Question 1

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 2

Both variable and fixed costs are included in calculating the contribution margin.

Accepted Answer

A) True 
 B)False

Question 3

Fessler, Inc. has a product with a selling price per unit of $200, the unit variable cost is $75, and the total monthly fixed costs are $300,000. How much is Fessler's contribution margin ratio?

Accepted Answer

A)  62.5% 
B)  37.5% 
C)  150% 
D)  266.6% 
A)  62.5% 
B)  37.5% 
C)  150% 
D)  266.6%

Question 4

Larue Company reports the following operating results for the month of August: Sales $300,000 (units 5,000); variable costs $210,000; and fixed costs $70,000. Management is considering the following independent courses of action to increase net income.
1. Increase selling price by 10% with no change in total variable costs.
2. Reduce variable costs to 65% of sales.
3. Reduce fixed costs by $10,000.
Instructions
Compute the net income to be earned under each alternative. Which course of action will produce the highest net income?

Accepted Answer

(1) Unit sales price = $300,000 / 5,000

Question 5

A division sold 200,000 calculators during 2010:   How much is the contribution margin per unit?

Accepted Answer

A)  $1.00 
B)  $3.50 
C)  $8.50 
D)  $6.50 
A)  $1.00 
B)  $3.50 
C)  $8.50 
D)  $6.50

Question 6

Cost behavior analysis applies to

Accepted Answer

A)  retailers. 
B)  wholesalers. 
C)  manufacturers. 
D)  all entities. 
A)  retailers. 
B)  wholesalers. 
C)  manufacturers. 
D)  all entities.

Question 7

Nunley Company estimates that variable costs will be 60% of sales and fixed costs will total $1,920,000. The selling price of the product is $10, and 600,000 units will be sold.
Instructions
Using the mathematical equation,
(a) Compute the break-even point in units and dollars.
(b) Compute the margin of safety in dollars and as a ratio.
(c) Compute net income.

Accepted Answer

The answer of Nunley Company estimates that variable costs will...

Question 8

When units produced are greater than units sold, income under ________________ costing is higher than under ______________ costing.

Accepted Answer

absorption

Question 9

Maxfield Company has fixed costs of $200,000 and variable costs are 60% of sales. How much will Maxfield Company report as sales when its net income equals $20,000?

Accepted Answer

A)  $550,000 
B)  $366,667 
C)  $520,000 
D)  $132,000 
A)  $550,000 
B)  $366,667 
C)  $520,000 
D)  $132,000

Question 10

The break-even point is where

Accepted Answer

A)  total sales equal total variable costs. 
B)  contribution margin equals total fixed costs. 
C)  total variable costs equal total fixed costs. 
D)  total sales equal total fixed costs. 
A)  total sales equal total variable costs. 
B)  contribution margin equals total fixed costs. 
C)  total variable costs equal total fixed costs. 
D)  total sales equal total fixed costs.

Question 11

Which of the following is not a cost classification?

Accepted Answer

A)  Mixed 
B)  Multiple 
C)  Variable 
D)  Fixed 
A)  Mixed 
B)  Multiple 
C)  Variable 
D)  Fixed

Question 12

If the activity index decreases, total variable costs will decrease proportionately.

Accepted Answer

A) True 
 B)False

Question 13

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

Question 14

Keys 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

@#IMG-DLM& ($1.00 x 10,000) +

Question 15

Mandy's Music, Inc. produces a hip-hop CD that is sold for $15. The contribution margin ratio is 40%. Fixed expenses total $6,750.
Instructions
(a) Compute the variable cost per unit.
(b) Compute how many CDs Mandy's Music will have to sell in order to break even.
(c) Compute how many CDs Mandy's Music will have to sell in order to make a target net income of $16,200.

Accepted Answer

(a) Variable cost per unit: $1

Question 16

The margin of safety ratio is equal to the margin of safety in dollars divided by the actual or (expected) sales.

Accepted Answer

A) True 
 B)False

Question 17

Eusey Company requires sales of $2,000,000 to cover its fixed costs of $700,000 and to earn net income of $500,000. What percent are variable costs of sales?

Accepted Answer

A)  25% 
B)  40% 
C)  35% 
D)  60% 
A)  25% 
B)  40% 
C)  35% 
D)  60%

The high-low method is often employed in analyzing

Both variable and fixed costs are included in calculating the contribution margin.

Fessler, Inc. has a product with a selling price per unit of $200, the unit variable cost is $75, and the total monthly fixed costs are $300,000. How much is Fessler's contribution margin ratio?

A division sold 200,000 calculators during 2010: How much is the contribution margin per unit?

Cost behavior analysis applies to

When units produced are greater than units sold, income under __ costing is higher than under costing.

Maxfield Company has fixed costs of $200,000 and variable costs are 60% of sales. How much will Maxfield Company report as sales when its net income equals $20,000?

The break-even point is where

Which of the following is not a cost classification?

If the activity index decreases, total variable costs will decrease proportionately.

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

Keys 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.

The margin of safety ratio is equal to the margin of safety in dollars divided by the actual or (expected) sales.

Eusey Company requires sales of $2,000,000 to cover its fixed costs of $700,000 and to earn net income of $500,000. What percent are variable costs of sales?

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

Filters

Exam 22: Cost-Volume-Profit

The high-low method is often employed in analyzing

Both variable and fixed costs are included in calculating the contribution margin.

Fessler, Inc. has a product with a selling price per unit of $200, the unit variable cost is $75, and the total monthly fixed costs are $300,000. How much is Fessler's contribution margin ratio?

A division sold 200,000 calculators during 2010: How much is the contribution margin per unit?

Cost behavior analysis applies to

When units produced are greater than units sold, income under ________________ costing is higher than under ______________ costing.

Maxfield Company has fixed costs of $200,000 and variable costs are 60% of sales. How much will Maxfield Company report as sales when its net income equals $20,000?

The break-even point is where

Which of the following is not a cost classification?

If the activity index decreases, total variable costs will decrease proportionately.

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

Keys 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.

The margin of safety ratio is equal to the margin of safety in dollars divided by the actual or (expected) sales.

Eusey Company requires sales of $2,000,000 to cover its fixed costs of $700,000 and to earn net income of $500,000. What percent are variable costs of sales?

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

Filters

When units produced are greater than units sold, income under __ costing is higher than under costing.