Question 1

An example of a stepped fixed cost is:

Accepted Answer

A)  Factory supervisors' salaries 
B)  Depreciation 
C)  Direct materials 
D)  Commissions 
A)  Factory supervisors' salaries 
B)  Depreciation 
C)  Direct materials 
D)  Commissions

Question 2

Last month CMC Corporation had to sell 6,000 units to reach the break- even point. The selling price was $225 per unit and variable costs were $85.50 per unit. What were fixed costs for the month?

Accepted Answer

The answer of Last month CMC Corporation had to sell...

Question 3

Operating leverage deals primarily with the relationship between:

Accepted Answer

A)  Debt and equity 
B)  Sales revenue and net income 
C)  Fixed costs and variable costs 
D)  Variable costs and contribution margin 
A)  Debt and equity 
B)  Sales revenue and net income 
C)  Fixed costs and variable costs 
D)  Variable costs and contribution margin

Question 4

Everclean Company cleans draperies. It charges $90 to clean a full-size drape, and its variable and fixed costs are $55 per drape and $10,000 per year, respectively. Given these data, if Everclean's variable costs were reduced to $50 per drape, how many drapes would the firm have to clean to break even?

Accepted Answer

A)  250 
B)  286 
C)  200 
D)  112 
A)  250 
B)  286 
C)  200 
D)  112

Question 5

The type of cost that remains constant (in total) over the relevant range is a:

Accepted Answer

A)  Variable cost 
B)  Fixed cost 
C)  Mixed cost 
D)  Semi-variable cost 
A)  Variable cost 
B)  Fixed cost 
C)  Mixed cost 
D)  Semi-variable cost

Question 6

When using the scattergraph method to analyze mixed costs, the regression line should be visually fit to:

Accepted Answer

A)  Go through the highest and the lowest points 
B)  Maximize the average distance between all the data points and the regression line 
C)  Go through the cost axis at 0 
D)  Minimize the average distance between all the data points and the regression line 
A)  Go through the highest and the lowest points 
B)  Maximize the average distance between all the data points and the regression line 
C)  Go through the cost axis at 0 
D)  Minimize the average distance between all the data points and the regression line

Question 7

Costs that would NOT be graphed as a straight line are:

Accepted Answer

A)  Variable costs 
B)  Total costs 
C)  Fixed costs 
D)  Stepped costs 
A)  Variable costs 
B)  Total costs 
C)  Fixed costs 
D)  Stepped costs

Question 8

Exhibit 21-2 The following cost data are available for Malta Marketing:
  
-Refer to Exhibit 21-2. Given the data above and using the high-low method of analysis, total variable costs are approximately:

Accepted Answer

A)  $3 per direct labor hour 
B)  $4 per direct labor hour 
C)  $5 per direct labor hour 
D)  $6 per direct labor hour 
A)  $3 per direct labor hour 
B)  $4 per direct labor hour 
C)  $5 per direct labor hour 
D)  $6 per direct labor hour

Question 9

Identify the indicated lines, areas, and point on the following graph.

Accepted Answer

The answer of Identify the indicated lines, areas, and point...

Question 10

Black Company had the following income statement:   Given this data, Black Company has a per-unit contribution margin of:

Accepted Answer

A)  $40 
B)  $45 
C)  $70 
D)  $100 
A)  $40 
B)  $45 
C)  $70 
D)  $100

Question 11

When other factors remain constant, a decrease in fixed costs:

Accepted Answer

A)  Increases the number of units needed to earn profits 
B)  Decreases the number of units needed to earn profits 
C)  Has no effect on the number of units needed to earn profits 
D)  Increases the number of units needed to break even 
A)  Increases the number of units needed to earn profits 
B)  Decreases the number of units needed to earn profits 
C)  Has no effect on the number of units needed to earn profits 
D)  Increases the number of units needed to break even

Question 12

Another name for the scattergraph method of analyzing mixed costs is the:

Accepted Answer

A)  Regression analysis method 
B)  Visual-fit method 
C)  High-low method 
D)  Engineering method 
A)  Regression analysis method 
B)  Visual-fit method 
C)  High-low method 
D)  Engineering method

Question 13

McCammon Co. sells three products with the following sales and variable cost rates:   What is McCammon's total contribution margin ratio at the current sales mix?

Accepted Answer

A)  35% 
B)  38% 
C)  63% 
D)  65% 
A)  35% 
B)  38% 
C)  63% 
D)  65%

Question 14

Exhibit 21-4 Cash2U Company had the following income statement:
 
-Refer to Exhibit 21-4. Given the data above, Cash2U Company's break-even point in units is:

Accepted Answer

A)  700 units 
B)  800 units 
C)  900 units 
D)  1,000 units 
A)  700 units 
B)  800 units 
C)  900 units 
D)  1,000 units

Question 15

The two components of a mixed cost are:

Accepted Answer

A)  Relevant costs and fixed costs 
B)  Variable costs and opportunity costs 
C)  Variable costs and relevant costs 
D)  Variable costs and fixed costs 
A)  Relevant costs and fixed costs 
B)  Variable costs and opportunity costs 
C)  Variable costs and relevant costs 
D)  Variable costs and fixed costs

Question 16

Which of the following is NOT true of the break-even point?

Accepted Answer

A)  The volume of activity where total revenues equal total costs 
B)  The volume of activity where contribution margin equals variable costs 
C)  The volume of activity where there is no profit or loss 
D)  The volume of activity where contribution margin equals fixed costs 
A)  The volume of activity where total revenues equal total costs 
B)  The volume of activity where contribution margin equals variable costs 
C)  The volume of activity where there is no profit or loss 
D)  The volume of activity where contribution margin equals fixed costs

Question 17

Exhibit 21-2 The following cost data are available for Malta Marketing:
 
- Refer to Exhibit 21-2. Given the data above and using the high-low method of analysis, total fixed costs are approximately:

Accepted Answer

A)  $16,000 
B)  $24,000 
C)  $20,000 
D)  $36,000 
A)  $16,000 
B)  $24,000 
C)  $20,000 
D)  $36,000

Question 18

When other factors remain constant, a decrease in sales price:

Accepted Answer

A)  Increases the number of units needed to earn profits 
B)  Decreases the number of units needed to earn profits 
C)  Has no effect on the number of units needed to earn profits 
D)  Decreases the number of units needed to break even 
A)  Increases the number of units needed to earn profits 
B)  Decreases the number of units needed to earn profits 
C)  Has no effect on the number of units needed to earn profits 
D)  Decreases the number of units needed to break even

Question 19

Within the relevant range, variable costs are considered to be:

Accepted Answer

A)  Curvilinear 
B)  Linear 
C)  Mixed 
D)  Stepped 
A)  Curvilinear 
B)  Linear 
C)  Mixed 
D)  Stepped

Question 20

Exhibit 21-7 Use the cost-volume-profit graph below to answer the following question(s).
 
-Refer to Exhibit 21-7. Area D on the cost-volume-profit graph represents the:

Accepted Answer

A)  Profit area 
B)  Total costs 
C)  Loss area 
D)  Fixed costs 
A)  Profit area 
B)  Total costs 
C)  Loss area 
D)  Fixed costs

Exam 21: Cost Behavior and Decisions Using C-V-P Analysis

An example of a stepped fixed cost is:

Last month CMC Corporation had to sell 6,000 units to reach the break- even point. The selling price was $225 per unit and variable costs were $85.50 per unit. What were fixed costs for the month?

Operating leverage deals primarily with the relationship between:

The type of cost that remains constant (in total) over the relevant range is a:

When using the scattergraph method to analyze mixed costs, the regression line should be visually fit to:

Costs that would NOT be graphed as a straight line are:

Exhibit 21-2 The following cost data are available for Malta Marketing: -Refer to Exhibit 21-2. Given the data above and using the high-low method of analysis, total variable costs are approximately:

Identify the indicated lines, areas, and point on the following graph.

Black Company had the following income statement: Given this data, Black Company has a per-unit contribution margin of:

When other factors remain constant, a decrease in fixed costs:

Another name for the scattergraph method of analyzing mixed costs is the:

McCammon Co. sells three products with the following sales and variable cost rates: What is McCammon's total contribution margin ratio at the current sales mix?

Exhibit 21-4 Cash2U Company had the following income statement: -Refer to Exhibit 21-4. Given the data above, Cash2U Company's break-even point in units is:

The two components of a mixed cost are:

Which of the following is NOT true of the break-even point?

Exhibit 21-2 The following cost data are available for Malta Marketing: - Refer to Exhibit 21-2. Given the data above and using the high-low method of analysis, total fixed costs are approximately:

When other factors remain constant, a decrease in sales price:

Within the relevant range, variable costs are considered to be:

Exhibit 21-7 Use the cost-volume-profit graph below to answer the following question(s). -Refer to Exhibit 21-7. Area D on the cost-volume-profit graph represents the:

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

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