Question 1

What major assumption do multi-product firms need to make in using CVP analysis that single-product firms need not make?

Accepted Answer

The assumption that must be imposed is a

Question 2

If a company's variable costs per unit were to increase but its unit selling price stays constant,the effect on a profit-volume graph would be that the

Accepted Answer

A) contribution margin line would shift upward parallel to the present line. 
B) contribution margin line would shift downward parallel to the present line. 
C) slope of the contribution margin line would be pronounced (steeper). 
D) slope of the contribution margin line would be less pronounced (flatter). 
A) contribution margin line would shift upward parallel to the present line. 
B) contribution margin line would shift downward parallel to the present line. 
C) slope of the contribution margin line would be pronounced (steeper). 
D) slope of the contribution margin line would be less pronounced (flatter).

Question 3

Robert Wilson Company
Below is an income statement for Robert Wilson Company:
Sales                                                                          $ \$ 400,000 $
Variable costs                                                          $\underline{(200,000)}$
Contribution margin                                                  $200,000
Fixed costs                                                            $\underline{(125,000)}$
Profit before taxes                                                  $\underline{\$75,000}$

Refer to Robert Wilson Company.What is the company's degree of operating leverage (DOL)?

Accepted Answer

A) 2.67 
B) 3.2 
C) 5.33 
D) 10.67 
A) 2.67 
B) 3.2 
C) 5.33 
D) 10.67

Question 4

Which of the following factors is involved in studying cost-volume-profit relationships?

Accepted Answer

A) product mix 
B) variable costs 
C) fixed costs 
D) all of the above 
A) product mix 
B) variable costs 
C) fixed costs 
D) all of the above

Question 5

When computing profit on an after-tax basis,it is necessary to multiply the pretax profit by (1 - effective tax rate).

Accepted Answer

A) True 
 B)False

Question 6

On a CVP graph,the total cost line intersects the y-axis at zero.

Accepted Answer

A) True 
 B)False

Question 7

CVP analysis is based on concepts from

Accepted Answer

A) standard costing. 
B) variable costing. 
C) job order costing. 
D) process costing. 
A) standard costing. 
B) variable costing. 
C) job order costing. 
D) process costing.

Question 8

After the break-even point is reached,each dollar of contribution margin is a dollar of after-tax profit.

Accepted Answer

A) True 
 B)False

Question 9

Burns Corporation
Information relating to the current operations of Burns Corporation follows:
 Sales                                                                          $ \$ 120,000 $
Variable costs                                                          $\underline{(36,000)}$
Contribution margin                                                  $84,000
Fixed costs                                                            $\underline{(70,000)}$
Profit before taxes                                                  $\underline{\$14,000}$
 Refer to Burns Corporation.Burns's break-even point was 1,000 units.Compute Burns's sales price per unit.

Accepted Answer

Refer to Burns Corporation.Burns's break

Question 10

Information concerning Thompson Corporation's Product A follows:
Sales                                      $ \$ 300,000 $
Variable costs                          240,000
Fixed costs                                40,000
Assuming that Thompson increased sales of Product A by 20 percent,what should the profit from Product A be?

Accepted Answer

A) $20,000 
B) $24,000 
C) $32,000 
D) $80,000 
A) $20,000 
B) $24,000 
C) $32,000 
D) $80,000

Question 11

McDonald Company
The following information relates to financial projections of McDonald Company:
Projected sales                                                        75,000 units
Projected variable costs                                           $ \$3.00 $ per unit
Projectedfixed costs                                                $ \$ 60,000 $ per year
Projected unit sales price                                        $ \$ 8.00 $

Refer to McDonald Company.If McDonald Company achieves its projections,what will be its degree of operating leverage?

Accepted Answer

A) 6.25 
B) 1.19 
C) 1.68 
D) 3.00 
A) 6.25 
B) 1.19 
C) 1.68 
D) 3.00

Question 12

The margin of safety is computed by dividing 1 by the degree of operating leverage.

Accepted Answer

A) True 
 B)False

Question 13

Surfside Corporation
Surfside Corporation manufactures and sells two products: A and B.The operating results of the company are as follows:
                                              $\text {\underline{ Product $ A $} }$ $\text {\underline{ Procluct B} }$
$\begin{array}{lll}
\text { Sales in units } & 2,000 & 3,000 \
\text { Sales price per unit } & \$ 10 & \$ 5 \
\text { Variable costs per unit } & 7 & 3
\end{array}$

In addition,the company incurred total fixed costs in the amount of $9,000.

Accepted Answer

A) 8,750 
B) 20,000 
C) 10,000 
D) 8,400 
A) 8,750 
B) 20,000 
C) 10,000 
D) 8,400

Question 14

At the break-even point,fixed costs are always

Accepted Answer

A) less than the contribution margin. 
B) equal to the contribution margin. 
C) more than the contribution margin. 
D) more than the variable cost. 
A) less than the contribution margin. 
B) equal to the contribution margin. 
C) more than the contribution margin. 
D) more than the variable cost.

Question 15

In a CVP graph,the slope of the total revenue line indicates the

Accepted Answer

A) rate at which profit changes as volume changes. 
B) rate at which the contribution margin changes as volume changes. 
C) ratio of increase of total fixed costs. 
D) total costs per unit. 
A) rate at which profit changes as volume changes. 
B) rate at which the contribution margin changes as volume changes. 
C) ratio of increase of total fixed costs. 
D) total costs per unit.

Question 16

The following information pertains to Gemini Company's cost-volume-profit relationships:
Break-even point in units sold                        1,500
Variable costs per unit                                    $ \$ 700 $
Total fixed costs                                            $ \$ 225.000 $

How much will be contributed to profit before taxes by the 1,501st unit sold?

Accepted Answer

A) $850 
B) $700 
C) $150 
D) $0 
A) $850 
B) $700 
C) $150 
D) $0

Question 17

Dividing total fixed costs by the contribution margin ratio yields break-even point in sales dollars.

Accepted Answer

A) True 
 B)False

Question 18

The excess of budgeted or actual sales over sales at break-even point is referred to as __________.

Accepted Answer

The answer of The excess of budgeted or actual sales...

Question 19

Variable costs per unit remain unchanged with levels of production.

Accepted Answer

A) True 
 B)False

Question 20

Bridges Corporation
Bridges Corporation manufactures and sells two products: A and B.
B.The overall company break-even point is found by dividing total fixed costs by the contribution margin on one unit of sales mix: $10,000/$20 = 500 units.The 500 units of sales mix contain 500 ´ 5 units of product for a total of 2,500.Of the 2,500 total units,2,000 are units of Product A and 500 are units of Product B.The projected information on these two products for the coming year is presented below:
                                           $\text {\underline{ Product A} }$ $\text {\underline{ Product B} }$
$\begin{array}{lcc}
\text { Sales in units } & 4,000 & 1,000 \
\text { Sales price per unit } & \$ 12 & \$ 8 \
\text { Variable costsper unit } & 8 & 4
\end{array}$ 
Total fixed costs for the company are projected at $10,000.B.The total contribution margin for one unit of sales mix would be $20.This consists of $16 of contribution margin from the 4 units of Product A and $4 of contribution margin from 1 unit of Product 
Refer to Bridges Corporation.Compute Bridges Corporation's projected break-even point in total units.
The company anticipates a sales mix consisting of 4 units of Product A and 1 unit of ProductTotal fixed costs for the company are projected at $10,000.
Refer to Bridges Corporation.Compute Bridges Corporation's projected break-even point in total units.

Accepted Answer

Total fixed costs for the company are pr

What major assumption do multi-product firms need to make in using CVP analysis that single-product firms need not make?

If a company's variable costs per unit were to increase but its unit selling price stays constant,the effect on a profit-volume graph would be that the

Which of the following factors is involved in studying cost-volume-profit relationships?

When computing profit on an after-tax basis,it is necessary to multiply the pretax profit by (1 - effective tax rate).

On a CVP graph,the total cost line intersects the y-axis at zero.

CVP analysis is based on concepts from

After the break-even point is reached,each dollar of contribution margin is a dollar of after-tax profit.

Information concerning Thompson Corporation's Product A follows: Sales $\$ 300,000$ Variable costs 240,000 Fixed costs 40,000 Assuming that Thompson increased sales of Product A by 20 percent,what should the profit from Product A be?

The margin of safety is computed by dividing 1 by the degree of operating leverage.

At the break-even point,fixed costs are always

In a CVP graph,the slope of the total revenue line indicates the

The following information pertains to Gemini Company's cost-volume-profit relationships: Break-even point in units sold 1,500 Variable costs per unit $\$ 700$ Total fixed costs $\$ 225.000$ How much will be contributed to profit before taxes by the 1,501st unit sold?

Dividing total fixed costs by the contribution margin ratio yields break-even point in sales dollars.

The excess of budgeted or actual sales over sales at break-even point is referred to as __________.

Variable costs per unit remain unchanged with levels of production.

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting,support Department Allocations,and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

Exam 9: Break-Even Point and Cost-Volume-Profit Analysis

What major assumption do multi-product firms need to make in using CVP analysis that single-product firms need not make?

If a company's variable costs per unit were to increase but its unit selling price stays constant,the effect on a profit-volume graph would be that the

Which of the following factors is involved in studying cost-volume-profit relationships?

When computing profit on an after-tax basis,it is necessary to multiply the pretax profit by (1 - effective tax rate).

On a CVP graph,the total cost line intersects the y-axis at zero.

CVP analysis is based on concepts from

After the break-even point is reached,each dollar of contribution margin is a dollar of after-tax profit.

Information concerning Thompson Corporation's Product A follows: Sales $300,000 \$ 300,000 $300,000 Variable costs 240,000 Fixed costs 40,000 Assuming that Thompson increased sales of Product A by 20 percent,what should the profit from Product A be?

The margin of safety is computed by dividing 1 by the degree of operating leverage.

At the break-even point,fixed costs are always

In a CVP graph,the slope of the total revenue line indicates the

The following information pertains to Gemini Company's cost-volume-profit relationships: Break-even point in units sold 1,500 Variable costs per unit $700 \$ 700 $700 Total fixed costs $225.000 \$ 225.000 $225.000 How much will be contributed to profit before taxes by the 1,501st unit sold?

Dividing total fixed costs by the contribution margin ratio yields break-even point in sales dollars.

The excess of budgeted or actual sales over sales at break-even point is referred to as __________.

Variable costs per unit remain unchanged with levels of production.

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting,support Department Allocations,and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

Information concerning Thompson Corporation's Product A follows: Sales $\$ 300,000$ Variable costs 240,000 Fixed costs 40,000 Assuming that Thompson increased sales of Product A by 20 percent,what should the profit from Product A be?

The following information pertains to Gemini Company's cost-volume-profit relationships: Break-even point in units sold 1,500 Variable costs per unit $\$ 700$ Total fixed costs $\$ 225.000$ How much will be contributed to profit before taxes by the 1,501st unit sold?