Question 1

Which of the following graphs illustrates the behavior of a total fixed cost within the specified relevant range?

Accepted Answer

A) Graph 2 
B) Graph 3 
C) Graph 4 
D) Graph 1 
A) Graph 2 
B) Graph 3 
C) Graph 4 
D) Graph 1

Question 2

Foggy Co.has the following operating data for its manufacturing operations:

Accepted Answer

A) increase by 400 units. 
B) increase by 640 units. 
C) decrease by 640 units. 
D) increase by 800 units. 
A) increase by 400 units. 
B) increase by 640 units. 
C) decrease by 640 units. 
D) increase by 800 units.

Question 3

The point where the profit line intersects the left vertical axis on the profit-volume 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 4

Given the following cost and activity observations for Alifix Company's utilities,use the high­low method to calculate Alifix's fixed costs per month.

Accepted Answer

A) $4,516 
B) $9,100 
C) $5,750 
D) $2,400 
A) $4,516 
B) $9,100 
C) $5,750 
D) $2,400

Question 5

If a business sells two products,it is not possible to estimate the break-even point.

Accepted Answer

A) True 
 B)False

Question 6

The contribution margin ratio is:

Accepted Answer

A) the same as the variable cost ratio. 
B) the same as profit. 
C) the portion of equity contributed by the stockholders. 
D) the same as the profit-volume ratio. 
A) the same as the variable cost ratio. 
B) the same as profit. 
C) the portion of equity contributed by the stockholders. 
D) the same as the profit-volume ratio.

Question 7

Variable costs as a percentage of sales for Protoveo Inc.are 65%,sales are $500,000,and fixed costs are $125,000.How much would operating income change if sales decrease by $10,000?

Accepted Answer

A) $3,500 increase 
B) $3,500 decrease. 
C) $3,250 decrease 
D)  $3,500 increase. 
A) $3,500 increase 
B) $3,500 decrease. 
C) $3,250 decrease 
D)  $3,500 increase.

Question 8

If sales total $1,000,000,fixed costs total $200,000,and variable costs are 55% of the sales,the contribution margin ratio is 55%.

Accepted Answer

A) True 
 B)False

Question 9

Fixed costs are costs that vary in total dollar amount as the level of activity changes.

Accepted Answer

A) True 
 B)False

Question 10

Rouney Co.has budgeted that factory supervisors' salary will increase by 10%.If selling prices and all other cost relationships are held constant,next year's break-even point would:

Accepted Answer

A) decrease by 10%. 
B) increase by 10%. 
C) remain constant. 
D) increase at a rate greater than 10%. 
A) decrease by 10%. 
B) increase by 10%. 
C) remain constant. 
D) increase at a rate greater than 10%.

Question 11

Variable costs as a percentage of sales is equal to 100% minus the contribution margin ratio.

Accepted Answer

A) True 
 B)False

Question 12

Lauder Company had fixed costs of $282,500,variable costs of $645,000,and actual sales amounted to $1,100,000.If the company has a break-even point at $750,000 in sales revenue,determine (a)the margin of safety expressed in dollars,(b)the margin of safety expressed as a percentage of sales,(c)the contribution margin ratio,and (d)the operating income.

Accepted Answer

(a)Margin of safety (dollars)= $1,100,00

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is true about the changes in fixed cost?

Accepted Answer

A) An increase in production will result in an increase in per unit fixed cost. 
B) A decrease in fixed cost will result in an increase in variable cost. 
C) An increase in production will result in a decrease in per unit fixed cost. 
D) A decrease in production will result in an increase in total fixed cost. 
A) An increase in production will result in an increase in per unit fixed cost. 
B) A decrease in fixed cost will result in an increase in variable cost. 
C) An increase in production will result in a decrease in per unit fixed cost. 
D) A decrease in production will result in an increase in total fixed cost.

Question 15

The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed as contribution margin ratio.

Accepted Answer

A) True 
 B)False

Question 16

If a business sells four products,it is not possible to estimate the break-even point.

Accepted Answer

A) True 
 B)False

Question 17

Currently,fixed costs are $540,000,the unit selling price is $95,and the unit variable cost is $60.What would be the break-even sales (in units),if the unit selling price is increased by $10?

Accepted Answer

A) 5,294 units 
B) 9,000 units 
C) 12,857 units 
D) 12,000 units 
A) 5,294 units 
B) 9,000 units 
C) 12,857 units 
D) 12,000 units

Question 18

Cost behavior refers to the manner in which:

Accepted Answer

A) a cost changes as the related activity changes. 
B) a cost is allocated to products. 
C) a cost is used in setting selling prices. 
D) a cost is estimated. 
A) a cost changes as the related activity changes. 
B) a cost is allocated to products. 
C) a cost is used in setting selling prices. 
D) a cost is estimated.

Question 19

Which of the following conditions would cause the break-even point to decrease?

Accepted Answer

A) Increase in total fixed costs 
B) Decrease in unit selling price 
C) Decrease in unit variable cost 
D) Increase in unit variable cost 
A) Increase in total fixed costs 
B) Decrease in unit selling price 
C) Decrease in unit variable cost 
D) Increase in unit variable cost

Question 20

The point where the profit line intersects the horizontal axis on the profit-volume 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.

Which of the following graphs illustrates the behavior of a total fixed cost within the specified relevant range?

Foggy Co.has the following operating data for its manufacturing operations:

The point where the profit line intersects the left vertical axis on the profit-volume chart represents:

Given the following cost and activity observations for Alifix Company's utilities,use the highlow method to calculate Alifix's fixed costs per month.

If a business sells two products,it is not possible to estimate the break-even point.

The contribution margin ratio is:

Variable costs as a percentage of sales for Protoveo Inc.are 65%,sales are $500,000,and fixed costs are $125,000.How much would operating income change if sales decrease by $10,000?

If sales total $1,000,000,fixed costs total $200,000,and variable costs are 55% of the sales,the contribution margin ratio is 55%.

Fixed costs are costs that vary in total dollar amount as the level of activity changes.

Rouney Co.has budgeted that factory supervisors' salary will increase by 10%.If selling prices and all other cost relationships are held constant,next year's break-even point would:

Variable costs as a percentage of sales is equal to 100% minus the contribution margin ratio.

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

Which of the following is true about the changes in fixed cost?

The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed as contribution margin ratio.

If a business sells four products,it is not possible to estimate the break-even point.

Currently,fixed costs are $540,000,the unit selling price is $95,and the unit variable cost is $60.What would be the break-even sales (in units),if the unit selling price is increased by $10?

Cost behavior refers to the manner in which:

Which of the following conditions would cause the break-even point to decrease?

The point where the profit line intersects the horizontal axis on the profit-volume chart represents:

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

Which of the following graphs illustrates the behavior of a total fixed cost within the specified relevant range?

Foggy Co.has the following operating data for its manufacturing operations:

The point where the profit line intersects the left vertical axis on the profit-volume chart represents:

Given the following cost and activity observations for Alifix Company's utilities,use the high­low method to calculate Alifix's fixed costs per month.

If a business sells two products,it is not possible to estimate the break-even point.

The contribution margin ratio is:

Variable costs as a percentage of sales for Protoveo Inc.are 65%,sales are $500,000,and fixed costs are $125,000.How much would operating income change if sales decrease by $10,000?

If sales total $1,000,000,fixed costs total $200,000,and variable costs are 55% of the sales,the contribution margin ratio is 55%.

Fixed costs are costs that vary in total dollar amount as the level of activity changes.

Rouney Co.has budgeted that factory supervisors' salary will increase by 10%.If selling prices and all other cost relationships are held constant,next year's break-even point would:

Variable costs as a percentage of sales is equal to 100% minus the contribution margin ratio.

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

Which of the following is true about the changes in fixed cost?

The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed as contribution margin ratio.

If a business sells four products,it is not possible to estimate the break-even point.

Currently,fixed costs are $540,000,the unit selling price is $95,and the unit variable cost is $60.What would be the break-even sales (in units),if the unit selling price is increased by $10?

Cost behavior refers to the manner in which:

Which of the following conditions would cause the break-even point to decrease?

The point where the profit line intersects the horizontal axis on the profit-volume chart represents:

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 cost and activity observations for Alifix Company's utilities,use the highlow method to calculate Alifix's fixed costs per month.