Question 1

When identifying fixed and variable costs, which one of the following is a typical assumption concerning cost behavior?

Accepted Answer

A)  General and administrative costs are assumed to be variable costs. 
B)  Cost behavior is assumed to be realistic for all levels of activity from zero to maximum capacity. 
C)  Total costs are assumed to be linear when plotted on a graph. 
D)  The relevant time period is assumed to be five years. 
A)  General and administrative costs are assumed to be variable costs. 
B)  Cost behavior is assumed to be realistic for all levels of activity from zero to maximum capacity. 
C)  Total costs are assumed to be linear when plotted on a graph. 
D)  The relevant time period is assumed to be five years.

Question 2

Rogers Company has the following data for 2018:
  
-What is breakeven in (a) units and (b) sales dollars?

Accepted Answer

(a) $70,000 / $6 = 1

Question 3

A business case is used to determine whether a major action was successful.

Accepted Answer

A) True 
 B)False

Question 4

A nonmanufacturing cost is a cost incurred in service companies that cannot be directly tied to providing the service.

Accepted Answer

A) True 
 B)False

Question 5

Rogers Company has the following data for 2018:
  
-Assume the company can sell 18,000 units. What price must it charge per unit to earn a before-tax profit of $110,000? (Round to the nearest cent.)

Accepted Answer

$19
Let P = Price needed 
 @#IMG-DLM& So

Question 6

Breakeven quantity is defined as the volume of output at which revenues are equal to:

Accepted Answer

A)  Marginal costs. 
B)  Total costs. 
C)  Variable costs. 
D)  Fixed costs. 
A)  Marginal costs. 
B)  Total costs. 
C)  Variable costs. 
D)  Fixed costs.

Question 7

Ticker Company sells two products. Product A provides a contribution margin of $3 per unit, and Product B provides a contribution margin of $4 per unit. If Ticker's sales mix shifts toward Product A, which one of the following statements is correct?

Accepted Answer

A)  The total number of units necessary to break even will decrease. 
B)  The overall contribution margin ratio will increase. 
C)  Operating income will decrease if the total number of units sold remains constant. 
D)  The contribution margin ratios for Products A and B will change. 
A)  The total number of units necessary to break even will decrease. 
B)  The overall contribution margin ratio will increase. 
C)  Operating income will decrease if the total number of units sold remains constant. 
D)  The contribution margin ratios for Products A and B will change.

Question 8

All of the following is true of a business case except:

Accepted Answer

A)  It is a comprehensive analysis of a proposed change in how a business is being operated. 
B)  It analyzes at a detailed level actual changes in resource demands when a company changes its basic business model. 
C)  We use it before we take any major action, unless CVP analysis suggests the change is a good idea. 
D)  It is a great way to capture stepped costs. 
A)  It is a comprehensive analysis of a proposed change in how a business is being operated. 
B)  It analyzes at a detailed level actual changes in resource demands when a company changes its basic business model. 
C)  We use it before we take any major action, unless CVP analysis suggests the change is a good idea. 
D)  It is a great way to capture stepped costs.

Question 9

BusyBee Cleaning Co. is evaluating its costs to clean a standard office. The controller has done a linear regression of the hours spent cleaning various offices and the total costs (labor, supplies, transportation) for each office cleaned. The regression analysis yielded the following information.
Y = $25x + $75
Y = the total cost to clean an office
X = the hours spent cleaning an office
What is the best description of the costs of cleaning an office based on this regression analysis?

Accepted Answer

A)  The cost is $100 per hour to clean an office. 
B)  There is $25 of fixed costs and $75 of variable costs per hour to clean an office. 
C)  There is $25 of variable costs per hour and $75 of fixed costs to clean an office. 
D)  The cost is $25 per hour to clean an office. 
A)  The cost is $100 per hour to clean an office. 
B)  There is $25 of fixed costs and $75 of variable costs per hour to clean an office. 
C)  There is $25 of variable costs per hour and $75 of fixed costs to clean an office. 
D)  The cost is $25 per hour to clean an office.

Question 10

Which is better: a higher or lower degree of operating leverage?

Accepted Answer

A)  Higher because it leads to higher profits. 
B)  Lower because it requires fewer units sold to break even. 
C)  Higher because the amount by which a company's sales can decline before losses are incurred is higher. 
D)  Lower because the impact on net operating income of a given dollar change in sales is higher. 
E)  It depends on the level of risk a company is comfortable with. 
A)  Higher because it leads to higher profits. 
B)  Lower because it requires fewer units sold to break even. 
C)  Higher because the amount by which a company's sales can decline before losses are incurred is higher. 
D)  Lower because the impact on net operating income of a given dollar change in sales is higher. 
E)  It depends on the level of risk a company is comfortable with.

Question 11

The contribution margin ratio is computed as:

Accepted Answer

A)  (sales minus fixed expenses) / sales 
B)  sales / variable expenses 
C)  (sales minus variable expenses) / sales 
D)  (fixed expenses plus variable expenses) / sales 
A)  (sales minus fixed expenses) / sales 
B)  sales / variable expenses 
C)  (sales minus variable expenses) / sales 
D)  (fixed expenses plus variable expenses) / sales

When identifying fixed and variable costs, which one of the following is a typical assumption concerning cost behavior?

Rogers Company has the following data for 2018: -What is breakeven in (a) units and (b) sales dollars?

A business case is used to determine whether a major action was successful.

A nonmanufacturing cost is a cost incurred in service companies that cannot be directly tied to providing the service.

Rogers Company has the following data for 2018: -Assume the company can sell 18,000 units. What price must it charge per unit to earn a before-tax profit of $110,000? (Round to the nearest cent.)

Breakeven quantity is defined as the volume of output at which revenues are equal to:

Ticker Company sells two products. Product A provides a contribution margin of $3 per unit, and Product B provides a contribution margin of $4 per unit. If Ticker's sales mix shifts toward Product A, which one of the following statements is correct?

All of the following is true of a business case except:

Which is better: a higher or lower degree of operating leverage?

The contribution margin ratio is computed as:

Business Planning and Analysis: An Integrative Framework for Management Accounting

Measuring and Evaluating Performance

Cost Pools, Capacity, and Activity- Based Costing

Understanding the Management Process

Planning in the Product Domain

Assessing and Improving Product Profitability

Setting Process Expectations

Evaluating and Improving Process Performance

Setting Performance Expectations at the Entity Level

Setting Performance Expectations in Large, Complex Organizations

Evaluating and Improving Entity Performance

Setting and Achieving Targets in the Customer Domain

Strategic Cost Management and the Value Chain Domain

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Exam 3: Defining and Using Cost Estimates

When identifying fixed and variable costs, which one of the following is a typical assumption concerning cost behavior?

Rogers Company has the following data for 2018: -What is breakeven in (a) units and (b) sales dollars?

A business case is used to determine whether a major action was successful.

A nonmanufacturing cost is a cost incurred in service companies that cannot be directly tied to providing the service.

Rogers Company has the following data for 2018: -Assume the company can sell 18,000 units. What price must it charge per unit to earn a before-tax profit of $110,000? (Round to the nearest cent.)

Breakeven quantity is defined as the volume of output at which revenues are equal to:

Ticker Company sells two products. Product A provides a contribution margin of $3 per unit, and Product B provides a contribution margin of $4 per unit. If Ticker's sales mix shifts toward Product A, which one of the following statements is correct?

All of the following is true of a business case except:

Which is better: a higher or lower degree of operating leverage?

The contribution margin ratio is computed as:

Business Planning and Analysis: An Integrative Framework for Management Accounting

Measuring and Evaluating Performance

Cost Pools, Capacity, and Activity- Based Costing

Understanding the Management Process

Planning in the Product Domain

Assessing and Improving Product Profitability

Setting Process Expectations

Evaluating and Improving Process Performance

Setting Performance Expectations at the Entity Level

Setting Performance Expectations in Large, Complex Organizations

Evaluating and Improving Entity Performance

Setting and Achieving Targets in the Customer Domain

Strategic Cost Management and the Value Chain Domain

Filters