Question 1

The margin of safety tells a company how far sales can drop before it will be operating at a loss.

Accepted Answer

A) True 
 B)False  True

Question 2

Net income under absorption costing is higher than net income under variable costing

Accepted Answer

A)  when units produced exceed units sold. 
B)  when units produced equal units sold. 
C)  when units produced are less than units sold. 
D)  regardless of the relationship between units produced and units sold. 
A)  when units produced exceed units sold. 
B)  when units produced equal units sold. 
C)  when units produced are less than units sold. 
D)  regardless of the relationship between units produced and units sold. A

Question 3

In 2019, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. The same selling price, variable expenses, and fixed expenses are expected for 2020. What is Teller's break-even point in sales dollars for 2020?

Accepted Answer

A)  $900,000 
B)  $2,700,000 
C)  $1,800,000 
D)  $2,571,429 
A)  $900,000 
B)  $2,700,000 
C)  $1,800,000 
D)  $2,571,429 A

Question 4

Cost structure refers to the relative proportion of fixed versus variable costs that a company incurs.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Brooks Corporation can sell all the units it can produce of either Plain or Fancy but not both. Plain has a unit contribution margin of $72 and takes two machine hours to make and Fancy has a unit contribution margin of $90 and takes three machine hours to make. There are 2,400 machine hours available to manufacture a product. What should Brooks do?

Accepted Answer

A)  Make Fancy which creates $18 more profit per unit than Plain does. 
B)  Make Plain which creates $6 more profit per machine hour than Fancy does. 
C)  Make Plain because more units can be made and sold than Fancy. 
D)  The same total profits exist regardless of which product is made. 
A)  Make Fancy which creates $18 more profit per unit than Plain does. 
B)  Make Plain which creates $6 more profit per machine hour than Fancy does. 
C)  Make Plain because more units can be made and sold than Fancy. 
D)  The same total profits exist regardless of which product is made.

Question 7

Use the following information for questions 
Mercantile Corporation has sales of $2,000,000, variable costs of $800,000, and fixed costs of $900,000.
-Mercantile's degree of operating leverage is

Accepted Answer

A)  1.33. 
B)  1.67. 
C)  1.50. 
D)  4.00. 
A)  1.33. 
B)  1.67. 
C)  1.50. 
D)  4.00.

Question 8

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 9

A company with low operating leverage will experience a sharp increase in net income with a given increase in sales.

Accepted Answer

A) True 
 B)False

Question 10

The CVP income statement classifies costs

Accepted Answer

A)  as variable or fixed and computes contribution margin. 
B)  by function and computes a contribution margin. 
C)  as variable or fixed and computes gross margin. 
D)  by function and computes a gross margin. 
A)  as variable or fixed and computes contribution margin. 
B)  by function and computes a contribution margin. 
C)  as variable or fixed and computes gross margin. 
D)  by function and computes a gross margin.

Question 11

For Franklin, Inc., sales is $2,000,000, fixed expenses are $600,000, and the contribution margin ratio is 36%. What are the total variable expenses?

Accepted Answer

A)  $384,000 
B)  $720,000 
C)  $1,280,000 
D)  $2,000,000 
A)  $384,000 
B)  $720,000 
C)  $1,280,000 
D)  $2,000,000

Question 12

Cost structure refers to the relative proportion of

Accepted Answer

A)  selling expenses versus administrative expenses. 
B)  selling and administrative expenses versus cost of goods sold. 
C)  contribution margin versus sales. 
D)  none of the above. 
A)  selling expenses versus administrative expenses. 
B)  selling and administrative expenses versus cost of goods sold. 
C)  contribution margin versus sales. 
D)  none of the above.

Question 13

Net income can be increased or decreased by changing the sales mix.

Accepted Answer

A) True 
 B)False

Question 14

If Buttercup, Inc. sells two products with a sales mix of 75% : 25%, and the respective contribution margins are $80 and $240, then weighted-average unit contribution margin is $120.

Accepted Answer

A) True 
 B)False

Question 15

When absorption costing is used for external reporting, variable costing can still be used for internal reporting purposes.

Accepted Answer

A) True 
 B)False

Question 16

Capitol Manufacturing sells 4,000 units of Product A annually, and 6,000 units of Product B annually. The sales mix for Product A is

Accepted Answer

A)  40%. 
B)  60%. 
C)  67%. 
D)  Cannot determine from information given. 
A)  40%. 
B)  60%. 
C)  67%. 
D)  Cannot determine from information given.

Question 17

If Sprinkle Industries has a margin of safety ratio of .60, it could sustain a 60 percent decline in sales before it would be operating at a loss.

Accepted Answer

A) True 
 B)False

Question 18

Ramirez Corporation sells two types of computer hard drives. The sales mix is 30% (Q-Drive) and 70% (Q-Drive Plus). Q-Drive has variable costs per unit of $90 and a selling price of $150. Q-Drive Plus has variable costs per unit of $105 and a selling price of $195. The weighted-average unit contribution margin for Ramirez is

Accepted Answer

A)  $69. 
B)  $75. 
C)  $81. 
D)  $150. 
A)  $69. 
B)  $75. 
C)  $81. 
D)  $150.

Question 19

In 2019, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $240,000. What was Teller's 2019 net income?

Accepted Answer

A)  $300,000 
B)  $540,000 
C)  $1,260,000 
D)  $1,800,000 
A)  $300,000 
B)  $540,000 
C)  $1,260,000 
D)  $1,800,000

Question 20

For Buffalo Co., at a sales level of 4,000 units, sales is $75,000, variable expenses total $50,000, and fixed expenses are $21,000. What is the contribution margin per unit?

Accepted Answer

A)  $5.25 
B)  $6.25 
C)  $12.50 
D)  $18.75 
A)  $5.25 
B)  $6.25 
C)  $12.50 
D)  $18.75

The margin of safety tells a company how far sales can drop before it will be operating at a loss.

Net income under absorption costing is higher than net income under variable costing

In 2019, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. The same selling price, variable expenses, and fixed expenses are expected for 2020. What is Teller's break-even point in sales dollars for 2020?

Cost structure refers to the relative proportion of fixed versus variable costs that a company incurs.

The manufacturing cost per unit for absorption costing is

Use the following information for questions Mercantile Corporation has sales of $2,000,000, variable costs of $800,000, and fixed costs of $900,000. -Mercantile's degree of operating leverage 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?

A company with low operating leverage will experience a sharp increase in net income with a given increase in sales.

The CVP income statement classifies costs

For Franklin, Inc., sales is $2,000,000, fixed expenses are $600,000, and the contribution margin ratio is 36%. What are the total variable expenses?

Cost structure refers to the relative proportion of

Net income can be increased or decreased by changing the sales mix.

If Buttercup, Inc. sells two products with a sales mix of 75% : 25%, and the respective contribution margins are $80 and $240, then weighted-average unit contribution margin is $120.

When absorption costing is used for external reporting, variable costing can still be used for internal reporting purposes.

Capitol Manufacturing sells 4,000 units of Product A annually, and 6,000 units of Product B annually. The sales mix for Product A is

If Sprinkle Industries has a margin of safety ratio of .60, it could sustain a 60 percent decline in sales before it would be operating at a loss.

In 2019, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $240,000. What was Teller's 2019 net income?

For Buffalo Co., at a sales level of 4,000 units, sales is $75,000, variable expenses total $50,000, and fixed expenses are $21,000. What is the contribution margin per unit?

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

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Exam 6: Cost-Volume-Profit Analysis: Additional Issues

The margin of safety tells a company how far sales can drop before it will be operating at a loss.

Net income under absorption costing is higher than net income under variable costing

In 2019, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. The same selling price, variable expenses, and fixed expenses are expected for 2020. What is Teller's break-even point in sales dollars for 2020?

Cost structure refers to the relative proportion of fixed versus variable costs that a company incurs.

The manufacturing cost per unit for absorption costing is

Use the following information for questions Mercantile Corporation has sales of $2,000,000, variable costs of $800,000, and fixed costs of $900,000. -Mercantile's degree of operating leverage 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?

A company with low operating leverage will experience a sharp increase in net income with a given increase in sales.

The CVP income statement classifies costs

For Franklin, Inc., sales is $2,000,000, fixed expenses are $600,000, and the contribution margin ratio is 36%. What are the total variable expenses?

Cost structure refers to the relative proportion of

Net income can be increased or decreased by changing the sales mix.

If Buttercup, Inc. sells two products with a sales mix of 75% : 25%, and the respective contribution margins are $80 and $240, then weighted-average unit contribution margin is $120.

When absorption costing is used for external reporting, variable costing can still be used for internal reporting purposes.

Capitol Manufacturing sells 4,000 units of Product A annually, and 6,000 units of Product B annually. The sales mix for Product A is

If Sprinkle Industries has a margin of safety ratio of .60, it could sustain a 60 percent decline in sales before it would be operating at a loss.

In 2019, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $240,000. What was Teller's 2019 net income?

For Buffalo Co., at a sales level of 4,000 units, sales is $75,000, variable expenses total $50,000, and fixed expenses are $21,000. What is the contribution margin per unit?

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

Filters