Question 1

The margin of safety is the difference between sales at breakeven and sales at a determined activity level.

Accepted Answer

A) True 
 B)False

Question 2

Keene, Inc.produces flash drives for computers, which it sells for $20 each.Each flash drive costs $6 of variable costs to make.During March, 1,000 drives were sold.Fixed costs for March were $4.90 per unit for a total of $4,900 for the month.If variable costs decrease by 10%, what happens to the break-even level of units per month for Keene?

Accepted Answer

A) It is 10% higher than the original break-even point. 
B) It decreases about 14 units. 
C) It decreases about 35 units. 
D) It depends on the number of units the company expects to produce and sell. 
A) It is 10% higher than the original break-even point. 
B) It decreases about 14 units. 
C) It decreases about 35 units. 
D) It depends on the number of units the company expects to produce and sell.

Question 3

The following monthly data are available for Seasons Company which produces only one product: Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $84,000; Actual sales for the month of June, 5,000 units.How much is the margin of safety for the company for June?

Accepted Answer

A) $56,000 
B) $84,000 
C) $126,000 
D) $2,000 
A) $56,000 
B) $84,000 
C) $126,000 
D) $2,000

Question 4

Lansbury Manufacturing produces hair brushes.The selling price is $20 per unit and the variable costs are $8 per brush.Fixed costs per month are $4,800.If Lansbury sells 25 more units beyond breakeven, how much does profit increase as a result?

Accepted Answer

A) $300 
B) $500 
C) $200 
D) $1,000 
A) $300 
B) $500 
C) $200 
D) $1,000

Question 5

Reliable Manufacturing wants to sell a sufficient quantity of products to earn a profit of $80,000.If the unit sales price is $10, unit variable cost is $8, and total fixed costs are $160,000, how many units must be sold to earn income of $80,000?

Accepted Answer

A) 120,000 units 
B) 80,000 units 
C) 30,000 units 
D) 1,200,000 units 
A) 120,000 units 
B) 80,000 units 
C) 30,000 units 
D) 1,200,000 units

Question 6

Fixed costs normally will not include

Accepted Answer

A) property taxes. 
B) direct labor. 
C) supervisory salaries. 
D) depreciation on buildings and equipment. 
A) property taxes. 
B) direct labor. 
C) supervisory salaries. 
D) depreciation on buildings and equipment.

Question 7

Within the relevant range, the variable cost per unit

Accepted Answer

A) differs at each activity level. 
B) remains constant at each activity level. 
C) increases as production increases. 
D) decreases as production increases. 
A) differs at each activity level. 
B) remains constant at each activity level. 
C) increases as production increases. 
D) decreases as production increases.

Question 8

Portman Company's activity for the first three months of 2013 are as follows: $\begin{array}{lll}&\text { Machine Hours }&\text { Electrical Cost }\
\text { January } & 2,100 & \$ 3,600 \
\text { February } & 2,600 & \$ 4,350 \
\text { March } & 2,900 & \$ 4,800
\end{array}$ Using the high-low method, how much is the cost per machine hour?

Accepted Answer

A) $1.50 
B) $2.25 
C) $1.69 
D) $1.34 
A) $1.50 
B) $2.25 
C) $1.69 
D) $1.34

Question 9

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

Accepted Answer

A) All units produced are sold. 
B) All costs are variable costs. 
C) Sales mix remains constant. 
D) The behavior of costs and revenues are linear within the relevant range. 
A) All units produced are sold. 
B) All costs are variable costs. 
C) Sales mix remains constant. 
D) The behavior of costs and revenues are linear within the relevant range.

Question 10

If Qualls Quality Airline cuts its domestic fares by 30%,

Accepted Answer

A) its fixed costs will decrease. 
B) profit will increase by 30%. 
C) a profit can only be earned by decreasing the number of flights. 
D) a profit can be earned either by increasing the number of passengers or by decreasing variable costs. 
A) its fixed costs will decrease. 
B) profit will increase by 30%. 
C) a profit can only be earned by decreasing the number of flights. 
D) a profit can be earned either by increasing the number of passengers or by decreasing variable costs.

Question 11

The following monthly data are available for Lumberyard Company.which produces only one product: Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $84,000; Actual sales for the month of June, 4,000 units.How much is the margin of safety for the company for June?

Accepted Answer

A) $84,000 
B) $42,000 
C) $126,000 
D) $1,000 
A) $84,000 
B) $42,000 
C) $126,000 
D) $1,000

Question 12

Hayduke Corporation reported the following results from the sale of 6,000 units in May: sales $300,000, variable costs $180,000, fixed costs $90,000, and net income $30,000.Assume that Hayduke increases the selling price by 10% on June 1.How many units will have to be sold in June to maintain the same level of net income?

Accepted Answer

A) 4,800. 
B) 5,160. 
C) 5,400. 
D) 6,000. 
A) 4,800. 
B) 5,160. 
C) 5,400. 
D) 6,000.

Question 13

Which of the following is not a mixed cost?

Accepted Answer

A) Car rental fee 
B) Electricity 
C) Depreciation 
D) Telephone Expense 
A) Car rental fee 
B) Electricity 
C) Depreciation 
D) Telephone Expense

Question 14

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 15

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 16

The difference between the costs at the high and low levels of activity represents the fixed cost element of a mixed cost.

Accepted Answer

A) True 
 B)False

Question 17

For CVP analysis, both variable and fixed costs are assumed to have a linear relationship within the relevant range of activity.

Accepted Answer

A) True 
 B)False

Question 18

Frazier Manufacturing Company collected the following production data for the past month: $\begin{array}{rr}\text { Units Produced }&\text {Total Cost }\
1,600 & \$ 44,000 \
1,300 & 38,000 \
1,500 & 45,000 \
1,100 & 33,000
\end{array}$ If the high-low method is used, what is the monthly total cost equation?

Accepted Answer

A) Total cost = $8,800 + $22/unit 
B) Total cost = $11,000 + $20/unit 
C) Total cost = $0 + $30/unit 
D) Total cost = $6,600 + $24/unit 
A) Total cost = $8,800 + $22/unit 
B) Total cost = $11,000 + $20/unit 
C) Total cost = $0 + $30/unit 
D) Total cost = $6,600 + $24/unit

Question 19

Which of the following is not a plausible explanation of why variable costs often behave in a curvilinear fashion?

Accepted Answer

A) Labor specialization 
B) Overtime wages 
C) Total variable costs are constant within the relevant range 
D) Availability of quantity discounts 
A) Labor specialization 
B) Overtime wages 
C) Total variable costs are constant within the relevant range 
D) Availability of quantity discounts

Question 20

Armstrong Industries has a contribution margin of $300,000 and a contribution margin ratio of 30%.How much are total variable costs?

Accepted Answer

A) $90,000 
B) $700,000 
C) $210,000 
D) $1,000,000 
A) $90,000 
B) $700,000 
C) $210,000 
D) $1,000,000

The margin of safety is the difference between sales at breakeven and sales at a determined activity level.

The following monthly data are available for Seasons Company which produces only one product: Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $84,000; Actual sales for the month of June, 5,000 units.How much is the margin of safety for the company for June?

Lansbury Manufacturing produces hair brushes.The selling price is $20 per unit and the variable costs are $8 per brush.Fixed costs per month are $4,800.If Lansbury sells 25 more units beyond breakeven, how much does profit increase as a result?

Reliable Manufacturing wants to sell a sufficient quantity of products to earn a profit of $80,000.If the unit sales price is $10, unit variable cost is $8, and total fixed costs are $160,000, how many units must be sold to earn income of $80,000?

Fixed costs normally will not include

Within the relevant range, the variable cost per unit

Portman Company's activity for the first three months of 2013 are as follows: Machine Hours Electrical Cost January 2,100 \ 3,600 February 2,600 \ 4,350 March 2,900 \ 4,800 Using the high-low method, how much is the cost per machine hour?

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

If Qualls Quality Airline cuts its domestic fares by 30%,

The following monthly data are available for Lumberyard Company.which produces only one product: Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $84,000; Actual sales for the month of June, 4,000 units.How much is the margin of safety for the company for June?

Which of the following is not a mixed cost?

The high-low method is often employed in analyzing

Cost behavior analysis applies to

The difference between the costs at the high and low levels of activity represents the fixed cost element of a mixed cost.

For CVP analysis, both variable and fixed costs are assumed to have a linear relationship within the relevant range of activity.

Frazier Manufacturing Company collected the following production data for the past month: Units Produced Total Cost 1,600 \ 44,000 1,300 38,000 1,500 45,000 1,100 33,000 If the high-low method is used, what is the monthly total cost equation?

Which of the following is not a plausible explanation of why variable costs often behave in a curvilinear fashion?

Armstrong Industries has a contribution margin of $300,000 and a contribution margin ratio of 30%.How much are total variable costs?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Reporting and Analyzing Inventory

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 5: Merchandising Operations and the Multiple-Step Income Statement

The margin of safety is the difference between sales at breakeven and sales at a determined activity level.

The following monthly data are available for Seasons Company which produces only one product: Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $84,000; Actual sales for the month of June, 5,000 units.How much is the margin of safety for the company for June?

Lansbury Manufacturing produces hair brushes.The selling price is $20 per unit and the variable costs are $8 per brush.Fixed costs per month are $4,800.If Lansbury sells 25 more units beyond breakeven, how much does profit increase as a result?

Reliable Manufacturing wants to sell a sufficient quantity of products to earn a profit of $80,000.If the unit sales price is $10, unit variable cost is $8, and total fixed costs are $160,000, how many units must be sold to earn income of $80,000?

Fixed costs normally will not include

Within the relevant range, the variable cost per unit

Portman Company's activity for the first three months of 2013 are as follows: Machine Hours Electrical Cost January 2,100 \ 3,600 February 2,600 \ 4,350 March 2,900 \ 4,800 Using the high-low method, how much is the cost per machine hour?

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

If Qualls Quality Airline cuts its domestic fares by 30%,

The following monthly data are available for Lumberyard Company.which produces only one product: Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $84,000; Actual sales for the month of June, 4,000 units.How much is the margin of safety for the company for June?

Which of the following is not a mixed cost?

The high-low method is often employed in analyzing

Cost behavior analysis applies to

The difference between the costs at the high and low levels of activity represents the fixed cost element of a mixed cost.

For CVP analysis, both variable and fixed costs are assumed to have a linear relationship within the relevant range of activity.

Frazier Manufacturing Company collected the following production data for the past month: Units Produced Total Cost 1,600 \ 44,000 1,300 38,000 1,500 45,000 1,100 33,000 If the high-low method is used, what is the monthly total cost equation?

Which of the following is not a plausible explanation of why variable costs often behave in a curvilinear fashion?

Armstrong Industries has a contribution margin of $300,000 and a contribution margin ratio of 30%.How much are total variable costs?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Reporting and Analyzing Inventory

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