Question 1

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 2

Unit fixed costs __________________ with the changes in the level of activity.

Accepted Answer

The answer of Unit fixed costs __________________ with the changes...

Question 3

Kipling Company has sales of $1,500,000 for the first quarter of 2016. In making the sales, the company incurred the following costs and expenses.   
Instructions
Calculate net income under CVP for 2016.

Accepted Answer

$1,500,000 − [$500,0

Question 4

A target net income is calculated by taking actual sales minus the margin of safety.

Accepted Answer

A) True 
 B)False

Question 5

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 6

_________________ divided by the contribution margin ratio will give the amount of _________________ to break even.

Accepted Answer

Fixed cost

Question 7

Which one of the following is a name for the range over which a company expects to operate?

Accepted Answer

A)  Mixed range 
B)  Fixed range 
C)  Variable range 
D)  Relevant range 
A)  Mixed range 
B)  Fixed range 
C)  Variable range 
D)  Relevant range

Question 8

If volume increases, all costs will increase.

Accepted Answer

A) True 
 B)False

Question 9

April Industries sells a product with a contribution margin of $12 per unit, fixed costs of $223,200, and sales for the current year of $300,000. How much is April's break-even point?

Accepted Answer

A)  13,800 units 
B)  $76,800 
C)  18,600 units 
D)  6,400 units 
A)  13,800 units 
B)  $76,800 
C)  18,600 units 
D)  6,400 units

Question 10

In evaluating the margin of safety, the

Accepted Answer

A)  break-even point is not relevant. 
B)  higher the margin of safety ratio, the greater the margin of safety. 
C)  higher the dollar amount, the lower the margin of safety. 
D)  higher the margin of safety ratio, the lower the fixed costs. 
A)  break-even point is not relevant. 
B)  higher the margin of safety ratio, the greater the margin of safety. 
C)  higher the dollar amount, the lower the margin of safety. 
D)  higher the margin of safety ratio, the lower the fixed costs.

Question 11

Match between columns
                        Premises: The amount of revenue remaining after deducting variable costs.
Costs that contain both a variable and a fixed element.
The percentage of sales dollars available to cover fixed costs and produce income.
Identifies the activity which causes changes in the behavior of costs.
The difference between actual or expected sales and sales at the break-even point.
Costs that vary in total directly and proportionately with changes in the activity level.
The level of activity at which total revenues equal total costs.
The range over which the company expects to operate during the year.
Costs that remain the same in total regardless of changes in the activity level.
A method that uses the total costs incurred at the high and low levels of activity.

Accepted Answer

The Answer of Activity index and Variable costs and Fixed is...

Question 12

At the break-even point of 2,000 units, variable costs are $165,000, and fixed costs are $96,000. How much is the selling price per unit?

Accepted Answer

A)  $130.50 
B)  $34.50 
C)  $48.00 
D)  Not enough information 
A)  $130.50 
B)  $34.50 
C)  $48.00 
D)  Not enough information

Question 13

Contribution margin

Accepted Answer

A)  is always the same as gross profit margin. 
B)  excludes variable selling costs from its calculation. 
C)  is calculated by subtracting total manufacturing costs per unit from sales revenue per unit. 
D)  equals sales revenue minus variable costs. 
A)  is always the same as gross profit margin. 
B)  excludes variable selling costs from its calculation. 
C)  is calculated by subtracting total manufacturing costs per unit from sales revenue per unit. 
D)  equals sales revenue minus variable costs.

Question 14

Why is identification of a relevant range important?

Accepted Answer

A)  It is required under GAAP. 
B)  Cost behavior outside of the relevant range is not linear, which distorts CVP analysis. 
C)  It directly impacts the number of units of product a customer buys. 
D)  It is a cost that is incurred by a company that must be accounted for. 
A)  It is required under GAAP. 
B)  Cost behavior outside of the relevant range is not linear, which distorts CVP analysis. 
C)  It directly impacts the number of units of product a customer buys. 
D)  It is a cost that is incurred by a company that must be accounted for.

Question 15

Melody Manufacturing produces a hip-hop CD that is sold for $20. The contribution margin ratio is 40%. Fixed expenses total $9,200.
Instructions
(a) Compute the variable cost per unit.
(b) Compute how many CDs Melody Manufacturing will have to sell in order to break even.
(c) Compute how many CDs Melody Manufacturing will have to sell in order to make a target net income of $16,200.

Accepted Answer

(a) Variable cost per unit: $2

Question 16

Gall Manufacturing sells a product for $50 per unit. The fixed costs are $840,000 and the variable costs are 60% of the selling price. As a result of new automated equipment, it is anticipated that fixed costs will increase by $200,000 and variable costs will be 50% of the selling price. The new break-even point in units is:

Accepted Answer

A)  42,000. 
B)  41,600. 
C)  41,200. 
D)  33,600. 
A)  42,000. 
B)  41,600. 
C)  41,200. 
D)  33,600.

Question 17

In applying the high-low method, what is the unit variable cost?

Accepted Answer

A)  $2.88 
B)  $2.50 
C)  $3.20 
D)  Cannot be determined from the information given. 
A)  $2.88 
B)  $2.50 
C)  $3.20 
D)  Cannot be determined from the information given.

Question 18

If the unit contribution margin is $1 and unit sales are 10,000 units above the break-even volume, then net income will be $10,000.

Accepted Answer

A) True 
 B)False

Question 19

Sandburg Manufacturing manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for the production of 2,000 units. The Utilities and Maintenance are mixed costs. The fixed portions of these costs are $300 and $200, respectively.   
Instructions
Calculate the expected costs to be incurred when production is 4,000 units. Use your knowledge of cost behavior to determine which of the other costs are fixed or variable.

Accepted Answer

@#IMG-DLM& a. Variable $6,000 ÷ 2,000 = $3.00 per

Question 20

The fixed cost element of a mixed cost is the cost of having a service available.

Accepted Answer

A) True 
 B)False

Exam 18: Cost-Volume-Profit

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

Unit fixed costs __________________ with the changes in the level of activity.

Kipling Company has sales of $1,500,000 for the first quarter of 2016. In making the sales, the company incurred the following costs and expenses. Instructions Calculate net income under CVP for 2016.

A target net income is calculated by taking actual sales minus the margin of safety.

Which of the following is not a mixed cost?

_________________ divided by the contribution margin ratio will give the amount of _________________ to break even.

Which one of the following is a name for the range over which a company expects to operate?

If volume increases, all costs will increase.

April Industries sells a product with a contribution margin of $12 per unit, fixed costs of $223,200, and sales for the current year of $300,000. How much is April's break-even point?

In evaluating the margin of safety, the

At the break-even point of 2,000 units, variable costs are $165,000, and fixed costs are $96,000. How much is the selling price per unit?

Contribution margin

Why is identification of a relevant range important?

In applying the high-low method, what is the unit variable cost?

If the unit contribution margin is $1 and unit sales are 10,000 units above the break-even volume, then net income will be $10,000.

The fixed cost element of a mixed cost is the cost of having a service available.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations Perpetual Approach

Inventories Periodic Approach

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, and Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Time Value of Money

Investments

Payroll Accounting

Subsidiary Ledgers and Special Journals

Other Significant Liabilities

Filters

_ divided by the contribution margin ratio will give the amount of _ to break even.