Question 1

In defining a cost as fixed, the accountant must consider

Accepted Answer

A)  the variable costs. 
B)  the contribution margin. 
C)  the relevant range. 
D)  projected sales revenue. 
A)  the variable costs. 
B)  the contribution margin. 
C)  the relevant range. 
D)  projected sales revenue.

Question 2

A change in the tax rate will not affect the break-even point.

Accepted Answer

A) True 
 B)False

Question 3

As sales volume in units increases and all other relationships remain constant

Accepted Answer

A)  break-even increases. 
B)  break-even decreases. 
C)  total contribution margin decreases. 
D)  total contribution margin increases. 
A)  break-even increases. 
B)  break-even decreases. 
C)  total contribution margin decreases. 
D)  total contribution margin increases.

Question 4

Contribution margin

Accepted Answer

A)  is not the same as marginal income. 
B)  can be calculated as a ratio or per unit. 
C)  equals the sales price minus all the fixed expenses. 
D)  equals total fixed costs minus total variable costs. 
A)  is not the same as marginal income. 
B)  can be calculated as a ratio or per unit. 
C)  equals the sales price minus all the fixed expenses. 
D)  equals total fixed costs minus total variable costs.

Question 5

Assume the following cost information for Quayle Corporation:
  
-What is the break-even point in units?

Accepted Answer

A)  1,000 
B)  1,250 
C)  556 
D)  500 
A)  1,000 
B)  1,250 
C)  556 
D)  500

Question 6

Reese, Inc. produces pliers. Each pair of pliers sells for $8.00. Variable costs per unit total $5.60 of which $2.50 is for direct materials and $2.10 is for direct labour.
-If the break-even volume in sales dollars is $578,400, then the total fixed costs for the period must be

Accepted Answer

A)  $173,520. 
B)  $144,600. 
C)  $206,570. 
D)  $251,747. 
A)  $173,520. 
B)  $144,600. 
C)  $206,570. 
D)  $251,747.

Question 7

The volume of sales at which revenue equals expenses, and net income is zero is known as the break-even point.

Accepted Answer

A) True 
 B)False

Question 8

A firm's ratio of fixed and variable costs.

Accepted Answer

The answer of A firm's ratio of fixed and variable...

Question 9

The Orton Company produces two types of food processors. Information about the two products for 2006 is as follows:   The company expects fixed costs to be $150,000 in 2006. The firm expects 80% of its sales (in units) to be Regular model food processors.
a. Determine the break-even point in units.
b. Determine sales in units of Regular and Deluxe models necessary to generate a before-tax profit of $90,000.
c. Determine sales in units of Regular and Deluxe models necessary to generate an after-tax profit of $90,000 if the tax rate is 40 percent.

Accepted Answer

@#IMG-DLM& b. Sales in units n

Question 10

Wallace, Inc. produces squirt guns and has provided the following information:   The break-even point is 25,000 units.
Required:
a. Compute the selling price per unit.
b. Compute the contribution-margin ratio.
c. Compute the break-even volume in dollars.
d. Compute the margin of safety.

Accepted Answer

a. $100,000/25,000 = $4 + $10

Question 11

If the sales price per unit is $48.00, the total fixed costs are $67,500, and the break-even volume in dollar sales is $270,000, then the unit variable cost is

Accepted Answer

A)  $4.00. 
B)  $6.33. 
C)  $12.00. 
D)  $36.00. 
A)  $4.00. 
B)  $6.33. 
C)  $12.00. 
D)  $36.00.

Question 12

The Isbit Company has developed the following income statement using a contribution margin format.   The projected income statement was based upon sales of 10,000 units. Anton has the capacity to produce 15,000 units during the year.
a. Determine the break-even point in units.
b. Calculate the margin of safety in dollars.
c. The sales manager believes the company could increase sales by 1,000 units if advertising expenditures are increased by $16,000. Should the company increase advertising expenditures?
d. What is the maximum amount the company could pay for advertising if the advertising would increase sales by 1,000 units?
e. Management believes that by lowering the selling price to $17 per unit, the company can increase sales by 2,000 units. Based upon these estimates, would it be profitable for the company to lower its selling price?

Accepted Answer

a. Breakeven in Units = Fixed Costs/Cont

Question 13

A variable cost varies per unit.

Accepted Answer

A) True 
 B)False

Question 14

The way in which the activities of an organization affect its costs is called cost behaviour.

Accepted Answer

A) True 
 B)False

Question 15

Hampton Company, a producer of computer disks, has the following information:
  
-Which of the following is NOT an underlying assumption of the cost-volume-profit graph?

Accepted Answer

A)  Expenses are categorized into variable and fixed. 
B)  Sales mix will not be constant. 
C)  Revenues and expenses are linear over the relevant range. 
D)  Efficiency and productivity will be unchanged. 
A)  Expenses are categorized into variable and fixed. 
B)  Sales mix will not be constant. 
C)  Revenues and expenses are linear over the relevant range. 
D)  Efficiency and productivity will be unchanged.

Question 16

Activities that affect costs are often called

Accepted Answer

A)  cost drivers. 
B)  stages of production. 
C)  fixed activities. 
D)  variable activities. 
A)  cost drivers. 
B)  stages of production. 
C)  fixed activities. 
D)  variable activities.

Question 17

Assume the following cost information for Quayle Corporation:
  
-What is the number of units that must be sold to earn an after-tax net income of $25,500?

Accepted Answer

A)  3,700 
B)  2,313 
C)  1,594 
D)  1,063 
A)  3,700 
B)  2,313 
C)  1,594 
D)  1,063

Question 18

The change in total results under a new condition, in comparison with some given or known condition, is the definition of

Accepted Answer

A)  incremental. 
B)  detrimental. 
C)  conditional. 
D)  comparability. 
A)  incremental. 
B)  detrimental. 
C)  conditional. 
D)  comparability.

Question 19

Use the following information to answer the next question(s).
  
-If the tax rate is 40 percent, how many units must be sold to earn an after-tax profit of $60,000?

Accepted Answer

A)  4,000 
B)  1,500 
C)  2,640 
D)  2,546 
A)  4,000 
B)  1,500 
C)  2,640 
D)  2,546

Question 20

Assume the following cost information for Quayle Corporation:
  
-What volume of sales dollars is required to earn an after-tax net income of $15,000?

Accepted Answer

A)  $196,875 
B)  $157,500 
C)  $135,000 
D)  $168,750 
A)  $196,875 
B)  $157,500 
C)  $135,000 
D)  $168,750

In defining a cost as fixed, the accountant must consider

A change in the tax rate will not affect the break-even point.

As sales volume in units increases and all other relationships remain constant

Contribution margin

Assume the following cost information for Quayle Corporation: -What is the break-even point in units?

Reese, Inc. produces pliers. Each pair of pliers sells for $8.00. Variable costs per unit total $5.60 of which $2.50 is for direct materials and $2.10 is for direct labour. -If the break-even volume in sales dollars is $578,400, then the total fixed costs for the period must be

The volume of sales at which revenue equals expenses, and net income is zero is known as the break-even point.

A firm's ratio of fixed and variable costs.

Wallace, Inc. produces squirt guns and has provided the following information: The break-even point is 25,000 units. Required: a. Compute the selling price per unit. b. Compute the contribution-margin ratio. c. Compute the break-even volume in dollars. d. Compute the margin of safety.

If the sales price per unit is $48.00, the total fixed costs are $67,500, and the break-even volume in dollar sales is $270,000, then the unit variable cost is

A variable cost varies per unit.

The way in which the activities of an organization affect its costs is called cost behaviour.

Hampton Company, a producer of computer disks, has the following information: -Which of the following is NOT an underlying assumption of the cost-volume-profit graph?

Activities that affect costs are often called

Assume the following cost information for Quayle Corporation: -What is the number of units that must be sold to earn an after-tax net income of $25,500?

The change in total results under a new condition, in comparison with some given or known condition, is the definition of

Use the following information to answer the next question(s). -If the tax rate is 40 percent, how many units must be sold to earn an after-tax profit of $60,000?

Assume the following cost information for Quayle Corporation: -What volume of sales dollars is required to earn an after-tax net income of $15,000?

Management Accounting and Management Decisions

Measurement of Cost Behaviour

Cost Management Systems

Cost Allocation and Activity-Based Costing Systems

Job-Costing Systems

Process-Costing Systems

Relevant Information and Decision Making: Marketing Decisions

Relevant Information and Decision Making: Production Decisions

Capital Budgeting Decisions

The Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems, the Balanced Scorecard, and Responsibility Accounting

Management Control in Decentralized Organizations

Filters

Exam 2: Cost Behaviour and Cost-Volume Relationships

In defining a cost as fixed, the accountant must consider

A change in the tax rate will not affect the break-even point.

As sales volume in units increases and all other relationships remain constant

Contribution margin

Assume the following cost information for Quayle Corporation: -What is the break-even point in units?

Reese, Inc. produces pliers. Each pair of pliers sells for $8.00. Variable costs per unit total $5.60 of which $2.50 is for direct materials and $2.10 is for direct labour. -If the break-even volume in sales dollars is $578,400, then the total fixed costs for the period must be

The volume of sales at which revenue equals expenses, and net income is zero is known as the break-even point.

A firm's ratio of fixed and variable costs.

Wallace, Inc. produces squirt guns and has provided the following information: The break-even point is 25,000 units. Required: a. Compute the selling price per unit. b. Compute the contribution-margin ratio. c. Compute the break-even volume in dollars. d. Compute the margin of safety.

If the sales price per unit is $48.00, the total fixed costs are $67,500, and the break-even volume in dollar sales is $270,000, then the unit variable cost is

A variable cost varies per unit.

The way in which the activities of an organization affect its costs is called cost behaviour.

Hampton Company, a producer of computer disks, has the following information: -Which of the following is NOT an underlying assumption of the cost-volume-profit graph?

Activities that affect costs are often called

Assume the following cost information for Quayle Corporation: -What is the number of units that must be sold to earn an after-tax net income of $25,500?

The change in total results under a new condition, in comparison with some given or known condition, is the definition of

Use the following information to answer the next question(s). -If the tax rate is 40 percent, how many units must be sold to earn an after-tax profit of $60,000?

Assume the following cost information for Quayle Corporation: -What volume of sales dollars is required to earn an after-tax net income of $15,000?

Management Accounting and Management Decisions

Measurement of Cost Behaviour

Cost Management Systems

Cost Allocation and Activity-Based Costing Systems

Job-Costing Systems

Process-Costing Systems

Relevant Information and Decision Making: Marketing Decisions

Relevant Information and Decision Making: Production Decisions

Capital Budgeting Decisions

The Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems, the Balanced Scorecard, and Responsibility Accounting

Management Control in Decentralized Organizations

Filters