Question 1

The CVP income statement classifies costs as variable or fixed and computes a contribution margin.

Accepted Answer

A) True 
 B)False

Question 2

Sales mix is not important to managers when different products have substantially different contribution margins.

Accepted Answer

A) True 
 B)False

Question 3

A company can sell all the units it can produce of either Product A or Product B but not both.Product A has a unit contribution margin of $16 and takes two machine hours to make and Product B has a unit contribution margin of $30 and takes three machine hours to make.If there are 3,000 machine hours available to manufacture a product, income will be

Accepted Answer

A) $6,000 more if Product A is made. 
B) $6,000 less if Product B is made. 
C) $6,000 less if Product A is made. 
D) the same if either product is made. 
A) $6,000 more if Product A is made. 
B) $6,000 less if Product B is made. 
C) $6,000 less if Product A is made. 
D) the same if either product is made.

Question 4

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

Accepted Answer

A) $90,000 
B) $162,000 
C) $378,000 
D) $540,000 
A) $90,000 
B) $162,000 
C) $378,000 
D) $540,000

Question 5

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 contribution margin?

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 6

For Buffalo Co., at a sales level of 5,000 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) $4.20 
B) $5.00 
C) $10.00 
D) $15.00 
A) $4.20 
B) $5.00 
C) $10.00 
D) $15.00

Question 7

Warner Manufacturing reported sales of $2,000,000 last year (100,000 units at $20 each), when the break-even point was 75,000 units.Warner's margin of safety ratio is

Accepted Answer

A) 25%. 
B) 33%. 
C) 75%. 
D) 125%. 
A) 25%. 
B) 33%. 
C) 75%. 
D) 125%.

Question 8

Ramirez Corporation sells two types of computer chips.The sales mix is 30% (Q-Chip) and 70% (Q-Chip Plus).Q-Chip has variable costs per unit of $60 and a selling price of $100.Q-Chip Plus has variable costs per unit of $70 and a selling price of $130.The weighted-average unit contribution margin for Ramirez is

Accepted Answer

A) $46. 
B) $50. 
C) $54. 
D) $100. 
A) $46. 
B) $50. 
C) $54. 
D) $100.

Question 9

Outsourcing production 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 more 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 more susceptible to economic swings.

Question 10

Contribution margin is the amount of revenue remaining after deducting

Accepted Answer

A) cost of goods sold. 
B) fixed costs. 
C) variable costs. 
D) contra-revenue. 
A) cost of goods sold. 
B) fixed costs. 
C) variable costs. 
D) contra-revenue.

Question 11

The degree of operating leverage provides a measure of a company's earnings volatility.

Accepted Answer

A) True 
 B)False

Question 12

The sales mix percentages for Novotna's Boston and Seattle Divisions are 70% and 30%.The contribution margin ratios are: Boston (40%) and Seattle (30%).Fixed costs are $1,110,000.What is Novotna's break-even point in dollars?

Accepted Answer

A) $388,500 
B) $3,000,000 
C) $3,171,428 
D) $3,363,636 
A) $388,500 
B) $3,000,000 
C) $3,171,428 
D) $3,363,636

Question 13

In 2013, Teller Company sold 3,000 units at $400 each.Variable expenses were $280 per unit, and fixed expenses were $160,000.What was Teller's 2013 net income?

Accepted Answer

A) $200,000 
B) $360,000 
C) $840,000 
D) $1,200,000 
A) $200,000 
B) $360,000 
C) $840,000 
D) $1,200,000

Question 14

Cost structure

Accepted Answer

A) refers to the relative proportion of fixed versus variable costs that a company incurs. 
B) generally has little impact on profitability. 
C) cannot be significantly changed by companies. 
D) refers to the relative proportion of operating versus nonoperating costs that a company incurs. 
A) refers to the relative proportion of fixed versus variable costs that a company incurs. 
B) generally has little impact on profitability. 
C) cannot be significantly changed by companies. 
D) refers to the relative proportion of operating versus nonoperating costs that a company incurs.

Question 15

Sales mix is

Accepted Answer

A) the relative percentage in which a company sells its multiple products. 
B) the trend of sales over recent periods. 
C) the mix of variable and fixed expenses in relation to sales. 
D) a measure of leverage used by the company. 
A) the relative percentage in which a company sells its multiple products. 
B) the trend of sales over recent periods. 
C) the mix of variable and fixed expenses in relation to sales. 
D) a measure of leverage used by the company.

Question 16

Miller Manufacturing's degree of operating leverage is 1.5.Warren Corporation's degree of operating leverage is 6.Warren's earnings would go up (or down) by ________ as much as Miller's with an equal increase (or decrease) in sales.

Accepted Answer

A) 1/4 
B) 4.5 times 
C) 4 times 
D) 7.5 times 
A) 1/4 
B) 4.5 times 
C) 4 times 
D) 7.5 times

Question 17

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 $120 and takes two machine hours to make and Fancy has a unit contribution margin of $150 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 $30 more profit per unit than Plain does. 
B) Make Plain which creates $10 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 $30 more profit per unit than Plain does. 
B) Make Plain which creates $10 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 18

Swanson Company has two divisions; Sporting Goods and Sports Gear.The sales mix is 65% for Sporting Goods and 35% for Sports Gear.Swanson incurs $4,440,000 in fixed costs.The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%.
-What will sales be for the Sporting Goods Division at the break-even point?

Accepted Answer

A) $3,600,000 
B) $4,200,000 
C) $6,711,628 
D) $7,800,000 
A) $3,600,000 
B) $4,200,000 
C) $6,711,628 
D) $7,800,000

Question 19

In a CVP income statement, cost of goods sold 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 20

MacCloud Industries has two divisions-Standard and Premium.Each division has hundreds of different types of tennis racquets and tennis products.The following information is available: $\begin{array}{lrr}&\text { Standard Division}&\text { Premium Division }&\text {Total }\
\text { Sales } & \$ 400,000 & \$ 600,000&\$1,000,000 \
\text { Variable costs } & 280,000 & 360,000 \
\text { Contribution margin }&\$120,000&\$240,000\\text { Total fixed costs }&&&\$320,000
\end{array}$
- What is the weighted-average contribution margin ratio?

Accepted Answer

A) 34% 
B) 35% 
C) 36% 
D) 50% 
A) 34% 
B) 35% 
C) 36% 
D) 50%

The CVP income statement classifies costs as variable or fixed and computes a contribution margin.

Sales mix is not important to managers when different products have substantially different contribution margins.

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

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 contribution margin?

For Buffalo Co., at a sales level of 5,000 units, sales is $75,000, variable expenses total $50,000, and fixed expenses are $21,000.What is the contribution margin per unit?

Warner Manufacturing reported sales of $2,000,000 last year (100,000 units at $20 each), when the break-even point was 75,000 units.Warner's margin of safety ratio is

Outsourcing production will

Contribution margin is the amount of revenue remaining after deducting

The degree of operating leverage provides a measure of a company's earnings volatility.

The sales mix percentages for Novotna's Boston and Seattle Divisions are 70% and 30%.The contribution margin ratios are: Boston (40%) and Seattle (30%).Fixed costs are $1,110,000.What is Novotna's break-even point in dollars?

In 2013, Teller Company sold 3,000 units at $400 each.Variable expenses were $280 per unit, and fixed expenses were $160,000.What was Teller's 2013 net income?

Cost structure

Sales mix is

Miller Manufacturing's degree of operating leverage is 1.5.Warren Corporation's degree of operating leverage is 6.Warren's earnings would go up (or down) by ________ as much as Miller's with an equal increase (or decrease) in sales.

In a CVP income statement, cost of goods sold is generally

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

The CVP income statement classifies costs as variable or fixed and computes a contribution margin.

Sales mix is not important to managers when different products have substantially different contribution margins.

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

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 contribution margin?

For Buffalo Co., at a sales level of 5,000 units, sales is $75,000, variable expenses total $50,000, and fixed expenses are $21,000.What is the contribution margin per unit?

Warner Manufacturing reported sales of $2,000,000 last year (100,000 units at $20 each), when the break-even point was 75,000 units.Warner's margin of safety ratio is

Outsourcing production will

Contribution margin is the amount of revenue remaining after deducting

The degree of operating leverage provides a measure of a company's earnings volatility.

The sales mix percentages for Novotna's Boston and Seattle Divisions are 70% and 30%.The contribution margin ratios are: Boston (40%) and Seattle (30%).Fixed costs are $1,110,000.What is Novotna's break-even point in dollars?

In 2013, Teller Company sold 3,000 units at $400 each.Variable expenses were $280 per unit, and fixed expenses were $160,000.What was Teller's 2013 net income?

Cost structure

Sales mix is

Miller Manufacturing's degree of operating leverage is 1.5.Warren Corporation's degree of operating leverage is 6.Warren's earnings would go up (or down) by ________ as much as Miller's with an equal increase (or decrease) in sales.

In a CVP income statement, cost of goods sold is generally

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