Question 1

Which of the following costs is a mixed cost?

Accepted Answer

A) Salary of a factory supervisor 
B) Electricity costs of $2 per kilowatt-hour 
C) Rental costs of $5,000 per month plus $0.30 per machine hour of use 
D) Straight-line depreciation on factory equipment 
A) Salary of a factory supervisor 
B) Electricity costs of $2 per kilowatt-hour 
C) Rental costs of $5,000 per month plus $0.30 per machine hour of use 
D) Straight-line depreciation on factory equipment

Question 2

The relevant range is useful for analyzing cost behavior for management decision-making purposes.

Accepted Answer

A) True 
 B)False

Question 3

Rental charges of $60,000 per year plus $2 for each machine hour over 15,000 hours is an example of a fixed cost.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) $97.60 
B) $104.00 
C) $102.40 
D) $94.40 
A) $97.60 
B) $104.00 
C) $102.40 
D) $94.40

Question 5

If a business had sales of $4,000,000,fixed costs of $1,200,000,a margin of safety of 25%,and a contribution margin ratio of 40%,what was the break-even point?

Accepted Answer

A) $3,000,000 
B) $2,800,000 
C) $4,800,000 
D) $2,000,000 
A) $3,000,000 
B) $2,800,000 
C) $4,800,000 
D) $2,000,000

Question 6

A change in fixed costs as a result of increase in yearly insurance premium will decrease the break-even point.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following graphs illustrates the behavior of a total variable cost?

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 8

Variable costs are costs that vary in total in direct proportion to changes in the activity level.

Accepted Answer

A) True 
 B)False

Question 9

If direct materials cost per unit decreases,the amount of sales necessary to earn a desired amount of profit will decrease.

Accepted Answer

A) True 
 B)False

Question 10

For the current year ending January 31,Ringo Company expects fixed costs of $178,500 and a unit variable cost of $41.50.For the coming year,a new wage contract will increase the unit variable cost to $45.The selling price of $50 per unit is expected to remain the same.
(a)	Compute the break-even sales (in units) for the current year.
(b)	Compute the anticipated break-even sales (in units) for the coming year, assuming the new wage contract is signed.

Accepted Answer

(a)Break­even sales (units)= $

Question 11

Wiles Inc.'s unit selling price is $40,the unit variable costs is $30,fixed costs are $135,000,and current sales are 10,000 units.How much would operating income change if sales increase by 5,000 units?

Accepted Answer

A) $50,000 increase 
B) $65,000 decrease 
C) $100,000 increase 
D) $50,000 decrease 
A) $50,000 increase 
B) $65,000 decrease 
C) $100,000 increase 
D) $50,000 decrease

Question 12

If direct materials cost per unit increases,the break-even point will increase.

Accepted Answer

A) True 
 B)False

Question 13

Refer to the information provided for Kennedy Co.What was Kennedy's sales mix last year?

Accepted Answer

A) 40% Arks,60% Bins 
B) 43% Arks,57% Bins 
C) 54% Arks,46% Bins 
D) 64% Arks,36% Bins 
A) 40% Arks,60% Bins 
B) 43% Arks,57% Bins 
C) 54% Arks,46% Bins 
D) 64% Arks,36% Bins

Question 14

Costs that vary in total in direct proportion to changes in an activity level are called:

Accepted Answer

A) fixed costs. 
B) sunk costs. 
C) variable costs. 
D) differential costs. 
A) fixed costs. 
B) sunk costs. 
C) variable costs. 
D) differential costs.

Question 15

In cost-volume-profit analysis,all costs are classified into the following two categories:

Accepted Answer

A) mixed costs and variable costs. 
B) sunk costs and fixed costs. 
C) discretionary costs and sunk costs. 
D) variable costs and fixed costs. 
A) mixed costs and variable costs. 
B) sunk costs and fixed costs. 
C) discretionary costs and sunk costs. 
D) variable costs and fixed costs.

Question 16

As production increases,what should happen to the variable costs per unit?

Accepted Answer

A) Remain constant 
B) Increase 
C) Decrease 
D) Either increase or decrease,depending on the fixed costs 
A) Remain constant 
B) Increase 
C) Decrease 
D) Either increase or decrease,depending on the fixed costs

Question 17

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

Accepted Answer

A) $32.00 
B) $30.00 
C) $28.80 
D) $27.20 
A) $32.00 
B) $30.00 
C) $28.80 
D) $27.20

Question 18

Cost-volume-profit analysis cannot be used if which of the following occurs?

Accepted Answer

A) Costs cannot be properly classified into fixed and variable costs 
B) The total fixed costs change 
C) The per-unit variable costs change 
D) Per-unit sales prices change 
A) Costs cannot be properly classified into fixed and variable costs 
B) The total fixed costs change 
C) The per-unit variable costs change 
D) Per-unit sales prices change

Question 19

Currently,fixed costs are $500,000 and the unit contribution margin is $40.What would be the break-even point in units if fixed costs are reduced by $80,000?

Accepted Answer

A) 14,500 units 
B) 20,000 units 
C) 10,500 units 
D) 12,500 units 
A) 14,500 units 
B) 20,000 units 
C) 10,500 units 
D) 12,500 units

Question 20

Which of the following activity bases would be the most appropriate for food costs of a hospital?

Accepted Answer

A) Number of cooks scheduled to work 
B) Number of x-rays taken 
C) Number of patients who are admitted in the hospital 
D) Number of scheduled surgeries 
A) Number of cooks scheduled to work 
B) Number of x-rays taken 
C) Number of patients who are admitted in the hospital 
D) Number of scheduled surgeries

Which of the following costs is a mixed cost?

The relevant range is useful for analyzing cost behavior for management decision-making purposes.

Rental charges of $60,000 per year plus $2 for each machine hour over 15,000 hours is an example of a fixed cost.

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

If a business had sales of $4,000,000,fixed costs of $1,200,000,a margin of safety of 25%,and a contribution margin ratio of 40%,what was the break-even point?

A change in fixed costs as a result of increase in yearly insurance premium will decrease the break-even point.

Which of the following graphs illustrates the behavior of a total variable cost?

Variable costs are costs that vary in total in direct proportion to changes in the activity level.

If direct materials cost per unit decreases,the amount of sales necessary to earn a desired amount of profit will decrease.

Wiles Inc.'s unit selling price is $40,the unit variable costs is $30,fixed costs are $135,000,and current sales are 10,000 units.How much would operating income change if sales increase by 5,000 units?

If direct materials cost per unit increases,the break-even point will increase.

Refer to the information provided for Kennedy Co.What was Kennedy's sales mix last year?

Costs that vary in total in direct proportion to changes in an activity level are called:

In cost-volume-profit analysis,all costs are classified into the following two categories:

As production increases,what should happen to the variable costs per unit?

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

Cost-volume-profit analysis cannot be used if which of the following occurs?

Currently,fixed costs are $500,000 and the unit contribution margin is $40.What would be the break-even point in units if fixed costs are reduced by $80,000?

Which of the following activity bases would be the most appropriate for food costs of a hospital?

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

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

Which of the following costs is a mixed cost?

The relevant range is useful for analyzing cost behavior for management decision-making purposes.

Rental charges of $60,000 per year plus $2 for each machine hour over 15,000 hours is an example of a fixed cost.

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

If a business had sales of $4,000,000,fixed costs of $1,200,000,a margin of safety of 25%,and a contribution margin ratio of 40%,what was the break-even point?

A change in fixed costs as a result of increase in yearly insurance premium will decrease the break-even point.

Which of the following graphs illustrates the behavior of a total variable cost?

Variable costs are costs that vary in total in direct proportion to changes in the activity level.

If direct materials cost per unit decreases,the amount of sales necessary to earn a desired amount of profit will decrease.

Wiles Inc.'s unit selling price is $40,the unit variable costs is $30,fixed costs are $135,000,and current sales are 10,000 units.How much would operating income change if sales increase by 5,000 units?

If direct materials cost per unit increases,the break-even point will increase.

Refer to the information provided for Kennedy Co.What was Kennedy's sales mix last year?

Costs that vary in total in direct proportion to changes in an activity level are called:

In cost-volume-profit analysis,all costs are classified into the following two categories:

As production increases,what should happen to the variable costs per unit?

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

Cost-volume-profit analysis cannot be used if which of the following occurs?

Currently,fixed costs are $500,000 and the unit contribution margin is $40.What would be the break-even point in units if fixed costs are reduced by $80,000?

Which of the following activity bases would be the most appropriate for food costs of a hospital?

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