Question 1

In which of these short-term decision areas are fixed costs generally irrelevant?

Accepted Answer

A) Make or buy decisions. 
B) Closing a department. 
C) Accepting or rejecting a special order. 
D) All of the above. 
A) Make or buy decisions. 
B) Closing a department. 
C) Accepting or rejecting a special order. 
D) All of the above. D

Question 2

Semi-fixed costs are best defined as:

Accepted Answer

A) having both fixed and variable elements. 
B) varying over time. 
C) costs ignored in cost-volume-profit analysis. 
D) none of the above. 
A) having both fixed and variable elements. 
B) varying over time. 
C) costs ignored in cost-volume-profit analysis. 
D) none of the above. A

Question 3

Sand Art has increased its selling price to $35. All other costs remain constant (variable costs $25 per pot and fixed costs $50,000). The number of pots that have to be sold to break even is:

Accepted Answer

A) 7,000 pots. 
B) 4,000 pots. 
C) 5,000 pots. 
D) 6,000 pots. 
A) 7,000 pots. 
B) 4,000 pots. 
C) 5,000 pots. 
D) 6,000 pots. C

Question 4

Information necessary for decision-making includes:

Accepted Answer

A) both quantitative and qualitative information. 
B) quantitative information only. 
C) information reported in financial reports only. 
D) qualitative information only. 
A) both quantitative and qualitative information. 
B) quantitative information only. 
C) information reported in financial reports only. 
D) qualitative information only.

Question 5

The contribution margin is so called because it contributes to:

Accepted Answer

A) variable costs. 
B) fixed and variable costs. 
C) fixed costs and profit. 
D) fixed costs. 
A) variable costs. 
B) fixed and variable costs. 
C) fixed costs and profit. 
D) fixed costs.

Question 6

Use the information below to answer the following questions.
Sales Extraordinaire sells one particular photo frame. It estimates that it can sell as many frames as it produces. $\begin{array}{lr}
\text { Sales price per unit } & \$ 6.00 \
\text { Variable cost per unit } & \$ 3.00 \
\text { Fixed costs per annum } & \$ 9,000
\end{array}$
-Refer to the table above. The break-even point in units is:

Accepted Answer

A) 1,800. 
B) 5,500. 
C) 1,285. 
D) 3,000. 
A) 1,800. 
B) 5,500. 
C) 1,285. 
D) 3,000.

Question 7

What does an operating loss indicate?

Accepted Answer

A) sales are greater than break-even. 
B) sales are less than break-even. 
C) sales are equal to break-even. 
D) none of the above. 
A) sales are greater than break-even. 
B) sales are less than break-even. 
C) sales are equal to break-even. 
D) none of the above.

Question 8

Which of these is a limitation in applying break-even analysis?

Accepted Answer

A) Stepped fixed costs. 
B) The possibility of non-linear relationships. 
C) Multi-product businesses. 
D) All of the above. 
A) Stepped fixed costs. 
B) The possibility of non-linear relationships. 
C) Multi-product businesses. 
D) All of the above.

Question 9

Sand Art sells ceramic pots. The pots sell for $30 each with variable costs totalling $25 per pot. Fixed costs are $50,000. The number of pots that have to be sold to break even is:

Accepted Answer

A) 10,000 pots. 
B) 8,000 pots. 
C) 2,000 pots. 
D) 7,000 pots. 
A) 10,000 pots. 
B) 8,000 pots. 
C) 2,000 pots. 
D) 7,000 pots.

Question 10

A business may prefer to make a product that it could subcontract at a cheaper price because:

Accepted Answer

A) they may be concerned that having gained their business, the subcontractor could increase the price charged. 
B) by subcontracting the business, they may find supply is less reliable. 
C) by subcontracting the business, they may lose control over quality. 
D) all of the above. 
A) they may be concerned that having gained their business, the subcontractor could increase the price charged. 
B) by subcontracting the business, they may find supply is less reliable. 
C) by subcontracting the business, they may lose control over quality. 
D) all of the above.

Question 11

Which of the following is an example of a semi-fixed (semi-variable)cost?

Accepted Answer

A) cost of telephone calls. 
B) total telephone account, both calls and rental. 
C) cost of telephone rental. 
D) none of the above. 
A) cost of telephone calls. 
B) total telephone account, both calls and rental. 
C) cost of telephone rental. 
D) none of the above.

Question 12

Use the information below to answer the following questions.
Unique Tables manufacture coffee tables made of recycled timber. Market research has suggested that there will be strong demand for the tables. Due to this, management is debating whether to lease a new turning machine to meet increased production. To assist in their decisionmaking, the management accountant has supplied the following information: $\begin{array}{lll}&\text { Without }&\text {With }\&\text { turning machine }&\text { turning machine }\\hline
\text { Expected level of sales } & 1,500 \text { units } & 1,500 \text { units } \
\text { Sales price per unit } & \$ 150 & \$ 150 \
\text { Variable costs per unit } & \$ 120 & \$ 110 \
\text { Fixed costs } & \$ 7500 & \$ 15,000
\end{array}$
-Refer to the table above. At the current level of sales, which of the following results are achieved?

Accepted Answer

A) Without the turning machine profit of $45,000. With the turning machine profit of $52,500. 
B) Without the turning machine profit of $30,000. With the turning machine profit of $22,500. 
C) Without the turning machine profit of $37,500. With the turning machine profit of $45,000. 
D) None of the above. 
A) Without the turning machine profit of $45,000. With the turning machine profit of $52,500. 
B) Without the turning machine profit of $30,000. With the turning machine profit of $22,500. 
C) Without the turning machine profit of $37,500. With the turning machine profit of $45,000. 
D) None of the above.

Question 13

A Business makes three different products, the details of which follow: $\begin{array}{llll}
\text { Product code } & \text { A1 } & \text { A2 } & \text { A3 } \
\text { Selling price } & \$ 50 & \$ 46 & \$ 40 \
\text { Variable cost } & \$ 20 & \$ 24 & \$ 16\\text { Weekly demand-units } & 50 & 40 & 60 \
\text { Machine time per unit } & 4 \text { hours } & 4 \text { hours } & 6 \text { hours }
\end{array}$ The maximum machine time available is 350 hours per week. How many machine hours should be spent manufacturing product A3?

Accepted Answer

A) 35 machine hours. 
B) 240 machine hours. 
C) 120 machine hours. 
D) None. 
A) 35 machine hours. 
B) 240 machine hours. 
C) 120 machine hours. 
D) None.

Question 14

When contribution margin per unit increases:

Accepted Answer

A) break-even output remains the same. 
B) break-even output increases. 
C) break-even output decreases. 
D) fixed costs decrease. 
A) break-even output remains the same. 
B) break-even output increases. 
C) break-even output decreases. 
D) fixed costs decrease.

Question 15

A marginal analysis of two or more possible courses of action takes into account:

Accepted Answer

A) all the revenue received from each course of action. 
B) all of the costs involved in each course of action. 
C) only the fixed costs involved in each course of action. 
D) only the costs that vary with each course of action. 
A) all the revenue received from each course of action. 
B) all of the costs involved in each course of action. 
C) only the fixed costs involved in each course of action. 
D) only the costs that vary with each course of action.

Question 16

If the sales output of a firm increases, what will be the impact on the break-even point?

Accepted Answer

A) Increase. 
B) Reduce. 
C) No change. 
D) Equal the margin of safety. 
A) Increase. 
B) Reduce. 
C) No change. 
D) Equal the margin of safety.

Question 17

How is the break-even point represented graphically?

Accepted Answer

A) the intersection of total costs and total revenue lines. 
B) starting at zero and increasing as a straight line as activity increases. 
C) starting at a given point and increasing as a straight line as activity increases. 
D) a horizontal line, staying the same irrespective of the level of activity. 
A) the intersection of total costs and total revenue lines. 
B) starting at zero and increasing as a straight line as activity increases. 
C) starting at a given point and increasing as a straight line as activity increases. 
D) a horizontal line, staying the same irrespective of the level of activity.

Question 18

Which is the approach to take in the short-run when considering the most efficient sales mix where there is a limiting factor?

Accepted Answer

A) Remove the limiting factor. 
B) The sales price per unit for each alternative. 
C) A comparison of the contribution margin per limiting factor for each alternative. 
D) A comparison of the contribution margin for each alternative. 
A) Remove the limiting factor. 
B) The sales price per unit for each alternative. 
C) A comparison of the contribution margin per limiting factor for each alternative. 
D) A comparison of the contribution margin for each alternative.

Question 19

Contribution per unit is best described as:

Accepted Answer

A) the difference between total costs per unit and revenue per unit. 
B) the difference between variable costs per unit and revenue per unit. 
C) the difference between semi-fixed costs per unit and revenue per unit. 
D) the difference between total fixed costs per unit and revenue per unit. 
A) the difference between total costs per unit and revenue per unit. 
B) the difference between variable costs per unit and revenue per unit. 
C) the difference between semi-fixed costs per unit and revenue per unit. 
D) the difference between total fixed costs per unit and revenue per unit.

Question 20

If total costs are $30,000 at an output of 2,000 units and $45,000 at an output of 3,500 units, and variable costs are $10 per unit, total fixed costs are:

Accepted Answer

A) $15,000 
B) $10,000 
C) $20,000 
D) $25,000 
A) $15,000 
B) $10,000 
C) $20,000 
D) $25,000

In which of these short-term decision areas are fixed costs generally irrelevant?

Semi-fixed costs are best defined as:

Sand Art has increased its selling price to $35. All other costs remain constant (variable costs $25 per pot and fixed costs $50,000). The number of pots that have to be sold to break even is:

Information necessary for decision-making includes:

The contribution margin is so called because it contributes to:

What does an operating loss indicate?

Which of these is a limitation in applying break-even analysis?

Sand Art sells ceramic pots. The pots sell for $30 each with variable costs totalling $25 per pot. Fixed costs are $50,000. The number of pots that have to be sold to break even is:

A business may prefer to make a product that it could subcontract at a cheaper price because:

Which of the following is an example of a semi-fixed (semi-variable)cost?

When contribution margin per unit increases:

A marginal analysis of two or more possible courses of action takes into account:

If the sales output of a firm increases, what will be the impact on the break-even point?

How is the break-even point represented graphically?

Which is the approach to take in the short-run when considering the most efficient sales mix where there is a limiting factor?

Contribution per unit is best described as:

If total costs are $30,000 at an output of 2,000 units and $45,000 at an output of 3,500 units, and variable costs are $10 per unit, total fixed costs are:

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters

Exam 9: Cost-Volume-Profit Analysis and Relevant Costing

In which of these short-term decision areas are fixed costs generally irrelevant?

Semi-fixed costs are best defined as:

Sand Art has increased its selling price to $35. All other costs remain constant (variable costs $25 per pot and fixed costs $50,000). The number of pots that have to be sold to break even is:

Information necessary for decision-making includes:

The contribution margin is so called because it contributes to:

What does an operating loss indicate?

Which of these is a limitation in applying break-even analysis?

Sand Art sells ceramic pots. The pots sell for $30 each with variable costs totalling $25 per pot. Fixed costs are $50,000. The number of pots that have to be sold to break even is:

A business may prefer to make a product that it could subcontract at a cheaper price because:

Which of the following is an example of a semi-fixed (semi-variable)cost?

When contribution margin per unit increases:

A marginal analysis of two or more possible courses of action takes into account:

If the sales output of a firm increases, what will be the impact on the break-even point?

How is the break-even point represented graphically?

Which is the approach to take in the short-run when considering the most efficient sales mix where there is a limiting factor?

Contribution per unit is best described as:

If total costs are $30,000 at an output of 2,000 units and $45,000 at an output of 3,500 units, and variable costs are $10 per unit, total fixed costs are:

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters