The phone bill for a CPA firm is a mixed cost. Please refer to the 4-month data below, apply the high-low method, and answer the question. \[\begin{array} { | l | r | r | } \hline & { \text { Minutes } } & \text { Total Bill } \\ \hline \text { Jan} & 300 & \$ 2,650 \\ \hline \text { Feb } & 150 & \$ 2,575 \\ \hline \text { Mar } & 100 & \$ 2,550 \\ \hline \text { Apr } & 250 & \$ 2,625 \\ \hline \end{array}\] - If the company uses 280 minutes in May, how much will the total bill be?

A) $2,625 B) $2,750 C) $2,640 D) $2,540 A) $2,625 B) $2,750 C) $2,640 D) $2,540 C

Dalian Company provides the following information: \[\begin{array} { l l } \text { Price per unit: } & \$ 20 \\ \text { Variable cost per unit: } & \$ 8 \\ \text { Fixed costs per month: } & \$ 15,000 \end{array}\] - What is the breakeven point in terms of sales revenues?

A) $18,500 B) $25,000 C) $37,500 D) $22,750 A) $18,500 B) $25,000 C) $37,500 D) $22,750

Allston Products sells a special kind of effects pedal for musical performers. Each unit sells for $20.00. Additional data for the month of April, 2011, are as follows: \[\begin{array} { | l | r | r | } \hline \text { Direct materials } & \$ 4.00 & \text { per unit } \\ \hline \text { Direct labor } & \$ 8.00 & \text { per unit } \\ \hline \text { Variable manuf. overhead } & \$ 20,000 & \text { per month } \\ \hline \text { Fixed manuf. ovehead } & \$ 14,000 & \text { per month } \\ \hline \text { Operating Experses } & \$ 21,000 & \text { per month } \\ \hline & & \\ \hline \text { Bepinging inventory } & 0 & \text { units } \\ \hline \text { Units produced } & 8,000 & \text { units } \\ \hline \text { Units sold } & 7,500 & \text { units } \\ \hline \text { Ending inventory } & 500 & \text { units } \\ \hline \end{array}\] - Using variable costing, what is the cost per unit produced?

A) $16.25 B) $14.25 C) $14.50 D) $12.75 A) $16.25 B) $14.25 C) $14.50 D) $12.75

Dalian Company provides the following information: \[\begin{array} { l l } \text { Price per unit: } & \$ 20 \\ \text { Variable cost per unit: } & \$ 8 \\ \text { Fixed costs per month: } & \$ 15,000 \end{array}\] - What is the breakeven point in terms of units sold?

A) 1,150 B) 1,200 C) 1,875 D) 1,250 A) 1,150 B) 1,200 C) 1,875 D) 1,250

A small business produces a single product and reports the following data: \[\begin{array} { | l | r | r | } \hline \text { Price } & \$ 8.00 & \text { per unit } \\ \hline \text { Variable cost } & \$ 5.00 & \text { per unit } \\ \hline \text { Fixed cost } & \$ 21,000 & \text { per month } \\ \hline \text { Volume } & 10,000 & \text { per month } \\ \hline \end{array}\] - If the company reduces its price to $7.50, it believes that the volume will go up to 11,000 units. How would this change affect operating income?

A) It will go up by $7,500. B) It will go up by $8,000. C) It will go down by $2,500. D) It will go down by $4,500. A) It will go up by $7,500. B) It will go up by $8,000. C) It will go down by $2,500. D) It will go down by $4,500.

Allston Products sells a special kind of effects pedal for musical performers. Each unit sells for $20.00. Additional data for the month of April, 2011, are as follows: \[\begin{array} { | l | r | r | } \hline \text { Direct materials } & \$ 4.00 & \text { per unit } \\ \hline \text { Direct labor } & \$ 8.00 & \text { per unit } \\ \hline \text { Variable manuf. overhead } & \$ 20,000 & \text { per month } \\ \hline \text { Fixed manuf. ovehead } & \$ 14,000 & \text { per month } \\ \hline \text { Operating Experses } & \$ 21,000 & \text { per month } \\ \hline & & \\ \hline \text { Bepinging inventory } & 0 & \text { units } \\ \hline \text { Units produced } & 8,000 & \text { units } \\ \hline \text { Units sold } & 7,500 & \text { units } \\ \hline \text { Ending inventory } & 500 & \text { units } \\ \hline \end{array}\] - Which of the following statements is TRUE?

A) Absorption costing produces operating income that is $875 higher than variable costing. B) Absorption costing produces operating income that is $875 lower than variable costing. C) Absorption costing produces operating income that is $13,125 higher than variable costing. D) Absorption costing produces operating income that is $13,125 lower than variable costing. A) Absorption costing produces operating income that is $875 higher than variable costing. B) Absorption costing produces operating income that is $875 lower than variable costing. C) Absorption costing produces operating income that is $13,125 higher than variable costing. D) Absorption costing produces operating income that is $13,125 lower than variable costing.

Argyle sells steel beams to building contractors in two sizes-regular and heavy. Argyle sells 4 regular beams for every one heavy beam. Cost data are as follows: \[\begin{array} { | l | r | r | } \hline & { \text { Regular } } & { \text { Heavy } } \\ \hline \text { Price per unit } & \$ 20.00 & \$ 28.00 \\ \hline \text { Variable cost per unit } & \$ 16.00 & \$ 20.00\\ \hline \end{array}\] - Argyle's fixed costs are $2,880 per month. How much is the breakeven point for each product type?

A) 500 regular, 100 heavy B) 420 regular, 180 heavy C) 480 regular, 120 heavy D) 120 regular, 480 heavy A) 500 regular, 100 heavy B) 420 regular, 180 heavy C) 480 regular, 120 heavy D) 120 regular, 480 heavy

Arquebus Company is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen and collectors. He is currently producing 40 flintlock muskets per month. Cost data are as follows: \[\begin{array} { l l } \text { Price } & \$ 720 \text { per unit } \\ \text { Variable cost } & \$ 470 \text { per unit } \\ \text { Fixed costs } & \$ 8,000 \text { per month } \end{array}\] In June, the cost of the special kind of metal he uses went up considerably, and the variable cost per unit increased by $50 per unit. - If volume and other factors remain constant, how will this affect the company's operating income?

A) It will go up by $5,760 of sales revenue. B) It will go up by $2,400 of sales revenue. C) It will go down by $400 of sales revenue. D) It will go down by $2,000. A) It will go up by $5,760 of sales revenue. B) It will go up by $2,400 of sales revenue. C) It will go down by $400 of sales revenue. D) It will go down by $2,000.

Exam 19: Cost-Volume-Profit Analysis

Chambers Company sells glass vases at a wholesale price of $2.50 per unit. Variable cost is $1.75 per unit. Chambers' fixed costs are $6,500 per month. If Chambers wishes to make operating income of $2,500, how many units must be sold?

Free

(Multiple Choice)

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(39)

Question 1

Correct Answer:

Verified

C

The phone bill for a CPA firm is a mixed cost. Please refer to the 4-month data below, apply the high-low method, and answer the question. Minutes Total Bill Jan 300 \ 2,650 Feb 150 \ 2,575 Mar 100 \ 2,550 Apr 250 \ 2,625 - If the company uses 280 minutes in May, how much will the total bill be?

Free

(Multiple Choice)

4.8/5

(43)

Question 2

Correct Answer:

Verified

C

Fixed costs divided by the contribution margin ratio equals the breakeven point in sales dollars.

Free

(True/False)

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Question 3

Correct Answer:

Verified

True

Jarvis Foods produces a gourmet condiment which sells for $10.00 per unit. Variable costs are $7.50 per unit, and fixed costs are $18,000 per month. Jarvis is currently selling 8,000 units per month. If Jarvis is forced to reduce the selling price down to $9.00 per unit, and volume remains constant, how will that affect its breakeven point?

(Multiple Choice)

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Question 4

A 15% increase in production volume will result in a:

(Multiple Choice)

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Question 5

Jarvis Foods produces a gourmet condiment which sells for $10.00 per unit. Variable costs are $7.50 per unit, and fixed costs are $18,000 per month. Jarvis is currently selling 8,000 units per month. If Jarvis is forced to reduce the selling price down to $9.00 per unit, and volume remains constant, how will that affect its operating income?

(Multiple Choice)

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Question 6

Dalian Company provides the following information: Price per unit: \ 20 Variable cost per unit: \ 8 Fixed costs per month: \ 15,000 - What is the breakeven point in terms of sales revenues?

(Multiple Choice)

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Question 7

Some companies use contribution margin rather than sales revenues as the basis of incentives for motivating sales persons because it will lead them to sell more of the higher margin goods.

(True/False)

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Question 8

Allston Products sells a special kind of effects pedal for musical performers. Each unit sells for $20.00. Additional data for the month of April, 2011, are as follows: Direct materials \ 4.00 per unit Direct labor \ 8.00 per unit Variable manuf. overhead \ 20,000 per month Fixed manuf. ovehead \ 14,000 per month Operating Experses \ 21,000 per month Bepinging inventory 0 units Units produced 8,000 units Units sold 7,500 units Ending inventory 500 units - Using variable costing, what is the cost per unit produced?

(Multiple Choice)

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Question 9

A company's product sells for $240 per unit. The contribution margin ratio is 12.5%. Fixed costs run at $141,000 per month. How many dollars of sale revenue are required to break even?

(Multiple Choice)

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Question 10

Dalian Company provides the following information: Price per unit: \ 20 Variable cost per unit: \ 8 Fixed costs per month: \ 15,000 - What is the breakeven point in terms of units sold?

(Multiple Choice)

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Question 11

Fixed costs per unit decrease as production levels decrease.

(True/False)

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Question 12

Becky's Bakery sells three large muffins for every two small ones. A small muffin sells for $3, with a variable cost of $2.00. A large muffin sells for $5 with a variable cost of $2.50. Fixed costs are $3,000 per month. How much is the breakeven volume for each type of muffin?

(Multiple Choice)

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Question 13

A small business produces a single product and reports the following data: Price \ 8.00 per unit Variable cost \ 5.00 per unit Fixed cost \ 21,000 per month Volume 10,000 per month - If the company reduces its price to $7.50, it believes that the volume will go up to 11,000 units. How would this change affect operating income?

(Multiple Choice)

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Question 14

If variable costs go down, and all other factors remain the same, the company will have to sell more units to break even.

(True/False)

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Question 15

Allston Products sells a special kind of effects pedal for musical performers. Each unit sells for $20.00. Additional data for the month of April, 2011, are as follows: Direct materials \ 4.00 per unit Direct labor \ 8.00 per unit Variable manuf. overhead \ 20,000 per month Fixed manuf. ovehead \ 14,000 per month Operating Experses \ 21,000 per month Bepinging inventory 0 units Units produced 8,000 units Units sold 7,500 units Ending inventory 500 units - Which of the following statements is TRUE?

(Multiple Choice)

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Question 16

Orleans Company has a normal range of production volumes between 100,000 units and 180,000 units per month. That is considered the relevant range for production cost analysis. If the company expands significantly beyond 180,000 units per month, which of the following would be the most likely expectation?

(Multiple Choice)

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Question 17

Contribution margin is defined as the sales revenue minus the fixed costs.

(True/False)

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Question 18

Argyle sells steel beams to building contractors in two sizes-regular and heavy. Argyle sells 4 regular beams for every one heavy beam. Cost data are as follows: Regular Heavy Price per unit \ 20.00 \ 28.00 Variable cost per unit \ 16.00 \ 20.00 - Argyle's fixed costs are $2,880 per month. How much is the breakeven point for each product type?

(Multiple Choice)

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Question 19

Arquebus Company is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen and collectors. He is currently producing 40 flintlock muskets per month. Cost data are as follows: Price \ 720 per unit Variable cost \ 470 per unit Fixed costs \ 8,000 per month In June, the cost of the special kind of metal he uses went up considerably, and the variable cost per unit increased by $50 per unit. - If volume and other factors remain constant, how will this affect the company's operating income?

(Multiple Choice)

5.0/5

(29)

Question 20

Chambers Company sells glass vases at a wholesale price of $2.50 per unit. Variable cost is $1.75 per unit. Chambers' fixed costs are $6,500 per month. If Chambers wishes to make operating income of $2,500, how many units must be sold?

The phone bill for a CPA firm is a mixed cost. Please refer to the 4-month data below, apply the high-low method, and answer the question. Minutes Total Bill Jan 300 \ 2,650 Feb 150 \ 2,575 Mar 100 \ 2,550 Apr 250 \ 2,625 - If the company uses 280 minutes in May, how much will the total bill be?

Fixed costs divided by the contribution margin ratio equals the breakeven point in sales dollars.

A 15% increase in production volume will result in a:

Dalian Company provides the following information: Price per unit: \ 20 Variable cost per unit: \ 8 Fixed costs per month: \ 15,000 - What is the breakeven point in terms of sales revenues?

Some companies use contribution margin rather than sales revenues as the basis of incentives for motivating sales persons because it will lead them to sell more of the higher margin goods.

A company's product sells for $240 per unit. The contribution margin ratio is 12.5%. Fixed costs run at $141,000 per month. How many dollars of sale revenue are required to break even?

Dalian Company provides the following information: Price per unit: \ 20 Variable cost per unit: \ 8 Fixed costs per month: \ 15,000 - What is the breakeven point in terms of units sold?

Fixed costs per unit decrease as production levels decrease.

Becky's Bakery sells three large muffins for every two small ones. A small muffin sells for $3, with a variable cost of $2.00. A large muffin sells for $5 with a variable cost of $2.50. Fixed costs are $3,000 per month. How much is the breakeven volume for each type of muffin?

If variable costs go down, and all other factors remain the same, the company will have to sell more units to break even.

Contribution margin is defined as the sales revenue minus the fixed costs.

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Activity-Based Costing and Other Cost Management Tools

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

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