Question 1

The level of activity where a company's total revenues equal total costs is referred to as the _______.

Accepted Answer

The answer of The level of activity where a company's...

Question 2

The relationship between a company's variable costs and fixed costs is referred to as its _________.

Accepted Answer

The answer of The relationship between a company's variable costs...

Question 3

Break-even point may be expressed in terms of units or dollars.

Accepted Answer

A) True 
 B)False

Question 4

There is an inverse relationship between degree of operating leverage and the margin of safety.

Accepted Answer

A) True 
 B)False

Question 5

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 was the company's margin of safety?

Accepted Answer

A) $ 37,500 
B) $ 75,000 
C) $125,000 
D) $150,000 
A) $ 37,500 
B) $ 75,000 
C) $125,000 
D) $150,000

Question 6

When using CVP analysis to determine sales level for a desired amount of profit,the profit is treated as an additional cost to be covered.

Accepted Answer

A) True 
 B)False

Question 7

The margin of safety would be negative if a company('s)

Accepted Answer

A) was presently operating at a volume that is below the break-even point. 
B) present fixed costs were less than its contribution margin. 
C) variable costs exceeded its fixed costs. 
D) degree of operating leverage is greater than 100. 
A) was presently operating at a volume that is below the break-even point. 
B) present fixed costs were less than its contribution margin. 
C) variable costs exceeded its fixed costs. 
D) degree of operating leverage is greater than 100.

Question 8

Putnam Company
Below is an income statement for Putnam Company:
Sales                                                       $ 600,000 
Variable costs                                         $\underline{\$150,000}$
Contribution margin                               $ \$ 450,000 $ 
Fixed costs                                              $\underline{(300,000)}$
Profit before taxes                                    $\underline{\$150,000}$

Refer to Putnam Company.What was Putnam's margin of safety?

Accepted Answer

A) $150,000 
B) $175,000 
C) $200,000 
D) $300,000 
A) $150,000 
B) $175,000 
C) $200,000 
D) $300,000

Question 9

In a CVP graph,the area between the total cost line and the total revenue line represents total

Accepted Answer

A) contribution margin. 
B) variable costs. 
C) fixed costs. 
D) profit. 
A) contribution margin. 
B) variable costs. 
C) fixed costs. 
D) profit.

Question 10

Consider the equation X = Sales - [(CM/Sales)´ (Sales)].What is X?

Accepted Answer

A) net income 
B) fixed costs 
C) contribution margin 
D) variable costs 
A) net income 
B) fixed costs 
C) contribution margin 
D) variable costs

Question 11

A firm estimates that it will sell 100,000 units of its sole product in the coming period.It projects the sales price at $40 per unit,the CM ratio at 60 percent,and profit at $500,000.What is the firm budgeting for fixed costs in the coming period?

Accepted Answer

A) $1,600,000 
B) $2,400,000 
C) $1,100,000 
D) $1,900,000 
A) $1,600,000 
B) $2,400,000 
C) $1,100,000 
D) $1,900,000

Question 12

On a break-even chart,the break-even point is located at the point where the total

Accepted Answer

A) revenue line crosses the total fixed cost line. 
B) revenue line crosses the total contribution margin line. 
C) fixed cost line intersects the total variable cost line. 
D) revenue line crosses the total cost line. 
A) revenue line crosses the total fixed cost line. 
B) revenue line crosses the total contribution margin line. 
C) fixed cost line intersects the total variable cost line. 
D) revenue line crosses the total cost line.

Question 13

Lance is interested in entering the catfish farming business.He estimates if he enters this business,his fixed costs would be $50,000 per year and his variable costs would equal 30 percent of sales.If each catfish sells for $2,how many catfish would Lance need to sell to generate a profit that is equal to 10 percent of sales?

Accepted Answer

A) 40,000 
B) 41,667 
C) 35,000 
D) No level of sales can generate a 10 percent net return on sales. 
A) 40,000 
B) 41,667 
C) 35,000 
D) No level of sales can generate a 10 percent net return on sales.

Question 14

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.How many units would McDonald Company need to sell to earn a profit before taxes of $15,000?

Accepted Answer

A) 9,375 
B) 12,000 
C) 15,000 
D) 37,500 
A) 9,375 
B) 12,000 
C) 15,000 
D) 37,500

Question 15

Jean Simmons Company
Below is an income statement for Jean Simmons Company:
Sales                                                                          $ \$ 300,000 $
Variable costs                                                          $\underline{(150,000)}$
Contribution margin                                                  $150,000
Fixed costs                                                            $\underline{(100,000)}$
Profit before taxes                                                  $\underline{\$50,000}$

Refer to Jean Simmons Company.If the unit sales price for Jean Simmons's sole product was $10,how many units would it have needed to sell to produce a profit of $40,000?

Accepted Answer

A) 27,500 
B) 29,000 
C) 28,000 
D) can't be determined from the information given 
A) 27,500 
B) 29,000 
C) 28,000 
D) can't be determined from the information given

Question 16

What are the major assumptions of CVP analysis?

Accepted Answer

1. All revenue and var1able cost behavio

Question 17

Horner Company
Horner Company manufactures a single product.Each unit sells for $15.The firm's projected costs are listed below:
$\begin{array}{lc}
\text { Variable costs per unit: } & \
\text { Prochuction } & \$ 5  \
\text { SG\&A } &  \$ 1 \
\text { Fixed costs: } &  \
\text { Prochuction } & \$ 40,000 \
\text { SG\&A } & \$ 60,000\
\text { Estimated volume } & 20,000 \text { units }
\end{array}$

Refer to Horner Company.What is Horner's projected degree of operating leverage for the current year?

Accepted Answer

A) 2.25 
B) 1.80 
C) 3.75 
D) 1.67 
A) 2.25 
B) 1.80 
C) 3.75 
D) 1.67

Question 18

Fixed costs per unit remain constant with levels of production.

Accepted Answer

A) True 
 B)False

Question 19

In a CVP graph,the area between the total cost line and the total fixed cost line yields the

Accepted Answer

A) fixed costs per unit. 
B) total variable costs. 
C) profit. 
D) contribution margin. 
A) fixed costs per unit. 
B) total variable costs. 
C) profit. 
D) contribution margin.

Question 20

If a company's fixed costs were to increase,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 more 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 more pronounced (steeper). 
D) slope of the contribution margin line would be less pronounced (flatter).

The level of activity where a company's total revenues equal total costs is referred to as the _______.

The relationship between a company's variable costs and fixed costs is referred to as its _________.

Break-even point may be expressed in terms of units or dollars.

There is an inverse relationship between degree of operating leverage and the margin of safety.

When using CVP analysis to determine sales level for a desired amount of profit,the profit is treated as an additional cost to be covered.

The margin of safety would be negative if a company('s)

Putnam Company Below is an income statement for Putnam Company: Sales $ 600,000 Variable costs $\underline{\$150,000}$ Contribution margin $\$ 450,000$ Fixed costs $\underline{(300,000)}$ Profit before taxes $\underline{\$150,000}$ Refer to Putnam Company.What was Putnam's margin of safety?

In a CVP graph,the area between the total cost line and the total revenue line represents total

Consider the equation X = Sales - [(CM/Sales)´ (Sales)].What is X?

A firm estimates that it will sell 100,000 units of its sole product in the coming period.It projects the sales price at $40 per unit,the CM ratio at 60 percent,and profit at $500,000.What is the firm budgeting for fixed costs in the coming period?

On a break-even chart,the break-even point is located at the point where the total

What are the major assumptions of CVP analysis?

Fixed costs per unit remain constant with levels of production.

In a CVP graph,the area between the total cost line and the total fixed cost line yields the

If a company's fixed costs were to increase,the effect on a profit-volume graph would be that the

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

The level of activity where a company's total revenues equal total costs is referred to as the _______.

The relationship between a company's variable costs and fixed costs is referred to as its _________.

Break-even point may be expressed in terms of units or dollars.

There is an inverse relationship between degree of operating leverage and the margin of safety.

When using CVP analysis to determine sales level for a desired amount of profit,the profit is treated as an additional cost to be covered.

The margin of safety would be negative if a company('s)

In a CVP graph,the area between the total cost line and the total revenue line represents total

Consider the equation X = Sales - [(CM/Sales)´ (Sales)].What is X?

A firm estimates that it will sell 100,000 units of its sole product in the coming period.It projects the sales price at $40 per unit,the CM ratio at 60 percent,and profit at $500,000.What is the firm budgeting for fixed costs in the coming period?

On a break-even chart,the break-even point is located at the point where the total

What are the major assumptions of CVP analysis?

Fixed costs per unit remain constant with levels of production.

In a CVP graph,the area between the total cost line and the total fixed cost line yields the

If a company's fixed costs were to increase,the effect on a profit-volume graph would be that the

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