Question 1

Assume the following facts:   How many units must be sold to achieve the targeted net income?

Accepted Answer

A) 513 
B) 629 
C) 963 
D) 1,155 
A) 513 
B) 629 
C) 963 
D) 1,155

Question 2

Zachary Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000 and the contribution margin is $6.00 per unit.Zachary's tax rate is 40%.The number of units that must be sold to breakeven is ________.

Accepted Answer

A) 14,000 
B) 17,000 
C) 19,000 
D) 21,500 
A) 14,000 
B) 17,000 
C) 19,000 
D) 21,500

Question 3

An industry that has a high contribution-margin percentage is the airlines.

Accepted Answer

A) True 
 B)False

Question 4

The horizontal axis on the cost-volume-profit graph is the ________.

Accepted Answer

A) dollars of cost 
B) sales volume in units 
C) dollars of revenue 
D) net income 
A) dollars of cost 
B) sales volume in units 
C) dollars of revenue 
D) net income

Question 5

An assumption of the CVP analysis is that the sales mix can fluctuate.

Accepted Answer

A) True 
 B)False

Question 6

Assume the following information for Janice Company:   If fixed costs increased by 10% and management wanted to maintain the original break-even point,then the selling price per unit would have to be increased to ________.

Accepted Answer

A) $150.40 
B) $155.20 
C) $158.40 
D) $208.00 
A) $150.40 
B) $155.20 
C) $158.40 
D) $208.00

Question 7

Explosion Company produces one type of product.Total fixed costs are $100,000.Unit variable costs are $6.00.The break-even point is 25,000 units.Planned unit sales are 30,000.
Required:
A)Compute the selling price per unit.
B)Compute the contribution-margin ratio.
C)Compute the break-even volume in dollars.

Accepted Answer

A)$100,000 = 25,000

Question 8

Gross margin is the same as contribution margin for most companies.

Accepted Answer

A) True 
 B)False

Question 9

Assume ZZZ Company has the following information available:   If fixed costs increase $200,000,what is the break-even point in units?

Accepted Answer

A) 11,273 
B) 12,000 
C) 13,000 
D) none of the above 
A) 11,273 
B) 12,000 
C) 13,000 
D) none of the above

Question 10

The Love Company has provided the following information:
   Required: 
A)Compute the break-even point in units.
B)Compute the sales volume in units necessary to generate an after-tax net income of $10,000.
C)Compute the sales volume in units necessary to generate an after-tax net income of $20,000.

Accepted Answer

A)46,200/($6.60 - $5.28)= 35,000 units $

Question 11

Assume the following information for two products,Hawaii Fantasy and Hawaii Joy.   Fixed expenses total $475,800 per year.What is the breakeven point in units for each product?

Accepted Answer

A) 4,575 units of Hawaii Fantasy and 18,300 units of Hawaii Joy 
B) 18,300 units of Hawaii Fantasy and 18,300 units of Hawaii Joy 
C) 18,300 units of Hawaii Fantasy and 4,575 units of Hawaii Joy 
D) none of the above 
A) 4,575 units of Hawaii Fantasy and 18,300 units of Hawaii Joy 
B) 18,300 units of Hawaii Fantasy and 18,300 units of Hawaii Joy 
C) 18,300 units of Hawaii Fantasy and 4,575 units of Hawaii Joy 
D) none of the above

Question 12

Strongsville Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000 and the contribution margin is $6.00 per unit.Strongsville's tax rate is 40%.The number of units that must be sold to earn the targeted net income is ________.

Accepted Answer

A) 14,000 
B) 17,000 
C) 19,000 
D) 21,500 
A) 14,000 
B) 17,000 
C) 19,000 
D) 21,500

Question 13

Deadwood Hospital has variable costs of 50% of total revenues and fixed costs of $40 million per year.There are 40,000 patient-days estimated for the next year.The break-even point expressed in total revenue is ________.

Accepted Answer

A) $10 million 
B) $40 million 
C) $80 million 
D) $90 million 
A) $10 million 
B) $40 million 
C) $80 million 
D) $90 million

Question 14

Lakers Company produces two products.The following information is available:
   Total fixed costs are $234,000.Lakers plans to sell 21,000 units of Product X and 7,000 units of Product Y.
Required: 
A)Compute the contribution margin for each product.
B)What is the expected net income?
C)Assume the sales mix is 3 units of Product X for every 1 unit of Product Y.
What is the break-even point in units for each product?
D)Assume the sales mix is 3 units of Product X for every 2 units of Product Y.
What is the break-even point in units for each product?

Accepted Answer

A)Product X: Contribution margin = $46 -

Question 15

The relevant range is the limit of cost-driver level within which a specific relationship between costs and the cost driver is valid.

Accepted Answer

A) True 
 B)False

Question 16

Costs may behave in a linear or a nonlinear manner.

Accepted Answer

A) True 
 B)False

Question 17

Frances Company produces only one product.The selling price is $95 per unit and the variable cost is $65 per unit.Total fixed costs are $130,000.
Required:
A)Compute break-even point in units.
B)Compute break-even volume in dollars.

Accepted Answer

A)$130,00/($95 -$65)

Question 18

With very short time spans,more costs are fixed and fewer are variable.

Accepted Answer

A) True 
 B)False

Question 19

What action will decrease a company's break-even point?

Accepted Answer

A) reducing total fixed costs 
B) decreasing contribution margin per unit 
C) increasing variable cost per unit 
D) decreasing the selling price per unit 
A) reducing total fixed costs 
B) decreasing contribution margin per unit 
C) increasing variable cost per unit 
D) decreasing the selling price per unit

Question 20

Walnut Corporation sells desks at $480 per desk.The variable costs associated with each desk are $372.Total fixed costs for the period are $456,840.The contribution margin per desk is ________.

Accepted Answer

A) $51 
B) $108 
C) $126 
D) $195 
A) $51 
B) $108 
C) $126 
D) $195

Assume the following facts: How many units must be sold to achieve the targeted net income?

Zachary Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000 and the contribution margin is $6.00 per unit.Zachary's tax rate is 40%.The number of units that must be sold to breakeven is ________.

An industry that has a high contribution-margin percentage is the airlines.

The horizontal axis on the cost-volume-profit graph is the ________.

An assumption of the CVP analysis is that the sales mix can fluctuate.

Assume the following information for Janice Company: If fixed costs increased by 10% and management wanted to maintain the original break-even point,then the selling price per unit would have to be increased to ________.

Gross margin is the same as contribution margin for most companies.

Assume ZZZ Company has the following information available: If fixed costs increase $200,000,what is the break-even point in units?

The Love Company has provided the following information: Required: A)Compute the break-even point in units. B)Compute the sales volume in units necessary to generate an after-tax net income of $10,000. C)Compute the sales volume in units necessary to generate an after-tax net income of $20,000.

Assume the following information for two products,Hawaii Fantasy and Hawaii Joy. Fixed expenses total $475,800 per year.What is the breakeven point in units for each product?

Strongsville Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000 and the contribution margin is $6.00 per unit.Strongsville's tax rate is 40%.The number of units that must be sold to earn the targeted net income is ________.

Deadwood Hospital has variable costs of 50% of total revenues and fixed costs of $40 million per year.There are 40,000 patient-days estimated for the next year.The break-even point expressed in total revenue is ________.

The relevant range is the limit of cost-driver level within which a specific relationship between costs and the cost driver is valid.

Costs may behave in a linear or a nonlinear manner.

Frances Company produces only one product.The selling price is $95 per unit and the variable cost is $65 per unit.Total fixed costs are $130,000. Required: A)Compute break-even point in units. B)Compute break-even volume in dollars.

With very short time spans,more costs are fixed and fewer are variable.

What action will decrease a company's break-even point?

Walnut Corporation sells desks at $480 per desk.The variable costs associated with each desk are $372.Total fixed costs for the period are $456,840.The contribution margin per desk is ________.

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

Assume the following facts: How many units must be sold to achieve the targeted net income?

Zachary Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000 and the contribution margin is $6.00 per unit.Zachary's tax rate is 40%.The number of units that must be sold to breakeven is ________.

An industry that has a high contribution-margin percentage is the airlines.

The horizontal axis on the cost-volume-profit graph is the ________.

An assumption of the CVP analysis is that the sales mix can fluctuate.

Assume the following information for Janice Company: If fixed costs increased by 10% and management wanted to maintain the original break-even point,then the selling price per unit would have to be increased to ________.

Gross margin is the same as contribution margin for most companies.

Assume ZZZ Company has the following information available: If fixed costs increase $200,000,what is the break-even point in units?

The Love Company has provided the following information: Required: A)Compute the break-even point in units. B)Compute the sales volume in units necessary to generate an after-tax net income of $10,000. C)Compute the sales volume in units necessary to generate an after-tax net income of $20,000.

Assume the following information for two products,Hawaii Fantasy and Hawaii Joy. Fixed expenses total $475,800 per year.What is the breakeven point in units for each product?

Strongsville Company wishes to earn after-tax net income of $18,000.Total fixed costs are $84,000 and the contribution margin is $6.00 per unit.Strongsville's tax rate is 40%.The number of units that must be sold to earn the targeted net income is ________.

Deadwood Hospital has variable costs of 50% of total revenues and fixed costs of $40 million per year.There are 40,000 patient-days estimated for the next year.The break-even point expressed in total revenue is ________.

The relevant range is the limit of cost-driver level within which a specific relationship between costs and the cost driver is valid.

Costs may behave in a linear or a nonlinear manner.

Frances Company produces only one product.The selling price is $95 per unit and the variable cost is $65 per unit.Total fixed costs are $130,000. Required: A)Compute break-even point in units. B)Compute break-even volume in dollars.

With very short time spans,more costs are fixed and fewer are variable.

What action will decrease a company's break-even point?

Walnut Corporation sells desks at $480 per desk.The variable costs associated with each desk are $372.Total fixed costs for the period are $456,840.The contribution margin per desk is ________.

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