Question 1

The difference between the current sales revenue and the sales at the break-even point is called the:

Accepted Answer

A) contribution margin. 
B) margin of safety. 
C) price factor. 
D) operating leverage. 
A) contribution margin. 
B) margin of safety. 
C) price factor. 
D) operating leverage.

Question 2

The graph of a variable cost per unit when plotted against its related activity base appears as a:

Accepted Answer

A) circle. 
B) rectangle. 
C) straight line. 
D) curved line. 
A) circle. 
B) rectangle. 
C) straight line. 
D) curved line.

Question 3

Compute the break-even point(in dollars)if fixed costs are $540,000 and variable cost are 70% of sales.

Accepted Answer

A) $3,850,000 
B) $1,800,000 
C) $1,650,000 
D) $900,000 
A) $3,850,000 
B) $1,800,000 
C) $1,650,000 
D) $900,000

Question 4

Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service such as UPS?

Accepted Answer

A) Number of trucks employed 
B) Number of miles driven 
C) Number of trucks in service 
D) Number of packages delivered 
A) Number of trucks employed 
B) Number of miles driven 
C) Number of trucks in service 
D) Number of packages delivered

Question 5

The variable cost per unit remains constant with changes in the level of activity.

Accepted Answer

A) True 
 B)False

Question 6

The following cost graphs illustrate various types of cost behaviors.

Accepted Answer

^Graph (a)3 (b)3 (c)3 (d)2

Question 7

Tops Company sells Products D and E and has made the following estimates for the coming year:

Accepted Answer

(a) Unit selling price of Overall produc

Question 8

If fixed costs are $790,000 and the unit contribution margin is $60,what amount of units must be sold in order to have a zero profit?

Accepted Answer

A) 8,353 units 
B) 13,167 units 
C) 6,570 units 
D) 65,833 units 
A) 8,353 units 
B) 13,167 units 
C) 6,570 units 
D) 65,833 units

Question 9

Given below are the two independent situations:

(a)	If Henry Company's budgeted sales are $800,000, fixed costs are $350,000, and variable costs are $600,000, what is the budgeted contribution margin ratio?
(b)	If the contribution margin ratio is 30% for Gray Company, sales are $900,000, and fixed costs are $180,000, what is the operating profit?

Accepted Answer

(a) Contribution margin ratio = ($800,00

Question 10

Which of the following describes the behavior of the fixed cost per unit?

Accepted Answer

A) Decreases with increase in production 
B) Decreases with decrease in production 
C) Remains constant with changes in production 
D) Increases with increase in production 
A) Decreases with increase in production 
B) Decreases with decrease in production 
C) Remains constant with changes in production 
D) Increases with increase in production

Question 11

If fixed costs are $850,000 and the unit contribution margin is $50,profit is zero when 15,000 units are sold.

Accepted Answer

A) True 
 B)False

Question 12

Given the following costs and activity observations for Pike Company's utilities,use the high­low method to calculate Pike Company's variable utilities costs per machine hour.

Accepted Answer

A) $0.10 
B) $0.19 
C) $0.21 
D) $0.27 
A) $0.10 
B) $0.19 
C) $0.21 
D) $0.27

Question 13

Variable costs are costs that vary on a per-unit basis as the level of manufacturing activity changes.

Accepted Answer

A) True 
 B)False

Question 14

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents:

Accepted Answer

A) the maximum possible operating loss. 
B) the maximum possible operating income. 
C) the total fixed costs. 
D) the break-even point. 
A) the maximum possible operating loss. 
B) the maximum possible operating income. 
C) the total fixed costs. 
D) the break-even point.

Question 15

A company has a margin of safety of 25%,a contribution margin ratio of 30%,and sales of $1,000,000.

Accepted Answer

(a) Margin of safety = $1,000,000 * 25%

Question 16

Only a single line,which represents the difference between total sales revenues and total costs,is plotted on the profit-volume chart.

Accepted Answer

A) True 
 B)False

Question 17

Variable costs are costs that remain constant in total with changes in the activity level.

Accepted Answer

A) True 
 B)False

Question 18

Direct materials and direct labor costs are examples of variable costs of production.

Accepted Answer

A) True 
 B)False

Question 19

Refer to the information provided for Kennedy Co.What was Kennedy's overall product's unit contribution margin?

Accepted Answer

A) $67.20 
B) $70.00 
C) $72.00 
D) $100.00 
A) $67.20 
B) $70.00 
C) $72.00 
D) $100.00

Question 20

For the past year,LaPrade Company had fixed costs of $70,000,a unit variable costs of $32,and a unit selling price of $40.For the coming year,no changes are expected in revenues and costs except that property taxes are expected to increase by $10,000.Determine the break-even sales (in units)for (a)the past year and (b)the coming year.

Accepted Answer

(a)Break­even sales (units)= $

The difference between the current sales revenue and the sales at the break-even point is called the:

The graph of a variable cost per unit when plotted against its related activity base appears as a:

Compute the break-even point(in dollars)if fixed costs are $540,000 and variable cost are 70% of sales.

Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service such as UPS?

The variable cost per unit remains constant with changes in the level of activity.

The following cost graphs illustrate various types of cost behaviors.

Tops Company sells Products D and E and has made the following estimates for the coming year:

If fixed costs are $790,000 and the unit contribution margin is $60,what amount of units must be sold in order to have a zero profit?

Which of the following describes the behavior of the fixed cost per unit?

If fixed costs are $850,000 and the unit contribution margin is $50,profit is zero when 15,000 units are sold.

Given the following costs and activity observations for Pike Company's utilities,use the highlow method to calculate Pike Company's variable utilities costs per machine hour.

Variable costs are costs that vary on a per-unit basis as the level of manufacturing activity changes.

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents:

A company has a margin of safety of 25%,a contribution margin ratio of 30%,and sales of $1,000,000.

Only a single line,which represents the difference between total sales revenues and total costs,is plotted on the profit-volume chart.

Variable costs are costs that remain constant in total with changes in the activity level.

Direct materials and direct labor costs are examples of variable costs of production.

Refer to the information provided for Kennedy Co.What was Kennedy's overall product's unit contribution margin?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 11: Cost Behavior and Cost-Volume-Profit Analysis

The difference between the current sales revenue and the sales at the break-even point is called the:

The graph of a variable cost per unit when plotted against its related activity base appears as a:

Compute the break-even point(in dollars)if fixed costs are $540,000 and variable cost are 70% of sales.

Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service such as UPS?

The variable cost per unit remains constant with changes in the level of activity.

The following cost graphs illustrate various types of cost behaviors.

Tops Company sells Products D and E and has made the following estimates for the coming year:

If fixed costs are $790,000 and the unit contribution margin is $60,what amount of units must be sold in order to have a zero profit?

Which of the following describes the behavior of the fixed cost per unit?

If fixed costs are $850,000 and the unit contribution margin is $50,profit is zero when 15,000 units are sold.

Given the following costs and activity observations for Pike Company's utilities,use the high­low method to calculate Pike Company's variable utilities costs per machine hour.

Variable costs are costs that vary on a per-unit basis as the level of manufacturing activity changes.

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents:

A company has a margin of safety of 25%,a contribution margin ratio of 30%,and sales of $1,000,000.

Only a single line,which represents the difference between total sales revenues and total costs,is plotted on the profit-volume chart.

Variable costs are costs that remain constant in total with changes in the activity level.

Direct materials and direct labor costs are examples of variable costs of production.

Refer to the information provided for Kennedy Co.What was Kennedy's overall product's unit contribution margin?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Given the following costs and activity observations for Pike Company's utilities,use the highlow method to calculate Pike Company's variable utilities costs per machine hour.