and $8,000 
C)  $4.00 per unit and $800 
D)  $7.80 per unit and $4,000 
A)  $0.78 per unit and $4,000 
B)  $0.40 per unit and $8,000 
C)  $4.00 per unit and $800 
D)  $7.80 per unit and $4,000

Question 13

When Isaiah Company has fixed costs of $120,000 and the contribution margin is $30, the break-even point is

Accepted Answer

A)  16,000 units 
B)  8,000 units 
C)  6,000 units 
D)  4,000 units 
A)  16,000 units 
B)  8,000 units 
C)  6,000 units 
D)  4,000 units

Question 14

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

Accepted Answer

A) True 
 B)False

Question 15

The relevant range is useful for analyzing cost behavior for management decision-making purposes.

Accepted Answer

A) True 
 B)False

Question 16

Direct materials and direct labor costs are examples of variable costs of production.

Accepted Answer

A) True 
 B)False

Question 17

If fixed costs are $46,800, the unit selling price is $42, and the unit variable costs are $24, what are the break-even sales (units) if the variable costs are decreased by $2?

Accepted Answer

A)  2,127 
B)  1,114 
C)  2,340 
D)  1,950 
A)  2,127 
B)  1,114 
C)  2,340 
D)  1,950

Question 18

In order to choose the proper activity base for a cost, a managerial accountant must be familiar with the operations of the entity.

Accepted Answer

A) True 
 B)False

Question 19

Trail Bikes, Inc. sells three Deluxe bikes for every seven Standard bikes. The Deluxe bike sells for $1,800 and has variable costs of $1,200. The Standard bike sells for $600 and has variable costs of $200.?

Required
(a) If Trail Bikes has fixed costs that total $1,702,000, how many bikes must be sold in order for the company tobreak even?
(b) How many of these bikes will be Deluxe bikes, and how many will be Standard bikes?

Accepted Answer

(a) Weighted Average Contribut

Question 20

Which of the following describes the behavior of the fixed cost per unit?

Accepted Answer

A)  decreases with increasing production 
B)  decreases with decreasing production 
C)  remains constant with changes in production 
D)  increases with increasing production 
A)  decreases with increasing production 
B)  decreases with decreasing production 
C)  remains constant with changes in production 
D)  increases with increasing production

Exam 21: Cost-Volume-Profit Analysis

If direct materials cost per unit decreases, the amount of sales necessary to earn a desired amount of profit will decrease.

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio?

Variable costs as a percentage of sales for Lemon Inc. are 80%, current sales are $600,000, and fixed costs are $130,000. How much will operating income change if sales increase by $40,000?

Match the following terms with their definitions. -The excess of sales revenues over variable costs

Reynold's Grocery has fixed costs of $350,000, the unit selling price is $29, and the unit variable costs are $20. What are the break-even sales in units (rounded to a whole number) if the variable costs are decreased by $4?

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

In an absorption costing income statement, the manufacturing margin is the excess of sales over the variable cost of goods sold.

Rental charges of $40,000 per year plus $3 for each machine hour over 18,000 hours are an example of a fixed cost.

The data required for determining the break-even point for a business are the total estimated fixed costs for a period, stated as a percentage of net sales.

The manufacturing cost of Calico Industries for three months of the year are provided below.​ Using the high-low method, the variable cost per unit and the total fixed costs are

When Isaiah Company has fixed costs of $120,000 and the contribution margin is $30, the break-even point is

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

The relevant range is useful for analyzing cost behavior for management decision-making purposes.

Direct materials and direct labor costs are examples of variable costs of production.

If fixed costs are $46,800, the unit selling price is $42, and the unit variable costs are $24, what are the break-even sales (units) if the variable costs are decreased by $2?

In order to choose the proper activity base for a cost, a managerial accountant must be familiar with the operations of the entity.

Which of the following describes the behavior of the fixed cost per unit?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Evaluating Variances From Standard Costs

Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Filters

The manufacturing cost of Calico Industries for three months of the year are provided below. Using the high-low method, the variable cost per unit and the total fixed costs are