Question 1

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  False

Question 2

When a company is in its early stages of operation, its primary goal is to generate a target net income.

Accepted Answer

A) True 
 B)False  False

Question 3

If fixed costs are $100,000 and weighted-average unit contribution margin is $50, then the break-even point in units is 2,000 units.

Accepted Answer

A) True 
 B)False  True

Question 4

A shift from high-margin sales to low-margin sales

Accepted Answer

A) may decrease net income, even though there is an increase in total units sold. 
B) will always decrease net income. 
C) will always increase net income. 
D) will always increase units sold. 
A) may decrease net income, even though there is an increase in total units sold. 
B) will always decrease net income. 
C) will always increase net income. 
D) will always increase units sold.

Question 5

Greg's Breads can produce and sell only one of the following two products: $\begin{array}{lll}&\text { Oven } & \text { Contribution } \
&\text { Hours Required } & \text { Margin Per Unit }\
\text { Muffins } & 0.2 & \$ 3 \
\text { Coffee Cakes } & 0.3 & \$ 4
\end{array}$ The company has oven capacity of 1,200 hours.How much will contribution margin be if it produces only the most profitable product?

Accepted Answer

A) $12,000 
B) $16,000 
C) $18,000 
D) $24,000 
A) $12,000 
B) $16,000 
C) $18,000 
D) $24,000

Question 6

Margin of safety in dollars is

Accepted Answer

A) expected sales divided by break-even sales. 
B) expected sales less break-even sales. 
C) actual sales less expected sales. 
D) expected sales less actual sales. 
A) expected sales divided by break-even sales. 
B) expected sales less break-even sales. 
C) actual sales less expected sales. 
D) expected sales less actual sales.

Question 7

The contribution margin ratio is

Accepted Answer

A) sales divided by contribution margin. 
B) sales divided by fixed expenses. 
C) sales divided by variable expenses. 
D) contribution margin divided by sales. 
A) sales divided by contribution margin. 
B) sales divided by fixed expenses. 
C) sales divided by variable expenses. 
D) contribution margin divided by sales.

Question 8

Curtis Corporation's contribution margin is $20 per unit for Product A and $24 for Product B.Product A requires 2 machine hours and Product B requires 4 machine hours.How much is the contribution margin per unit of limited resource for each product? $\begin{array}{ll}&A&B\
a.&\$10.00&\$6.00\
b.&\$10.00&\$6.66\
c.&\$8.00&\$6.00\
d.&\$8.00&\$6.66
\end{array}$

Accepted Answer

The answer of Curtis Corporation's contribution margin is $20 per...

Question 9

In 2012, Teller Company sold 3,000 units at $400 each.Variable expenses were $280 per unit, and fixed expenses were $180,000.The same selling price, variable expenses, and fixed expenses are expected for 2013.What is Teller's break-even point in units for 2013?

Accepted Answer

A) 1,500 
B) 3,375 
C) 4,500 
D) 7,500 
A) 1,500 
B) 3,375 
C) 4,500 
D) 7,500

Question 10

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 $1,480,000, what is its net income?

Accepted Answer

A) $160,000 
B) $760,000 
C) $820,000 
D) $880,000 
A) $160,000 
B) $760,000 
C) $820,000 
D) $880,000

Question 11

For Wilder Corporation, sales is $1,200,000 (6,000 units), fixed expenses are $360,000, and the contribution margin per unit is $80.What is the margin of safety in dollars?

Accepted Answer

A) $60,000 
B) $300,000 
C) $540,000 
D) $840,000 
A) $60,000 
B) $300,000 
C) $540,000 
D) $840,000

Question 12

The margin of safety ratio

Accepted Answer

A) is computed as actual sales divided by break-even sales. 
B) indicates what percent decline in sales could be sustained before the company would operate at a loss. 
C) measures the ratio of fixed costs to variable costs. 
D) is used to determine the break-even point. 
A) is computed as actual sales divided by break-even sales. 
B) indicates what percent decline in sales could be sustained before the company would operate at a loss. 
C) measures the ratio of fixed costs to variable costs. 
D) is used to determine the break-even point.

Question 13

Reducing reliance on human workers and instead investing heavily in computers and online technology will

Accepted Answer

A) reduce fixed costs and increase variable costs. 
B) reduce variable costs and increase fixed costs. 
C) have no effect on the relative proportion of fixed and variable costs. 
D) make the company less susceptible to economic swings. 
A) reduce fixed costs and increase variable costs. 
B) reduce variable costs and increase fixed costs. 
C) have no effect on the relative proportion of fixed and variable costs. 
D) make the company less susceptible to economic swings.

Question 14

For Pierce Company, sales is $500,000, variable expenses are $330,000, and fixed expenses are $140,000.Pierce's contribution margin ratio is

Accepted Answer

A) 10%. 
B) 28%. 
C) 34%. 
D) 66%. 
A) 10%. 
B) 28%. 
C) 34%. 
D) 66%.

Question 15

Woolford's CVP income statement included sales of 4,000 units, a selling price of $50, variable expenses of $30 per unit, and net income of $25,000.Fixed expenses are

Accepted Answer

A) $55,000. 
B) $80,000. 
C) $120,000. 
D) $200,000. 
A) $55,000. 
B) $80,000. 
C) $120,000. 
D) $200,000.

Question 16

Capitol Manufacturing sells 3,000 units of Product A annually, and 7,000 units of Product B annually.The sales mix for Product A is

Accepted Answer

A) 30%. 
B) 43%. 
C) 70%. 
D) Cannot determine from information given. 
A) 30%. 
B) 43%. 
C) 70%. 
D) Cannot determine from information given.

Question 17

Which of the following statements is not true?

Accepted Answer

A) Operating leverage refers to the extent to which a company's net income reacts to a given change in sales. 
B) Companies that have higher fixed costs relative to variable costs have higher operating leverage. 
C) When a company's sales revenue is increasing, high operating leverage is good because it means that profits will increase rapidly. 
D) When a company's sales revenue is decreasing, high operating leverage is good because it means that profits will decrease at a slower pace than revenues decrease. 
A) Operating leverage refers to the extent to which a company's net income reacts to a given change in sales. 
B) Companies that have higher fixed costs relative to variable costs have higher operating leverage. 
C) When a company's sales revenue is increasing, high operating leverage is good because it means that profits will increase rapidly. 
D) When a company's sales revenue is decreasing, high operating leverage is good because it means that profits will decrease at a slower pace than revenues decrease.

Question 18

The weighted-average contribution margin of all the products is computed when determining the break-even sales for a multi-product firm.

Accepted Answer

A) True 
 B)False

Question 19

Sales mix is a measure of the percentage increase in sales from period to period.

Accepted Answer

A) True 
 B)False

Question 20

In a sales mix situation, at any level of units sold, net income will be higher if

Accepted Answer

A) more higher contribution margin units are sold than lower contribution margin units. 
B) more lower contribution margin units are sold than higher contribution margin units. 
C) more fixed expenses are incurred. 
D) weighted-average unit contribution margin decreases. 
A) more higher contribution margin units are sold than lower contribution margin units. 
B) more lower contribution margin units are sold than higher contribution margin units. 
C) more fixed expenses are incurred. 
D) weighted-average unit contribution margin decreases.

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

When a company is in its early stages of operation, its primary goal is to generate a target net income.

If fixed costs are $100,000 and weighted-average unit contribution margin is $50, then the break-even point in units is 2,000 units.

A shift from high-margin sales to low-margin sales

Greg's Breads can produce and sell only one of the following two products: Oven Contribution Hours Required Margin Per Unit Muffins 0.2 \ 3 Coffee Cakes 0.3 \ 4 The company has oven capacity of 1,200 hours.How much will contribution margin be if it produces only the most profitable product?

Margin of safety in dollars is

The contribution margin ratio is

In 2012, Teller Company sold 3,000 units at $400 each.Variable expenses were $280 per unit, and fixed expenses were $180,000.The same selling price, variable expenses, and fixed expenses are expected for 2013.What is Teller's break-even point in units for 2013?

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 $1,480,000, what is its net income?

For Wilder Corporation, sales is $1,200,000 (6,000 units), fixed expenses are $360,000, and the contribution margin per unit is $80.What is the margin of safety in dollars?

The margin of safety ratio

Reducing reliance on human workers and instead investing heavily in computers and online technology will

For Pierce Company, sales is $500,000, variable expenses are $330,000, and fixed expenses are $140,000.Pierce's contribution margin ratio is

Woolford's CVP income statement included sales of 4,000 units, a selling price of $50, variable expenses of $30 per unit, and net income of $25,000.Fixed expenses are

Capitol Manufacturing sells 3,000 units of Product A annually, and 7,000 units of Product B annually.The sales mix for Product A is

Which of the following statements is not true?

The weighted-average contribution margin of all the products is computed when determining the break-even sales for a multi-product firm.

Sales mix is a measure of the percentage increase in sales from period to period.

In a sales mix situation, at any level of units sold, net income will be higher if

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money and Present Value Calculations

Filters

Exam 6: Reporting and Analyzing Inventory

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

When a company is in its early stages of operation, its primary goal is to generate a target net income.

If fixed costs are $100,000 and weighted-average unit contribution margin is $50, then the break-even point in units is 2,000 units.

A shift from high-margin sales to low-margin sales

Greg's Breads can produce and sell only one of the following two products: Oven Contribution Hours Required Margin Per Unit Muffins 0.2 \ 3 Coffee Cakes 0.3 \ 4 The company has oven capacity of 1,200 hours.How much will contribution margin be if it produces only the most profitable product?

Margin of safety in dollars is

The contribution margin ratio is

In 2012, Teller Company sold 3,000 units at $400 each.Variable expenses were $280 per unit, and fixed expenses were $180,000.The same selling price, variable expenses, and fixed expenses are expected for 2013.What is Teller's break-even point in units for 2013?

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 $1,480,000, what is its net income?

For Wilder Corporation, sales is $1,200,000 (6,000 units), fixed expenses are $360,000, and the contribution margin per unit is $80.What is the margin of safety in dollars?

The margin of safety ratio

Reducing reliance on human workers and instead investing heavily in computers and online technology will

For Pierce Company, sales is $500,000, variable expenses are $330,000, and fixed expenses are $140,000.Pierce's contribution margin ratio is

Woolford's CVP income statement included sales of 4,000 units, a selling price of $50, variable expenses of $30 per unit, and net income of $25,000.Fixed expenses are

Capitol Manufacturing sells 3,000 units of Product A annually, and 7,000 units of Product B annually.The sales mix for Product A is

Which of the following statements is not true?

The weighted-average contribution margin of all the products is computed when determining the break-even sales for a multi-product firm.

Sales mix is a measure of the percentage increase in sales from period to period.

In a sales mix situation, at any level of units sold, net income will be higher if

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money and Present Value Calculations

Filters