Question 1

In CVP analysis, cost includes manufacturing costs but not selling and administrative expenses.

Accepted Answer

A) True 
 B)False

Question 2

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

Question 3

In 2012, Hagar Corp.sold 3,000 units at $500 each.Variable expenses were $350 per unit, and fixed expenses were $455,000.The same variable expenses per unit and fixed expenses are expected for 2013.If Hagar cuts selling price by 4%, what is Hagar's break-even point in units for 2013?

Accepted Answer

A) 3,033 
B) 3,159 
C) 3,360 
D) 3,500 
A) 3,033 
B) 3,159 
C) 3,360 
D) 3,500

Question 4

In 2012, Raleigh sold 1,000 units at $500 each, and earned net income of $50,000.Variable expenses were $300 per unit, and fixed expenses were $150,000.The same selling price is expected for 2013.Raleigh's variable cost per unit will rise by 10% in 2013 due to increasing material costs, so they are tentatively planning to cut fixed costs by $15,000.How many units must Raleigh sell in 2013 to maintain the same income level as 2012?

Accepted Answer

A) 794 
B) 971 
C) 1,176 
D) 1,088 
A) 794 
B) 971 
C) 1,176 
D) 1,088

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Mercantile Corporation has sales of $2,000,000, variable costs of $1,100,000, and fixed costs of $750,000.Mercantile's degree of operating leverage is

Accepted Answer

A) 1.22. 
B) 1.47. 
C) 1.20. 
D) 6.00. 
A) 1.22. 
B) 1.47. 
C) 1.20. 
D) 6.00.

Question 7

Moonwalker's CVP income statement included sales of 4,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $88,000.
-Net income is

Accepted Answer

A) $400,000. 
B) $160,000. 
C) $152,000. 
D) $72,000. 
A) $400,000. 
B) $160,000. 
C) $152,000. 
D) $72,000.

Question 8

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 9

Cost-volume-profit analysis is the study of the effects of

Accepted Answer

A) changes in costs and volume on a company's profit. 
B) cost, volume, and profit on the cash budget. 
C) cost, volume, and profit on various ratios. 
D) changes in costs and volume on a company's profitability ratios. 
A) changes in costs and volume on a company's profit. 
B) cost, volume, and profit on the cash budget. 
C) cost, volume, and profit on various ratios. 
D) changes in costs and volume on a company's profitability ratios.

Question 10

A cost structure which relies more heavily on fixed costs makes the company

Accepted Answer

A) more sensitive to changes in sales revenue. 
B) less sensitive to changes in sales revenue. 
C) either more or less sensitive to changes in sales revenue, depending on other factors. 
D) have a lower break-even point. 
A) more sensitive to changes in sales revenue. 
B) less sensitive to changes in sales revenue. 
C) either more or less sensitive to changes in sales revenue, depending on other factors. 
D) have a lower break-even point.

Question 11

For Sanborn Co., sales is $1,000,000, fixed expenses are $300,000, and the contribution margin per unit is $48.What is the break-even point?

Accepted Answer

A) $2,083,334 sales dollars 
B) $625,000 sales dollars 
C) 20,834 units 
D) 6,250 units 
A) $2,083,334 sales dollars 
B) $625,000 sales dollars 
C) 20,834 units 
D) 6,250 units

Question 12

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 sales dollars for 2013?

Accepted Answer

A) $600,000 
B) $1,800,000 
C) $1,200,000 
D) $1,714,286 
A) $600,000 
B) $1,800,000 
C) $1,200,000 
D) $1,714,286

Question 13

For Franklin, Inc., sales is $1,500,000, fixed expenses are $450,000, and the contribution margin ratio is 36%.What are the total variable expenses?

Accepted Answer

A) $288,000 
B) $540,000 
C) $960,000 
D) $1,500,000 
A) $288,000 
B) $540,000 
C) $960,000 
D) $1,500,000

Question 14

Operating leverage refers to the extent to which a company's net income reacts to a given change in fixed costs.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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

Accepted Answer

A) True 
 B)False

Question 17

If contribution margin is $120,000, sales is $300,000, and net income is $40,000, then variable and fixed expenses are $\begin{array}{lll}&\text { Variable }& \text { Fixed }\
\text { a. } & \$ 180,000 & \$ 260,000 \
\text { b. } & \$ 180,000 & \$ 80,000 \
\text { c. } & \$ 80,000 & \$ 180,000 \
\text { d. } & \$ 420,000 & \$ 260,000
\end{array}$

Accepted Answer

The answer of If contribution margin is $120,000, sales is...

Question 18

In a CVP income statement, a selling expense is generally

Accepted Answer

A) completely a variable cost. 
B) completely a fixed cost. 
C) neither a variable cost nor a fixed cost. 
D) partly a variable cost and partly a fixed cost. 
A) completely a variable cost. 
B) completely a fixed cost. 
C) neither a variable cost nor a fixed cost. 
D) partly a variable cost and partly a fixed cost.

Question 19

For Wickham Co., sales is $2,000,000, fixed expenses are $600,000, and the contribution margin ratio is 36%.What is required sales in dollars to earn a target net income of $400,000?

Accepted Answer

A) $1,111,111 
B) $1,666,666 
C) $2,777,778 
D) $5,555,556 
A) $1,111,111 
B) $1,666,666 
C) $2,777,778 
D) $5,555,556

Question 20

If a company has limited machine hours available for production, it is generally more profitable to produce and sell the product with the highest contribution margin per machine hour.

Accepted Answer

A) True 
 B)False

In CVP analysis, cost includes manufacturing costs but not selling and administrative expenses.

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

In 2012, Hagar Corp.sold 3,000 units at $500 each.Variable expenses were $350 per unit, and fixed expenses were $455,000.The same variable expenses per unit and fixed expenses are expected for 2013.If Hagar cuts selling price by 4%, what is Hagar's break-even point in units for 2013?

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

Mercantile Corporation has sales of $2,000,000, variable costs of $1,100,000, and fixed costs of $750,000.Mercantile's degree of operating leverage is

Moonwalker's CVP income statement included sales of 4,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $88,000. -Net income is

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.

Cost-volume-profit analysis is the study of the effects of

A cost structure which relies more heavily on fixed costs makes the company

For Sanborn Co., sales is $1,000,000, fixed expenses are $300,000, and the contribution margin per unit is $48.What is the break-even point?

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 sales dollars for 2013?

For Franklin, Inc., sales is $1,500,000, fixed expenses are $450,000, and the contribution margin ratio is 36%.What are the total variable expenses?

Operating leverage refers to the extent to which a company's net income reacts to a given change in fixed costs.

Cost structure refers to the relative proportion of

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

If contribution margin is $120,000, sales is $300,000, and net income is $40,000, then variable and fixed expenses are Variable Fixed a. \ 180,000 \ 260,000 b. \ 180,000 \ 80,000 c. \ 80,000 \ 180,000 d. \ 420,000 \ 260,000

In a CVP income statement, a selling expense is generally

For Wickham Co., sales is $2,000,000, fixed expenses are $600,000, and the contribution margin ratio is 36%.What is required sales in dollars to earn a target net income of $400,000?

If a company has limited machine hours available for production, it is generally more profitable to produce and sell the product with the highest contribution margin per machine hour.

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

In CVP analysis, cost includes manufacturing costs but not selling and administrative expenses.

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

In 2012, Hagar Corp.sold 3,000 units at $500 each.Variable expenses were $350 per unit, and fixed expenses were $455,000.The same variable expenses per unit and fixed expenses are expected for 2013.If Hagar cuts selling price by 4%, what is Hagar's break-even point in units for 2013?

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

Mercantile Corporation has sales of $2,000,000, variable costs of $1,100,000, and fixed costs of $750,000.Mercantile's degree of operating leverage is

Moonwalker's CVP income statement included sales of 4,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $88,000. -Net income is

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.

Cost-volume-profit analysis is the study of the effects of

A cost structure which relies more heavily on fixed costs makes the company

For Sanborn Co., sales is $1,000,000, fixed expenses are $300,000, and the contribution margin per unit is $48.What is the break-even point?

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 sales dollars for 2013?

For Franklin, Inc., sales is $1,500,000, fixed expenses are $450,000, and the contribution margin ratio is 36%.What are the total variable expenses?

Operating leverage refers to the extent to which a company's net income reacts to a given change in fixed costs.

Cost structure refers to the relative proportion of

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

If contribution margin is $120,000, sales is $300,000, and net income is $40,000, then variable and fixed expenses are Variable Fixed a. \ 180,000 \ 260,000 b. \ 180,000 \ 80,000 c. \ 80,000 \ 180,000 d. \ 420,000 \ 260,000

In a CVP income statement, a selling expense is generally

For Wickham Co., sales is $2,000,000, fixed expenses are $600,000, and the contribution margin ratio is 36%.What is required sales in dollars to earn a target net income of $400,000?

If a company has limited machine hours available for production, it is generally more profitable to produce and sell the product with the highest contribution margin per machine hour.

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