Question 1

Fixed costs depend on the resources acquired,not the resources used.

Accepted Answer

A) True 
 B)False

Question 2

The following annual information is for Bressler Corporation:   Total fixed costs:  $100,000
-If the sales mix consists of two units of Product X and one unit of Product Y,what is the break-even point in units for a year?

Accepted Answer

A) 2,000 units of Y and 4,000 units of X 
B) 2,025 units of Y and 4,050 units of X 
C) 4,025 units of Y and 8,050 units of X 
D) 4,000 units of Y and 8,000 units of X 
A) 2,000 units of Y and 4,000 units of X 
B) 2,025 units of Y and 4,050 units of X 
C) 4,025 units of Y and 8,050 units of X 
D) 4,000 units of Y and 8,000 units of X

Question 3

When deciding whether to discontinue a segment of a business,managers should focus on:

Accepted Answer

A) unavoidable fixed costs. 
B) reallocation of corporate costs. 
C) contribution margin and avoidable fixed costs of the segment. 
D) operating income per unit of the discontinued segment. 
A) unavoidable fixed costs. 
B) reallocation of corporate costs. 
C) contribution margin and avoidable fixed costs of the segment. 
D) operating income per unit of the discontinued segment.

Question 4

Skate Magic manufactures three different product lines, Model TS, Model AY, and Model GG. Considerable market demand exists for all models. The following per unit data apply:  
-Which model has the greatest contribution margin per unit?

Accepted Answer

A) Model TS 
B) Model AY 
C) Model GG 
D) both Models TS and AY 
A) Model TS 
B) Model AY 
C) Model GG 
D) both Models TS and AY

Question 5

Sanchez & Ryan, Inc, sells a single product. This year, 20,000 units were sold resulting in $130,000 of sales revenue, $60,000 of variable costs, and $17,500 of fixed costs.
-The break-even point in units for a year is:

Accepted Answer

A) 2,000 units. 
B) 3,000 units. 
C) 5,000 units. 
D) 10,000 units. 
A) 2,000 units. 
B) 3,000 units. 
C) 5,000 units. 
D) 10,000 units.

Question 6

Sunshine,Inc.sells a single product.The company's most recent income statement is given below.
   
Required:
a.Contribution margin per unit is _______________
b.If sales are doubled to $240,000,
total variable costs will equal _______________
c.If sales are doubled to $240,000,
total fixed costs will equal _______________
d.If Sunshine is past the breakeven point and
10 more units are sold,profits will increase by _______________
e.Compute how many units must be sold to break even. _______________
f.Compute how many units must be sold
to achieve a profit of $20,000. _______________

Accepted Answer

a. Contribution margin per unit is $13 =

Question 7

For decision making,a listing of the relevant costs:

Accepted Answer

A) will help the decision maker concentrate on the pertinent data. 
B) will only include future costs. 
C) will only include costs that differ among the decision alternatives. 
D) should include all of the above. 
A) will help the decision maker concentrate on the pertinent data. 
B) will only include future costs. 
C) will only include costs that differ among the decision alternatives. 
D) should include all of the above.

Question 8

Currently,most personnel costs are classified as fixed costs.

Accepted Answer

A) True 
 B)False

Question 9

Avoidable costs are eliminated when a product is outsourced.

Accepted Answer

A) True 
 B)False

Question 10

Donnelly Company has three products, R2, R4, and R2D2. The following information is available:  
-Assuming Product R2D2 is discontinued and the space formerly used to produce the product is rented for $6,000 per year,operating income will:

Accepted Answer

A) increase by $3,300. 
B) increase by $4,500. 
C) increase by $6,000. 
D) increase by $7,200. 
A) increase by $3,300. 
B) increase by $4,500. 
C) increase by $6,000. 
D) increase by $7,200.

Question 11

Umberger Manufacturing, Inc., is considering reorganizing its plant into manufacturing cells. The following estimates have been prepared to evaluate the benefits from the reorganization:   
Inventory carrying costs are estimated to be 10% per year.
-As a result of the layout reorganization,reduced levels of work-in-process inventory are projected to decrease inventory carrying costs annually by:

Accepted Answer

A) $12,500. 
B) $ 9,000. 
C) $ 6,000. 
D) $ 3,500. 
A) $12,500. 
B) $ 9,000. 
C) $ 6,000. 
D) $ 3,500.

Question 12

EJL Herbal Remedies sells several products for an average price of $17 per unit. Average variable costs per unit are as follows:   
EJL's annual fixed costs total $82,500.
-The contribution margin per unit is:

Accepted Answer

A) $7.50. 
B) $10.50. 
C) $12. 
D) $14. 
A) $7.50. 
B) $10.50. 
C) $12. 
D) $14.

Question 13

The break-even point is the level at which revenues:

Accepted Answer

A) equal fixed costs. 
B) equal variable costs. 
C) equal fixed costs minus flexible costs. 
D) equal variable costs plus capacity-related costs. 
A) equal fixed costs. 
B) equal variable costs. 
C) equal fixed costs minus flexible costs. 
D) equal variable costs plus capacity-related costs.

Question 14

If a company is deciding whether to outsource a part,the reliability of the supplier is an important factor to consider.

Accepted Answer

A) True 
 B)False

Question 15

When making decisions:

Accepted Answer

A) quantitative factors are the most important. 
B) qualitative factors are the most important. 
C) appropriate weight must be given to both quantitative and qualitative factors. 
D) both quantitative and qualitative factors are unimportant. 
A) quantitative factors are the most important. 
B) qualitative factors are the most important. 
C) appropriate weight must be given to both quantitative and qualitative factors. 
D) both quantitative and qualitative factors are unimportant.

Question 16

Fixed costs depend on:

Accepted Answer

A) the amount of resources used. 
B) the amount of resources acquired. 
C) the volume of production. 
D) the volume of sales. 
A) the amount of resources used. 
B) the amount of resources acquired. 
C) the volume of production. 
D) the volume of sales.

Question 17

Assume you are a sophomore in college and are committed to earning an undergraduate degree.Your current decision is whether to finish college in four consecutive years or take a year off and work for some extra cash.
a. Identify at least two revenues or costs that are relevant to making this decision.Explain why each is relevant.
b. Identify at least two costs that would be considered sunk costs for this decision.
c. Comment on at least one qualitative consideration for this decision.

Accepted Answer

a. Relevant revenues/costs are those tha

Question 18

In determining whether to keep or drop a product line,product contribution is calculated as sales minus variable costs,minus avoidable fixed costs.

Accepted Answer

A) True 
 B)False

Question 19

Donnelly Company has three products, R2, R4, and R2D2. The following information is available:  
-Donnelly Company is thinking of dropping Product R2D2 because it is reporting a loss.Assuming Donnelly drops Product R2D2 and does not replace it,operating income will:

Accepted Answer

A) increase by $1,200. 
B) increase by $1,500. 
C) decrease by $1,500. 
D) decrease by $2,700. 
A) increase by $1,200. 
B) increase by $1,500. 
C) decrease by $1,500. 
D) decrease by $2,700.

Question 20

A company with sales of $100,000,variable costs of $70,000,and fixed costs of $50,000 will reach its break-even point if sales are increased by $20,000.

Accepted Answer

A) True 
 B)False

Fixed costs depend on the resources acquired,not the resources used.

The following annual information is for Bressler Corporation: Total fixed costs: $100,000 -If the sales mix consists of two units of Product X and one unit of Product Y,what is the break-even point in units for a year?

When deciding whether to discontinue a segment of a business,managers should focus on:

Skate Magic manufactures three different product lines, Model TS, Model AY, and Model GG. Considerable market demand exists for all models. The following per unit data apply: -Which model has the greatest contribution margin per unit?

Sanchez & Ryan, Inc, sells a single product. This year, 20,000 units were sold resulting in $130,000 of sales revenue, $60,000 of variable costs, and $17,500 of fixed costs. -The break-even point in units for a year is:

For decision making,a listing of the relevant costs:

Currently,most personnel costs are classified as fixed costs.

Avoidable costs are eliminated when a product is outsourced.

Donnelly Company has three products, R2, R4, and R2D2. The following information is available: -Assuming Product R2D2 is discontinued and the space formerly used to produce the product is rented for $6,000 per year,operating income will:

EJL Herbal Remedies sells several products for an average price of $17 per unit. Average variable costs per unit are as follows: EJL's annual fixed costs total $82,500. -The contribution margin per unit is:

The break-even point is the level at which revenues:

If a company is deciding whether to outsource a part,the reliability of the supplier is an important factor to consider.

When making decisions:

Fixed costs depend on:

In determining whether to keep or drop a product line,product contribution is calculated as sales minus variable costs,minus avoidable fixed costs.

Donnelly Company has three products, R2, R4, and R2D2. The following information is available: -Donnelly Company is thinking of dropping Product R2D2 because it is reporting a loss.Assuming Donnelly drops Product R2D2 and does not replace it,operating income will:

A company with sales of $100,000,variable costs of $70,000,and fixed costs of $50,000 will reach its break-even point if sales are increased by $20,000.

How Management Accounting Information Supports Decision Making

The Balanced Scorecard and Strategy Map

Accumulating and Assigning Costs to Products

Activity-Based Cost Systems

Measuring and Managing Customer Relationships

Measuring and Managing Process Performance

Measuring and Managing Life-Cycle Costs

Behavioral and Organizational Issues in Management Accounting and Control Systems

Using Budgets for Planning and Coordination

Financial Control

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Exam 3: Using Costs in Decision Making

Fixed costs depend on the resources acquired,not the resources used.

The following annual information is for Bressler Corporation: Total fixed costs: $100,000 -If the sales mix consists of two units of Product X and one unit of Product Y,what is the break-even point in units for a year?

When deciding whether to discontinue a segment of a business,managers should focus on:

Skate Magic manufactures three different product lines, Model TS, Model AY, and Model GG. Considerable market demand exists for all models. The following per unit data apply: -Which model has the greatest contribution margin per unit?

Sanchez & Ryan, Inc, sells a single product. This year, 20,000 units were sold resulting in $130,000 of sales revenue, $60,000 of variable costs, and $17,500 of fixed costs. -The break-even point in units for a year is:

For decision making,a listing of the relevant costs:

Currently,most personnel costs are classified as fixed costs.

Avoidable costs are eliminated when a product is outsourced.

Donnelly Company has three products, R2, R4, and R2D2. The following information is available: -Assuming Product R2D2 is discontinued and the space formerly used to produce the product is rented for $6,000 per year,operating income will:

EJL Herbal Remedies sells several products for an average price of $17 per unit. Average variable costs per unit are as follows: EJL's annual fixed costs total $82,500. -The contribution margin per unit is:

The break-even point is the level at which revenues:

If a company is deciding whether to outsource a part,the reliability of the supplier is an important factor to consider.

When making decisions:

Fixed costs depend on:

In determining whether to keep or drop a product line,product contribution is calculated as sales minus variable costs,minus avoidable fixed costs.

Donnelly Company has three products, R2, R4, and R2D2. The following information is available: -Donnelly Company is thinking of dropping Product R2D2 because it is reporting a loss.Assuming Donnelly drops Product R2D2 and does not replace it,operating income will:

A company with sales of $100,000,variable costs of $70,000,and fixed costs of $50,000 will reach its break-even point if sales are increased by $20,000.

How Management Accounting Information Supports Decision Making

The Balanced Scorecard and Strategy Map

Accumulating and Assigning Costs to Products

Activity-Based Cost Systems

Measuring and Managing Customer Relationships

Measuring and Managing Process Performance

Measuring and Managing Life-Cycle Costs

Behavioral and Organizational Issues in Management Accounting and Control Systems

Using Budgets for Planning and Coordination

Financial Control

Filters