Question 1

Step costs change abruptly at different levels of cost-driver activity.

Accepted Answer

A) True 
 B)False

Question 2

Abbott 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)  $589,471 
C)  $1,573,560 
D)  $2,030,400 
A)  $456,840 
B)  $589,471 
C)  $1,573,560 
D)  $2,030,400

Question 3

Kaprelian Company sells desks at $480 per desk.The variable costs are $300 per desk.Total fixed costs for the period are $400,000.The contribution margin ratio is ________.

Accepted Answer

A)  22.5% 
B)  37.5% 
C)  40.6% 
D)  62.5% 
A)  22.5% 
B)  37.5% 
C)  40.6% 
D)  62.5%

Question 4

If individual cost steps are uniform and the decision being made spans a number of steps,the step costs are treated as a ________.

Accepted Answer

A)  fixed cost 
B)  mixed cost 
C)  incremental cost 
D)  variable cost 
A)  fixed cost 
B)  mixed cost 
C)  incremental cost 
D)  variable cost

Question 5

If the proportions of different products sold in a sales mix change,the ________.

Accepted Answer

A)  contribution margin per unit for each product increases 
B)  break-even point will change 
C)  contribution margin per unit for each product decreases 
D)  net income will not change 
A)  contribution margin per unit for each product increases 
B)  break-even point will change 
C)  contribution margin per unit for each product decreases 
D)  net income will not change

Question 6

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 7

Total fixed costs increase when the cost-driver level increases in the relevant range.

Accepted Answer

A) True 
 B)False

Question 8

As the cost-driver level increases in the relevant range,variable costs per unit of cost driver ________ but total variable costs ________.

Accepted Answer

A)  do not change; increase in direct proportion to the cost-driver activity level 
B)  do not change; decrease in direct proportion to the cost-driver activity level 
C)  increase; do not change 
D)  decrease; do not change 
A)  do not change; increase in direct proportion to the cost-driver activity level 
B)  do not change; decrease in direct proportion to the cost-driver activity level 
C)  increase; do not change 
D)  decrease; do not change

Question 9

What happens when the cost-driver level increases within the relevant range?

Accepted Answer

A)  Total fixed costs remain unchanged. 
B)  Fixed costs per unit of cost driver increase. 
C)  Total variable costs decrease. 
D)  Variable costs per unit of cost driver increase. 
A)  Total fixed costs remain unchanged. 
B)  Fixed costs per unit of cost driver increase. 
C)  Total variable costs decrease. 
D)  Variable costs per unit of cost driver increase.

Question 10

Assume the sales price is $34 per unit and the variable cost is $19 per unit.The break-even point is 12,000 units.What are total fixed costs?

Accepted Answer

A)  $180,000 
B)  $190,000 
C)  $340,000 
D)  $530,000 
A)  $180,000 
B)  $190,000 
C)  $340,000 
D)  $530,000

Question 11

If the variable cost per unit increases,what is the effect on the break-even point? (Assume no other changes.)

Accepted Answer

A)  The break-even point increases. 
B)  The break-even point decreases. 
C)  The break-even point remains the same. 
D)  The break-even point is zero. 
A)  The break-even point increases. 
B)  The break-even point decreases. 
C)  The break-even point remains the same. 
D)  The break-even point is zero.

Question 12

Assume the following information for two products,Hawaii Fantasy and Hawaii Joy.
$\begin{array}{lll}&\text { Hawaii Fantasy }&\text { Hawaii joy }\
\text { Sales mix } & 2 \text { units } & 1 \text { unit } \
\text { Selling price per unit } & \$ 15 & \$ 100 \
\text { Variable cost per unit } & \$ 10 & \$ 40
\end{array}$
Fixed expenses total $490,000 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)  7,000 units of Hawaii Fantasy and 14,000 units of Hawaii Joy 
C)  18,300 units of Hawaii Fantasy and 4,575 units of Hawaii Joy 
D)  14,000 units of Hawaii Fantasy and 7,000 units of Hawaii Joy 
A)  4,575 units of Hawaii Fantasy and 18,300 units of Hawaii Joy 
B)  7,000 units of Hawaii Fantasy and 14,000 units of Hawaii Joy 
C)  18,300 units of Hawaii Fantasy and 4,575 units of Hawaii Joy 
D)  14,000 units of Hawaii Fantasy and 7,000 units of Hawaii Joy

Question 13

Janitors clean the factory with scrubbing machines and polishing machines.Scrubbing machines scrub the factory floor and polishing machines polish the floor.The cost associated with cleaning the factory is treated as a product cost.What is a good cost driver for the Depreciation Expense associated with the scrubbing and polishing machines?

Accepted Answer

A)  number of janitors operating machines 
B)  number of labor hours put in by janitors 
C)  number of kilowatt hours used 
D)  number of machine hours used 
A)  number of janitors operating machines 
B)  number of labor hours put in by janitors 
C)  number of kilowatt hours used 
D)  number of machine hours used

Question 14

Total variable costs increase when the cost-driver level increases in the relevant range.

Accepted Answer

A) True 
 B)False

Question 15

Lakers Company produces two products.The following information is available:
 $\begin{array}{lll}&\text { Product X }&\text { Product Y }\
\text { Selling price per unit } & \$ 46 & \$ 36 \
\text { Variable cost per unit } & \$ 38 & \$ 24
\end{array}$ 
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 16

Assume the following facts:
$\begin{array}{ll}
\text { Sales price }&\$180 \text { per unit }\
\text { Variable cost }&\$100\text { per unit }\
\text { Total fixed costs } & \$ 39,600 \
\text { Targeted net income } & \$ 52,800
\end{array}$
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 17

Assume the sales price is $100 per unit and the variable cost is $75 per unit.Total fixed costs are $150,000.Then the break-even volume in dollar sales is ________.

Accepted Answer

A)  $1,500 
B)  $150,000 
C)  $200,000 
D)  $600,000 
A)  $1,500 
B)  $150,000 
C)  $200,000 
D)  $600,000

Question 18

If the selling price per unit increases,what is the effect on the break-even point? (Assume no other changes.)

Accepted Answer

A)  The break-even point increases. 
B)  The break-even point decreases. 
C)  The break-even point remains the same. 
D)  The break-even point is zero. 
A)  The break-even point increases. 
B)  The break-even point decreases. 
C)  The break-even point remains the same. 
D)  The break-even point is zero.

Question 19

Falls Company has budgeted sales of $120,000 based on 80,000 units.The margin of safety is $1,000.What is the break-even point in dollars?

Accepted Answer

A)  $81,000 
B)  $119,000 
C)  $120,000 
D)  $121,000 
A)  $81,000 
B)  $119,000 
C)  $120,000 
D)  $121,000

Question 20

Christian Corporation sells desks at $480 per desk.The variable costs are $300 per desk.Total fixed costs for the period are $540,000.The break-even point in desks is ________.

Accepted Answer

A)  1,125 
B)  1,800 
C)  3,000 
D)  4,230 
A)  1,125 
B)  1,800 
C)  3,000 
D)  4,230

Step costs change abruptly at different levels of cost-driver activity.

Abbott 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 ________.

Kaprelian Company sells desks at $480 per desk.The variable costs are $300 per desk.Total fixed costs for the period are $400,000.The contribution margin ratio is ________.

If individual cost steps are uniform and the decision being made spans a number of steps,the step costs are treated as a ________.

If the proportions of different products sold in a sales mix change,the ________.

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?

Total fixed costs increase when the cost-driver level increases in the relevant range.

As the cost-driver level increases in the relevant range,variable costs per unit of cost driver but total variable costs .

What happens when the cost-driver level increases within the relevant range?

Assume the sales price is $34 per unit and the variable cost is $19 per unit.The break-even point is 12,000 units.What are total fixed costs?

If the variable cost per unit increases,what is the effect on the break-even point? (Assume no other changes.)

Assume the following information for two products,Hawaii Fantasy and Hawaii Joy. Hawaii Fantasy Hawaii joy Sales mix 2 units 1 unit Selling price per unit \ 15 \ 100 Variable cost per unit \ 10 \ 40 Fixed expenses total $490,000 per year.What is the breakeven point in units for each product?

Total variable costs increase when the cost-driver level increases in the relevant range.

Assume the following facts: Sales price \1 80 per unit Variable cost \1 00 per unit Total fixed costs \ 39,600 Targeted net income \ 52,800 How many units must be sold to achieve the targeted net income?

Assume the sales price is $100 per unit and the variable cost is $75 per unit.Total fixed costs are $150,000.Then the break-even volume in dollar sales is ________.

If the selling price per unit increases,what is the effect on the break-even point? (Assume no other changes.)

Falls Company has budgeted sales of $120,000 based on 80,000 units.The margin of safety is $1,000.What is the break-even point in dollars?

Christian Corporation sells desks at $480 per desk.The variable costs are $300 per desk.Total fixed costs for the period are $540,000.The break-even point in desks is ________.

Managerial Accounting,the Business Organization,and Professional Ethics

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

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 Profit Relationships

Step costs change abruptly at different levels of cost-driver activity.

Abbott 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 ________.

Kaprelian Company sells desks at $480 per desk.The variable costs are $300 per desk.Total fixed costs for the period are $400,000.The contribution margin ratio is ________.

If individual cost steps are uniform and the decision being made spans a number of steps,the step costs are treated as a ________.

If the proportions of different products sold in a sales mix change,the ________.

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?

Total fixed costs increase when the cost-driver level increases in the relevant range.

As the cost-driver level increases in the relevant range,variable costs per unit of cost driver ________ but total variable costs ________.

What happens when the cost-driver level increases within the relevant range?

Assume the sales price is $34 per unit and the variable cost is $19 per unit.The break-even point is 12,000 units.What are total fixed costs?

If the variable cost per unit increases,what is the effect on the break-even point? (Assume no other changes.)

Assume the following information for two products,Hawaii Fantasy and Hawaii Joy. Hawaii Fantasy Hawaii joy Sales mix 2 units 1 unit Selling price per unit \ 15 \ 100 Variable cost per unit \ 10 \ 40 Fixed expenses total $490,000 per year.What is the breakeven point in units for each product?

Total variable costs increase when the cost-driver level increases in the relevant range.

Assume the following facts: Sales price \1 80 per unit Variable cost \1 00 per unit Total fixed costs \ 39,600 Targeted net income \ 52,800 How many units must be sold to achieve the targeted net income?

Assume the sales price is $100 per unit and the variable cost is $75 per unit.Total fixed costs are $150,000.Then the break-even volume in dollar sales is ________.

If the selling price per unit increases,what is the effect on the break-even point? (Assume no other changes.)

Falls Company has budgeted sales of $120,000 based on 80,000 units.The margin of safety is $1,000.What is the break-even point in dollars?

Christian Corporation sells desks at $480 per desk.The variable costs are $300 per desk.Total fixed costs for the period are $540,000.The break-even point in desks is ________.

Managerial Accounting,the Business Organization,and Professional Ethics

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

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

As the cost-driver level increases in the relevant range,variable costs per unit of cost driver but total variable costs .