Question 1

If a firm increases its activity level,

Accepted Answer

A)  costs should remain the same. 
B)  most costs will rise. 
C)  no costs will remain the same. 
D)  some costs will change, others will remain the same. 
A)  costs should remain the same. 
B)  most costs will rise. 
C)  no costs will remain the same. 
D)  some costs will change, others will remain the same. D

Question 2

Fallow-Hawke is a nonprofit organization that captures stray deer bewildered within residential communities. Fixed costs are $10,000. The variable cost of capturing each deer is $10.00 each. Fallow-Hawke is funded by a local philanthropy in the amount of $32,000 for 2008. How many deer can Fallow-Hawke capture during 2008?

Accepted Answer

A)  2,200 
B)  3,200 
C)  4,200 
D)  2,000 
A)  2,200 
B)  3,200 
C)  4,200 
D)  2,000 A

Question 3

Which of the following costs are variable?

Accepted Answer

A)  1 and 2 
B)  1 and 4 
C)  only 1 
D)  only 2 
A)  1 and 2 
B)  1 and 4 
C)  only 1 
D)  only 2 B

Question 4

Rankin Company had a net loss of $100,000 in 2010 when the selling price per unit was $20, the variable costs per unit were $12, and the fixed costs were $600,000. Management expects per unit data and total fixed costs to be the same in 2011. Management has set a goal of earning net income of $100,000 in 2011.
Instructions
(a) Compute the units sold in 2010.
(b) Compute the number of units that would have to be sold in 2011 to reach management's desired net income level.
(c) Assume that Rankin Company sells the same number of units in 2011 as it did in 2010. What would the selling price have to be in order to reach the target net income? Use the mathematical equation.

Accepted Answer

The answer of Rankin Company had a net loss of...

Question 5

The relevant range of activity refers to the

Accepted Answer

A)  geographical areas where the company plans to operate. 
B)  activity level where all costs are curvilinear. 
C)  levels of activity over which the company expects to operate. 
D)  level of activity where all costs are constant. 
A)  geographical areas where the company plans to operate. 
B)  activity level where all costs are curvilinear. 
C)  levels of activity over which the company expects to operate. 
D)  level of activity where all costs are constant.

Question 6

Fixed costs are $300,000 and the variable costs are 75% of the unit selling price. What is the break-even point in dollars?

Accepted Answer

A)  $700,000 
B)  $900,000 
C)  $1,200,000 
D)  $400,000 
A)  $700,000 
B)  $900,000 
C)  $1,200,000 
D)  $400,000

Question 7

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 8

The following information is available for Mathews Company:   A CVP income statement would report

Accepted Answer

A)  gross profit of $210,000. 
B)  contribution margin of $450,000. 
C)  gross profit of $240,000. 
D)  contribution margin of $240,000. 
A)  gross profit of $210,000. 
B)  contribution margin of $450,000. 
C)  gross profit of $240,000. 
D)  contribution margin of $240,000.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Ogle Company has a unit selling price of $500, variable cost per unit of $300, and fixed costs of $220,000.
Instructions
Compute the break-even point in units and in sales dollars.

Accepted Answer

$500X - $300X - $220,000 = 0
B

Question 11

Which of the following is not an underlying assumption of CVP analysis?

Accepted Answer

A)  Changes in activity are the only factors that affect costs. 
B)  Cost classifications are reasonably accurate. 
C)  Beginning inventory is larger than ending inventory. 
D)  Sales mix is constant. 
A)  Changes in activity are the only factors that affect costs. 
B)  Cost classifications are reasonably accurate. 
C)  Beginning inventory is larger than ending inventory. 
D)  Sales mix is constant.

Question 12

A mixed cost has both selling and administrative cost elements.

Accepted Answer

A) True 
 B)False

Question 13

Kress, Inc. wants to sell a sufficient quantity of products to earn a profit of $40,000. If the unit sales price is $10, unit variable cost is $8, and total fixed costs are $80,000, how many units must be sold to earn income of $40,000?

Accepted Answer

A)  60,000 units 
B)  40,000 units 
C)  15,000 units 
D)  600,000 units 
A)  60,000 units 
B)  40,000 units 
C)  15,000 units 
D)  600,000 units

Question 14

Nott Company has prepared the following cost-volume-profit graph:
   
Instructions
For the items listed below, enter to the left of the item, the letter in the graph which best corresponds to the item.
____ 1. Activity base
____ 2. Break-even point
____ 3. Dollars
____ 4. Fixed costs
____ 5. Loss
____ 6. Profit
____ 7. Revenues
____ 8. Total costs
____ 9. Variable costs

Accepted Answer

1. D Activity base
2. A Break-

Question 15

Kohler Company developed the following information for the product it sells:   
For the year ended December 31, 2010, Kohler Company produced and sold 100,000 units of product.
Instructions
(a) Prepare a CVP income statement using the contribution margin format for Wayman Company for 2010.
(b) What was the company's break-even point in units in 2010? Use the contribution margin technique.
(c) What was the company's margin of safety in dollars in 2010?

Accepted Answer

The answer of Kohler Company developed the following information for...

Question 16

For analysis purposes, the high-low method usually produces a(n)

Accepted Answer

A)  reasonable estimate. 
B)  precise estimate. 
C)  overstated estimate. 
D)  understated estimate. 
A)  reasonable estimate. 
B)  precise estimate. 
C)  overstated estimate. 
D)  understated estimate.

Question 17

Nease Company accumulates the following data concerning a mixed cost, using miles as the activity level.   
Instructions
Compute the variable and fixed cost elements using the high-low method.

Accepted Answer

The answer of Nease Company accumulates the following data concerning...

Question 18

Variable costs for Hogan, Inc. are 25% of sales. Its selling price is $80 per unit. If Hogan sells one unit more than break-even units, how much will profit increase?

Accepted Answer

A)  $60.00 
B)  $20.00 
C)  $26.66 
D)  $320.00 
A)  $60.00 
B)  $20.00 
C)  $26.66 
D)  $320.00

Question 19

The costing approach that charges all manufacturing costs to the product is referred to as

Accepted Answer

A)  variable costing. 
B)  contribution margin costing. 
C)  direct costing. 
D)  absorption costing. 
A)  variable costing. 
B)  contribution margin costing. 
C)  direct costing. 
D)  absorption costing.

Question 20

A CVP income statement classifies total costs by functional areas.

Accepted Answer

A) True 
 B)False

Exam 22: Cost-Volume-Profit

If a firm increases its activity level,

Which of the following costs are variable?

The relevant range of activity refers to the

Fixed costs are $300,000 and the variable costs are 75% of the unit selling price. What is the break-even point in dollars?

CVP analysis does not consider

The following information is available for Mathews Company: A CVP income statement would report

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

Ogle Company has a unit selling price of $500, variable cost per unit of $300, and fixed costs of $220,000. Instructions Compute the break-even point in units and in sales dollars.

Which of the following is not an underlying assumption of CVP analysis?

A mixed cost has both selling and administrative cost elements.

Kress, Inc. wants to sell a sufficient quantity of products to earn a profit of $40,000. If the unit sales price is $10, unit variable cost is $8, and total fixed costs are $80,000, how many units must be sold to earn income of $40,000?

For analysis purposes, the high-low method usually produces a(n)

Nease Company accumulates the following data concerning a mixed cost, using miles as the activity level. Instructions Compute the variable and fixed cost elements using the high-low method.

Variable costs for Hogan, Inc. are 25% of sales. Its selling price is $80 per unit. If Hogan sells one unit more than break-even units, how much will profit increase?

The costing approach that charges all manufacturing costs to the product is referred to as

A CVP income statement classifies total costs by functional areas.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

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