Question 1

The break-even point is when enough units are sold that total contribution margin equals total variable costs.

Accepted Answer

A) True 
 B)False  False

Question 2

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

Accepted Answer

A) True 
 B)False  True

Question 3

Hell Company has the following information available:   How many units must be sold to achieve the targeted net income?

Accepted Answer

A) 10,000 units 
B) 27,000 units 
C) 45,000 units 
D) 80,000 units 
A) 10,000 units 
B) 27,000 units 
C) 45,000 units 
D) 80,000 units D

Question 4

Sole Company manufactures running shoes.The selling price is $80 per pair (unit)and variable costs are $60 per pair(unit).The sales volume of $776,000 generates $100,750 of net income before taxes.
Required:
A)Compute total fixed costs.
B)Compute total variable costs.
C)Compute the break-even point in units.
D)Compute the quantity of units above the break-even point to reach targeted net income before taxes.

Accepted Answer

A)$776,000/ $80= 9,700 units @#IMG-DLM&

Question 5

Sizzling Company,a producer of electronic components,has the following information:   The break-even point in dollars is ________.

Accepted Answer

A) $150,000 
B) $180,000 
C) $225,000 
D) $270,000 
A) $150,000 
B) $180,000 
C) $225,000 
D) $270,000

Question 6

When analyzing costs,accountants should think of variable costs on a ________ basis and fixed costs on a ________ basis.

Accepted Answer

A) total; total 
B) per-unit; per-unit 
C) total; per-unit 
D) per-unit; total 
A) total; total 
B) per-unit; per-unit 
C) total; per-unit 
D) per-unit; total

Question 7

Medina Hospital has variable costs of 75% of total revenues and fixed costs of $40 million per year.There are 40,000 patient-days estimated for next year.What is the average daily revenue per patient necessary to breakeven?

Accepted Answer

A) $250 
B) $1,000 
C) $4,000 
D) $20,000 
A) $250 
B) $1,000 
C) $4,000 
D) $20,000

Question 8

Suppose a Holiday Inn Hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel.Average daily room rents are $50 per room and average variable costs are $10 for each room rented.It operates 365 days per year.If the hotel is one-half full throughout the entire year,what is the amount of net income for one year?

Accepted Answer

A) $(1,192,500) 
B) $990,000 
C) $1,590,000 
D) $2,737,500 
A) $(1,192,500) 
B) $990,000 
C) $1,590,000 
D) $2,737,500

Question 9

Company ZZZ has the following information available:   What is the expected operating income for a year?

Accepted Answer

A) $480,000 
B) $680,000 
C) $1,580,000 
D) none of the above 
A) $480,000 
B) $680,000 
C) $1,580,000 
D) none of the above

Question 10

Knotty Company sells desks at $480 per desk.The variable costs are $372 per desk.Total fixed costs for the period are $456,840.The break-even volume in dollars is ________.

Accepted Answer

A) $456,840 
B) $1,573,560 
C) $2,030,400 
D) none of these answers is correct 
A) $456,840 
B) $1,573,560 
C) $2,030,400 
D) none of these answers is correct

Question 11

Last year,XYZ Company sold 10,000 units that cost $40,000 to produce.This cost included $4,000 in fixed computer resource costs,$6,000 in fixed labor cost and $3.00 per unit for communications resource costs.XYZ Company expects to sell 20,000 units next year.Resource costs are expected to be in the same relevant range next year.What are the total estimated costs for next year?

Accepted Answer

A) $70,000 
B) $75,000 
C) $80,000 
D) $84,000 
A) $70,000 
B) $75,000 
C) $80,000 
D) $84,000

Question 12

HugME Company produces dolls.Each doll sells for $20.00.Variable costs per unit are $14.00 and total fixed costs for the period are $435,000.What is the break-even volume in dollars?

Accepted Answer

A) $435,000 
B) $621,429 
C) $1,023,529 
D) $1,450,000 
A) $435,000 
B) $621,429 
C) $1,023,529 
D) $1,450,000

Question 13

Which value chain function would use the following cost driver: number of advertisements?

Accepted Answer

A) production 
B) distribution 
C) marketing 
D) customer service 
A) production 
B) distribution 
C) marketing 
D) customer service

Question 14

A small margin of safety may indicate a risky situation.

Accepted Answer

A) True 
 B)False

Question 15

The following information is available for a company:   What is the contribution margin for this company?

Accepted Answer

A) $500,000 
B) $548,000 
C) $578,000 
D) $600,000 
A) $500,000 
B) $548,000 
C) $578,000 
D) $600,000

Question 16

Assume the following information for Andrew Company:   How many units must be sold to achieve the after-tax net income?

Accepted Answer

A) 6,040 
B) 7,400 
C) 7,770 
D) 7,800 
A) 6,040 
B) 7,400 
C) 7,770 
D) 7,800

Question 17

Key Company has a targeted sales volume of 62,300 units.Total fixed costs are $31,200.The contribution margin per unit is $1.20.What is targeted net income?

Accepted Answer

A) $31,200 
B) $37,440 
C) $43,560 
D) $74,760 
A) $31,200 
B) $37,440 
C) $43,560 
D) $74,760

Question 18

Which of the following is NOT an underlying assumption of cost-volume-profit analysis?

Accepted Answer

A) We can classify expenses into fixed and variable categories. 
B) Sales mix will be constant. 
C) Revenues and expenses are linear over the relevant range. 
D) There will be changes in efficiency or productivity. 
A) We can classify expenses into fixed and variable categories. 
B) Sales mix will be constant. 
C) Revenues and expenses are linear over the relevant range. 
D) There will be changes in efficiency or productivity.

Question 19

On Fire Company,a producer of electronic devices,has the following information:   The contribution-margin ratio is ________.

Accepted Answer

A) 30% 
B) 40% 
C) 60% 
D) 100% 
A) 30% 
B) 40% 
C) 60% 
D) 100%

Question 20

Highly leveraged companies have low fixed costs and high variable costs.

Accepted Answer

A) True 
 B)False

The break-even point is when enough units are sold that total contribution margin equals total variable costs.

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

Hell Company has the following information available: How many units must be sold to achieve the targeted net income?

Sizzling Company,a producer of electronic components,has the following information: The break-even point in dollars is ________.

When analyzing costs,accountants should think of variable costs on a basis and fixed costs on a basis.

Medina Hospital has variable costs of 75% of total revenues and fixed costs of $40 million per year.There are 40,000 patient-days estimated for next year.What is the average daily revenue per patient necessary to breakeven?

Company ZZZ has the following information available: What is the expected operating income for a year?

Knotty Company sells desks at $480 per desk.The variable costs are $372 per desk.Total fixed costs for the period are $456,840.The break-even volume in dollars is ________.

HugME Company produces dolls.Each doll sells for $20.00.Variable costs per unit are $14.00 and total fixed costs for the period are $435,000.What is the break-even volume in dollars?

Which value chain function would use the following cost driver: number of advertisements?

A small margin of safety may indicate a risky situation.

The following information is available for a company: What is the contribution margin for this company?

Assume the following information for Andrew Company: How many units must be sold to achieve the after-tax net income?

Key Company has a targeted sales volume of 62,300 units.Total fixed costs are $31,200.The contribution margin per unit is $1.20.What is targeted net income?

Which of the following is NOT an underlying assumption of cost-volume-profit analysis?

On Fire Company,a producer of electronic devices,has the following information: The contribution-margin ratio is ________.

Highly leveraged companies have low fixed costs and high variable costs.

Managerial Accounting, the Business Organization

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 2: Introduction to Cost Behavior and Cost-Volume Relationships

The break-even point is when enough units are sold that total contribution margin equals total variable costs.

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

Hell Company has the following information available: How many units must be sold to achieve the targeted net income?

Sizzling Company,a producer of electronic components,has the following information: The break-even point in dollars is ________.

When analyzing costs,accountants should think of variable costs on a ________ basis and fixed costs on a ________ basis.

Medina Hospital has variable costs of 75% of total revenues and fixed costs of $40 million per year.There are 40,000 patient-days estimated for next year.What is the average daily revenue per patient necessary to breakeven?

Company ZZZ has the following information available: What is the expected operating income for a year?

Knotty Company sells desks at $480 per desk.The variable costs are $372 per desk.Total fixed costs for the period are $456,840.The break-even volume in dollars is ________.

HugME Company produces dolls.Each doll sells for $20.00.Variable costs per unit are $14.00 and total fixed costs for the period are $435,000.What is the break-even volume in dollars?

Which value chain function would use the following cost driver: number of advertisements?

A small margin of safety may indicate a risky situation.

The following information is available for a company: What is the contribution margin for this company?

Assume the following information for Andrew Company: How many units must be sold to achieve the after-tax net income?

Key Company has a targeted sales volume of 62,300 units.Total fixed costs are $31,200.The contribution margin per unit is $1.20.What is targeted net income?

Which of the following is NOT an underlying assumption of cost-volume-profit analysis?

On Fire Company,a producer of electronic devices,has the following information: The contribution-margin ratio is ________.

Highly leveraged companies have low fixed costs and high variable costs.

Managerial Accounting, the Business Organization

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

When analyzing costs,accountants should think of variable costs on a basis and fixed costs on a basis.