Question 1

Which one of the following is true of the CVP income statement?

Accepted Answer

A) It is part of accounting information provided to all financial statement users. 
B) It is used internally by management. 
C) It provides the amount of gross profit of a company. 
D) It separates manufacturing from non-manufacturing costs. 
A) It is part of accounting information provided to all financial statement users. 
B) It is used internally by management. 
C) It provides the amount of gross profit of a company. 
D) It separates manufacturing from non-manufacturing costs.

Question 2

Proops Company has a weighted-average unit contribution margin of $30 for its two products, Drew and Carey.Expected sales for Proops are 40,000 Drews and 60,000 Careys.Fixed expenses are $1,800,000.How many Drews would Proops 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 3

Max Company's break-even point is 2,000 units, its contribution margin per unit is $2, and its selling price per unit is $12.If the company sell 10 more units, its net income will be $4,000.

Accepted Answer

A) True 
 B)False

Question 4

Old Canadian Company has sales of $500,000, variable costs of $425,000, and fixed costs of $25,000.New World Company has sales of $500,000, variable costs of $200,000, and fixed costs of $250,000.Old Canadian's contribution margin ratio is

Accepted Answer

A) 15%. 
B) 60%. 
C) 85%. 
D) 95%. 
A) 15%. 
B) 60%. 
C) 85%. 
D) 95%.

Question 5

Sales mix is not important to managers when different products have substantially different contribution margins.

Accepted Answer

A) True 
 B)False

Question 6

Contribution margin equals the total variable costs plus total fixed costs at the break-even point.

Accepted Answer

A) True 
 B)False

Question 7

In which one of the following calculations would CVP analysis be most important?

Accepted Answer

A) calculating depreciation expense 
B) setting selling prices 
C) determining how many employees to hire 
D) estimating units to be produced at capacity 
A) calculating depreciation expense 
B) setting selling prices 
C) determining how many employees to hire 
D) estimating units to be produced at capacity

Question 8

Old Canadian Company has sales of $500,000, variable costs of $425,000, and fixed costs of $25,000.New World Company has sales of $500,000, variable costs of $200,000, and fixed costs of $250,000.Old Canadian break-even point in dollars is

Accepted Answer

A) $166,667. 
B) $400,000. 
C) $450,000. 
D) $466,667. 
A) $166,667. 
B) $400,000. 
C) $450,000. 
D) $466,667.

Question 9

One assumption of CVP analysis is that costs must be classified as either fixed, mixed, or variable.

Accepted Answer

A) True 
 B)False

Question 10

Use the following information for items 
Ed Green Corporation has two divisions; Outdoor Sports and Indoor Sports.The sales mix is 60% for Outdoor Sports and 40% for Indoor Sports.Green incurs $2,420,000 in fixed costs.The contribution margin ratio for the Outdoor Sports Division is 40%, while for the Indoor Sports Division it is 50%.
-The break-even point in dollars is

Accepted Answer

A) $985,600. 
B) $4,869,565. 
C) $4,977,777. 
D) $5,500,000. 
A) $985,600. 
B) $4,869,565. 
C) $4,977,777. 
D) $5,500,000.

Question 11

The contribution margin per unit is the amount that each unit sold contributes towards covering fixed and variable costs.

Accepted Answer

A) True 
 B)False

Question 12

A company has total fixed costs of $180,000 and a contribution margin ratio of 30%.How much sales are necessary to break even?

Accepted Answer

A) $540,000 
B) $600,000 
C) $54,000 
D) $126,000 
A) $540,000 
B) $600,000 
C) $54,000 
D) $126,000

Question 13

Martin Worldwide sells a single product with a contribution margin of $12 per unit and fixed costs of $24,000.How much is Martin's break-even point?

Accepted Answer

A) 2,500 units 
B) $12,000 
C) $24,000 
D) 2,000 units 
A) 2,500 units 
B) $12,000 
C) $24,000 
D) 2,000 units

Question 14

Old Canadian Company has sales of $500,000, variable costs of $425,000, and fixed costs of $25,000.New World Company has sales of $500,000, variable costs of $200,000, and fixed costs of $250,000.New World's degree of operating leverage is

Accepted Answer

A) .85. 
B) 1.50. 
C) 6.00. 
D) 6.67. 
A) .85. 
B) 1.50. 
C) 6.00. 
D) 6.67.

Question 15

Sutton Company produces flash drives for computers, which it sells for $20 each.Each flash drive costs $6 of variable costs to make.During April, 1,000 drives were sold.Fixed costs for April were $2 per unit for a total of $2,000 for the month.How much is the contribution margin ratio?

Accepted Answer

A) 30% 
B) 40% 
C) 60% 
D) 70% 
A) 30% 
B) 40% 
C) 60% 
D) 70%

Question 16

To which function of management is CVP analysis most applicable?

Accepted Answer

A) directing 
B) controlling 
C) planning 
D) organizing 
A) directing 
B) controlling 
C) planning 
D) organizing

Question 17

Select the correct statement concerning the cost volume-profit graph that follows:

Accepted Answer

A) The point identified by 'B' is the break-even point. 
B) Line F is the break-even line. 
C) Line F is the variable cost line. 
D) Line E is the total cost line. 
A) The point identified by 'B' is the break-even point. 
B) Line F is the break-even line. 
C) Line F is the variable cost line. 
D) Line E is the total cost line.

Question 18

Which one of the following describes the break-even point?

Accepted Answer

A) It is the point where total sales equal total variable plus total fixed costs. 
B) It is the point where the contribution margin equals zero. 
C) It is the point where total variable costs equal total fixed costs. 
D) It is the point where total sales equal total fixed costs. 
A) It is the point where total sales equal total variable plus total fixed costs. 
B) It is the point where the contribution margin equals zero. 
C) It is the point where total variable costs equal total fixed costs. 
D) It is the point where total sales equal total fixed costs.

Question 19

Which one of the following calculates the break-even point in units?

Accepted Answer

A) Divide total fixed costs by the contribution margin per unit. 
B) Divide fixed cost per unit by the contribution margin per unit. 
C) Divide total contribution margin by the number of units sold. 
D) Divide total fixed costs by the contribution margin ratio. 
A) Divide total fixed costs by the contribution margin per unit. 
B) Divide fixed cost per unit by the contribution margin per unit. 
C) Divide total contribution margin by the number of units sold. 
D) Divide total fixed costs by the contribution margin ratio.

Question 20

What aspect of business would have the greatest impact of a break-even analysis calculation?

Accepted Answer

A) highly fluctuating costs from suppliers 
B) annual increases in fixed costs such as power 
C) annual decreases due to overall corporate cost savings 
D) changes in sales estimates from management 
A) highly fluctuating costs from suppliers 
B) annual increases in fixed costs such as power 
C) annual decreases due to overall corporate cost savings 
D) changes in sales estimates from management

Which one of the following is true of the CVP income statement?

Proops Company has a weighted-average unit contribution margin of $30 for its two products, Drew and Carey.Expected sales for Proops are 40,000 Drews and 60,000 Careys.Fixed expenses are $1,800,000.How many Drews would Proops sell at the break-even point?

Max Company's break-even point is 2,000 units, its contribution margin per unit is $2, and its selling price per unit is $12.If the company sell 10 more units, its net income will be $4,000.

Old Canadian Company has sales of $500,000, variable costs of $425,000, and fixed costs of $25,000.New World Company has sales of $500,000, variable costs of $200,000, and fixed costs of $250,000.Old Canadian's contribution margin ratio is

Sales mix is not important to managers when different products have substantially different contribution margins.

Contribution margin equals the total variable costs plus total fixed costs at the break-even point.

In which one of the following calculations would CVP analysis be most important?

Old Canadian Company has sales of $500,000, variable costs of $425,000, and fixed costs of $25,000.New World Company has sales of $500,000, variable costs of $200,000, and fixed costs of $250,000.Old Canadian break-even point in dollars is

One assumption of CVP analysis is that costs must be classified as either fixed, mixed, or variable.

The contribution margin per unit is the amount that each unit sold contributes towards covering fixed and variable costs.

A company has total fixed costs of $180,000 and a contribution margin ratio of 30%.How much sales are necessary to break even?

Martin Worldwide sells a single product with a contribution margin of $12 per unit and fixed costs of $24,000.How much is Martin's break-even point?

Old Canadian Company has sales of $500,000, variable costs of $425,000, and fixed costs of $25,000.New World Company has sales of $500,000, variable costs of $200,000, and fixed costs of $250,000.New World's degree of operating leverage is

Sutton Company produces flash drives for computers, which it sells for $20 each.Each flash drive costs $6 of variable costs to make.During April, 1,000 drives were sold.Fixed costs for April were $2 per unit for a total of $2,000 for the month.How much is the contribution margin ratio?

To which function of management is CVP analysis most applicable?

Select the correct statement concerning the cost volume-profit graph that follows:

Which one of the following describes the break-even point?

Which one of the following calculates the break-even point in units?

What aspect of business would have the greatest impact of a break-even analysis calculation?

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job-Order Cost Accounting

Process Cost Accounting

Activity-Based Costing

Incremental Analysis

Alternative Inventory Costing Methods: a Decision-Making Perspective

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters

Exam 6: Decision-Making: Costvolumeprofit

Which one of the following is true of the CVP income statement?

Proops Company has a weighted-average unit contribution margin of $30 for its two products, Drew and Carey.Expected sales for Proops are 40,000 Drews and 60,000 Careys.Fixed expenses are $1,800,000.How many Drews would Proops sell at the break-even point?

Max Company's break-even point is 2,000 units, its contribution margin per unit is $2, and its selling price per unit is $12.If the company sell 10 more units, its net income will be $4,000.

Old Canadian Company has sales of $500,000, variable costs of $425,000, and fixed costs of $25,000.New World Company has sales of $500,000, variable costs of $200,000, and fixed costs of $250,000.Old Canadian's contribution margin ratio is

Sales mix is not important to managers when different products have substantially different contribution margins.

Contribution margin equals the total variable costs plus total fixed costs at the break-even point.

In which one of the following calculations would CVP analysis be most important?

Old Canadian Company has sales of $500,000, variable costs of $425,000, and fixed costs of $25,000.New World Company has sales of $500,000, variable costs of $200,000, and fixed costs of $250,000.Old Canadian break-even point in dollars is

One assumption of CVP analysis is that costs must be classified as either fixed, mixed, or variable.

The contribution margin per unit is the amount that each unit sold contributes towards covering fixed and variable costs.

A company has total fixed costs of $180,000 and a contribution margin ratio of 30%.How much sales are necessary to break even?

Martin Worldwide sells a single product with a contribution margin of $12 per unit and fixed costs of $24,000.How much is Martin's break-even point?

Old Canadian Company has sales of $500,000, variable costs of $425,000, and fixed costs of $25,000.New World Company has sales of $500,000, variable costs of $200,000, and fixed costs of $250,000.New World's degree of operating leverage is

Sutton Company produces flash drives for computers, which it sells for $20 each.Each flash drive costs $6 of variable costs to make.During April, 1,000 drives were sold.Fixed costs for April were $2 per unit for a total of $2,000 for the month.How much is the contribution margin ratio?

To which function of management is CVP analysis most applicable?

Select the correct statement concerning the cost volume-profit graph that follows:

Which one of the following describes the break-even point?

Which one of the following calculates the break-even point in units?

What aspect of business would have the greatest impact of a break-even analysis calculation?

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job-Order Cost Accounting

Process Cost Accounting

Activity-Based Costing

Incremental Analysis

Alternative Inventory Costing Methods: a Decision-Making Perspective

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters