Question 1

A company's product sells at $12 per unit and has a $5 per unit variable cost.The company's total fixed costs are $98,000.The contribution margin per unit is:

Accepted Answer

A) $ 5.00. 
B) $ 7.00. 
C) $ 8.17. 
D) $12.00. 
E) $17.00. 
A) $ 5.00. 
B) $ 7.00. 
C) $ 8.17. 
D) $12.00. 
E) $17.00. B

Question 2

A visual line fit to points in a scatter diagram may be used to identify the approximate relation between past cost and volume.

Accepted Answer

A) True 
 B)False  True

Question 3

The following data relate to a product sold by Nelson Company:
Total Variable costs $90,000
Total fixed costs 27,000
Predicted after-tax income (30% tax) 12,600
Contribution margin per unit 5
(a)Calculate the number of units expected to be sold.
(b)Calculate the expected total dollar sales.

Accepted Answer

(a)

Question 4

A company's normal operating range,which excludes extremely high and low volumes that are not likely to occur,is called the:

Accepted Answer

A) Margin of safety. 
B) Contribution range. 
C) Break-even point. 
D) Relevant range. 
E) High-low point. 
A) Margin of safety. 
B) Contribution range. 
C) Break-even point. 
D) Relevant range. 
E) High-low point.

Question 5

Cost-volume-profit analysis is based on three basic assumptions.Which of the following is not one of these assumptions?

Accepted Answer

A) Total fixed costs remain constant over changes in volume. 
B) Curvilinear costs change proportionately with changes in volume throughout the relevant range. 
C) Variable costs per unit of output remain constant as volume changes. 
D) Sales price per unit remains constant as volume changes. 
E) All of these are basic assumptions. 
A) Total fixed costs remain constant over changes in volume. 
B) Curvilinear costs change proportionately with changes in volume throughout the relevant range. 
C) Variable costs per unit of output remain constant as volume changes. 
D) Sales price per unit remains constant as volume changes. 
E) All of these are basic assumptions.

Question 6

A company's product sells at $12 per unit and has a $5 per unit variable cost.The company's total fixed costs are $98,000.The break-even point in units is:

Accepted Answer

A) 5,158. 
B) 7,000. 
C) 8,167. 
D) 14,000. 
E) 19,600. 
A) 5,158. 
B) 7,000. 
C) 8,167. 
D) 14,000. 
E) 19,600.

Question 7

Curvilinear costs always increase:

Accepted Answer

A) With decreases in volume. 
B) In constant proportion to changes in production levels. 
C) When management performs break-even analysis. 
D) When volume increases, but not at a constant rate. 
E) On a per unit basis when volume of activity goes down. 
A) With decreases in volume. 
B) In constant proportion to changes in production levels. 
C) When management performs break-even analysis. 
D) When volume increases, but not at a constant rate. 
E) On a per unit basis when volume of activity goes down.

Question 8

As the level of output activity increases,fixed cost per unit remains constant.

Accepted Answer

A) True 
 B)False

Question 9

The ratio of the volumes of the various products sold by a company is called the ______________________________.

Accepted Answer

The answer of The ratio of the volumes of the...

Question 10

Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300.Annual fixed costs are $990,000.Current sales volume is $4,200,000.Compute the current margin of safety in dollars for Dunkin Company.

Accepted Answer

A) $3,210,000. 
B) $2,640,000. 
C) $1,560,000. 
D) $2,440,000. 
E) $3,500,000. 
A) $3,210,000. 
B) $2,640,000. 
C) $1,560,000. 
D) $2,440,000. 
E) $3,500,000.

Question 11

Break-even analysis is a special case of cost-volume-profit analysis.

Accepted Answer

A) True 
 B)False

Question 12

Baines Brothers manufactures and sells two products,A and Z in the ratio of 4: 2.Product A sells for $75; Z sells for $95.Variable costs for product A are $35; for Z $40.Fixed costs are $418,500.Compute the contribution margin per composite unit.

Accepted Answer

A) $270. 
B) $240. 
C) $300. 
D) $330. 
E) $285. 
A) $270. 
B) $240. 
C) $300. 
D) $330. 
E) $285.

Question 13

A cost that changes with volume,but not at a constant rate,is called a:

Accepted Answer

A) Variable cost. 
B) Curvilinear cost. 
C) Step-wise variable cost. 
D) Fixed cost. 
E) Differential cost. 
A) Variable cost. 
B) Curvilinear cost. 
C) Step-wise variable cost. 
D) Fixed cost. 
E) Differential cost.

Question 14

A company has total fixed costs of $360,000.Its product sells for $40 per unit and variable costs amount to $25 per unit.What is the break-even point in dollar sales?

Accepted Answer

Contribution margin ratio = ($

Question 15

A company has fixed costs of $90,000.Its contribution margin ratio is 30% and the product sells for $75 per unit.What is the company's break-even point in dollar sales?

Accepted Answer

A) $ 60,000. 
B) $128,571. 
C) $180,000. 
D) $210,000. 
E) $300,000. 
A) $ 60,000. 
B) $128,571. 
C) $180,000. 
D) $210,000. 
E) $300,000.

Question 16

What are the unit contribution margin and the contribution margin ratio?
 What do these measures reveal about a company's cost structure?

Accepted Answer

The unit contribution margin is the sale

Question 17

Variable costs per unit increase proportionately with increases in output activity.

Accepted Answer

A) True 
 B)False

Question 18

A cost-volume-profit chart is also known as a(n)

Accepted Answer

A) Operating profit chart. 
B) Operating leverage chart. 
C) Break-even chart. 
D) Margin of safety chart. 
E) Sales chart. 
A) Operating profit chart. 
B) Operating leverage chart. 
C) Break-even chart. 
D) Margin of safety chart. 
E) Sales chart.

Question 19

On a typical cost-volume-profit graph,unit sales are shown on the horizontal axis and both dollars of sales and dollars of costs are represented on the vertical axis.

Accepted Answer

A) True 
 B)False

Question 20

Cost-volume-profit analysis is frequently based on the assumption that the production level is the same as the sales level.

Accepted Answer

A) True 
 B)False

Exam 21: Cost-Volume-Profit Analysis

A company's product sells at $12 per unit and has a $5 per unit variable cost.The company's total fixed costs are $98,000.The contribution margin per unit is:

A visual line fit to points in a scatter diagram may be used to identify the approximate relation between past cost and volume.

The following data relate to a product sold by Nelson Company: Total Variable costs $90,000 Total fixed costs 27,000 Predicted after-tax income (30% tax) 12,600 Contribution margin per unit 5 (a)Calculate the number of units expected to be sold. (b)Calculate the expected total dollar sales.

A company's normal operating range,which excludes extremely high and low volumes that are not likely to occur,is called the:

Cost-volume-profit analysis is based on three basic assumptions.Which of the following is not one of these assumptions?

A company's product sells at $12 per unit and has a $5 per unit variable cost.The company's total fixed costs are $98,000.The break-even point in units is:

Curvilinear costs always increase:

As the level of output activity increases,fixed cost per unit remains constant.

The ratio of the volumes of the various products sold by a company is called the ______________________________.

Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300.Annual fixed costs are $990,000.Current sales volume is $4,200,000.Compute the current margin of safety in dollars for Dunkin Company.

Break-even analysis is a special case of cost-volume-profit analysis.

Baines Brothers manufactures and sells two products,A and Z in the ratio of 4: 2.Product A sells for $75; Z sells for $95.Variable costs for product A are $35; for Z $40.Fixed costs are $418,500.Compute the contribution margin per composite unit.

A cost that changes with volume,but not at a constant rate,is called a:

A company has total fixed costs of $360,000.Its product sells for $40 per unit and variable costs amount to $25 per unit.What is the break-even point in dollar sales?

A company has fixed costs of $90,000.Its contribution margin ratio is 30% and the product sells for $75 per unit.What is the company's break-even point in dollar sales?

What are the unit contribution margin and the contribution margin ratio? What do these measures reveal about a company's cost structure?

Variable costs per unit increase proportionately with increases in output activity.

A cost-volume-profit chart is also known as a(n)

On a typical cost-volume-profit graph,unit sales are shown on the horizontal axis and both dollars of sales and dollars of costs are represented on the vertical axis.

Cost-volume-profit analysis is frequently based on the assumption that the production level is the same as the sales level.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

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