Question 1

Cost drivers are ________.

Accepted Answer

A)  the different functions in the value chain 
B)  different types of functional areas in the firm 
C)  measures of activities that require the use of resources and thereby cause costs 
D)  different types of cost calculations 
A)  the different functions in the value chain 
B)  different types of functional areas in the firm 
C)  measures of activities that require the use of resources and thereby cause costs 
D)  different types of cost calculations

Question 2

Wetzel Company has variable costs of $5 per unit and a selling price of $10 per unit.Fixed costs are $200,000.Planned unit sales for 2015 are 45,000 units.Actual unit sales for 2014 were 42,000.What is the margin of safety in units for 2015?

Accepted Answer

A)  2,000 units 
B)  3,000 units 
C)  5,000 units 
D)  7,000 units 
A)  2,000 units 
B)  3,000 units 
C)  5,000 units 
D)  7,000 units

Question 3

The sales mix is the relative proportions or combinations of quantities of different products that constitute total sales.

Accepted Answer

A) True 
 B)False

Question 4

A compensation plan where the sales force is paid salary plus commission is a ________.

Accepted Answer

A)  purely variable cost 
B)  mixed cost 
C)  step cost 
D)  fixed cost 
A)  purely variable cost 
B)  mixed cost 
C)  step cost 
D)  fixed cost

Question 5

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 6

On a cost-volume-profit graph,when the Total Cost line is higher than the Total Revenue line,the difference represents ________.

Accepted Answer

A)  net income 
B)  a positive return on the investment 
C)  a net loss 
D)  not enough information is presented 
A)  net income 
B)  a positive return on the investment 
C)  a net loss 
D)  not enough information is presented

Question 7

Yemen Company has the following information available:
$\begin{array} { l  }
 \text {Selling price per unit }&\$100\
 \text {Variable cost per unit }&\$45\
 \text { Fixed costs per year}&\$420,000\
 \text {Expected sales per year (units) }&20,000\
\end{array}$

If variable costs increase to $65 per unit and fixed costs increase by $200,000,what is the break-even point in units?

Accepted Answer

A)  11,273 
B)  12,000 
C)  20,000 
D)  17,714 
A)  11,273 
B)  12,000 
C)  20,000 
D)  17,714

Question 8

The Todd Dolhun Company has the following information available:
$\begin{array}{ll}\text { Targeted after-tax net income }&\$120,000\
\text { Total fixed costs } & \$ 300,000 \
\text { Contribution margin per unit } & \$ 2 \
\text { Taxrate } & 40 \%
\end{array}$
How many units should be sold to achieve the targeted after-tax net income?

Accepted Answer

A)  180,000 
B)  210,000 
C)  250,000 
D)  300,000 
A)  180,000 
B)  210,000 
C)  250,000 
D)  300,000

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Why is it important to identify the most appropriate cost drivers for a particular product?

Accepted Answer

A)  so managers can identify the activities necessary to manufacture a product 
B)  so managers can control product costs better 
C)  so managers can predict product costs better and make better decisions 
D)  B and C 
A)  so managers can identify the activities necessary to manufacture a product 
B)  so managers can control product costs better 
C)  so managers can predict product costs better and make better decisions 
D)  B and C

Question 11

Which of the following costs is a fixed cost?

Accepted Answer

A)  cost of dairy ingredients used to produce ice cream 
B)  depreciation expense on factory building 
C)  fuel used by delivery trucks 
D)  labor wages of workers who mix dairy ingredients to make ice cream 
A)  cost of dairy ingredients used to produce ice cream 
B)  depreciation expense on factory building 
C)  fuel used by delivery trucks 
D)  labor wages of workers who mix dairy ingredients to make ice cream

Question 12

The contribution margin per unit of a given product guides managers when deciding which product to emphasize in a sales mix.

Accepted Answer

A) True 
 B)False

Question 13

A small margin of safety may indicate a risky situation.

Accepted Answer

A) True 
 B)False

Question 14

Assume Mussa Company has the following information available:
$\begin{array} { l  }
 \text {Selling price per unit }&\$100\
 \text {Variable cost per unit }&\$45\
 \text { Fixed costs per year}&\$420,000\
 \text {Expected sales per year (units) }&20,000\
\end{array}$

If fixed costs increase by $200,000,what is the expected operating income?

Accepted Answer

A)  $280,000 
B)  $480,000 
C)  $680,000 
D)  $1,380,000 
A)  $280,000 
B)  $480,000 
C)  $680,000 
D)  $1,380,000

Question 15

What does the margin of safety in units measure?

Accepted Answer

A)  how far fixed costs can rise before an operating loss occurs 
B)  how far variable costs can rise before an operating loss occurs 
C)  how far total costs can rise before an operating loss occurs 
D)  how far sales can fall before an operating loss occurs 
A)  how far fixed costs can rise before an operating loss occurs 
B)  how far variable costs can rise before an operating loss occurs 
C)  how far total costs can rise before an operating loss occurs 
D)  how far sales can fall before an operating loss occurs

Question 16

Assume Unicorn Company has the following information available:
$\begin{array} { l  }
 \text {Selling price per unit }&\$100\
 \text { Variable cost per unit }&\$45\
 \text { Fixed costs per year}&\$420,000\
 \text { Expected sales per year}&20,000 \text { units }\
\end{array}$

If variable costs increase to $65 per unit,what is the expected net income for one year?

Accepted Answer

A)  $280,000 
B)  $700,000 
C)  $880,000 
D)  $1,580,000 
A)  $280,000 
B)  $700,000 
C)  $880,000 
D)  $1,580,000

Question 17

Benjamin Company has the following information available:
$\begin{array}{ll}
\text { Income tax rate } & 30 \% \
\text { Selling price per unit } & \$ 5.00 \
\text { Variable cost per unit } & \$ 3.00\
\text { Total fixed costs }&\$90,000.00
\end{array}$
If Benjamin Company wants a targeted after-tax net income of $14,000,how many units must be sold?

Accepted Answer

A)  45,000 
B)  52,000 
C)  55,000 
D)  60,000 
A)  45,000 
B)  52,000 
C)  55,000 
D)  60,000

Question 18

The CVP graph shows how costs behave over different relevant ranges.

Accepted Answer

A) True 
 B)False

Question 19

The degree of operating leverage for Geesling Company is 8.0 at 80,000 units of sales.At 80,000 units of sales,the net profit is $10,000.If the sales volume increases to 90,000 units,what is the net profit?

Accepted Answer

A)  $12,000 
B)  $20,000 
C)  $22,222 
D)  $80,000 
A)  $12,000 
B)  $20,000 
C)  $22,222 
D)  $80,000

Question 20

As cost-driver level increases in the relevant range,a fixed cost does not change ________,but the fixed cost ________ becomes progressively smaller.

Accepted Answer

A)  per unit of cost driver; total 
B)  in total; per unit of cost driver 
C)  per-unit; per unit of cost driver 
D)  in total; per year 
A)  per unit of cost driver; total 
B)  in total; per unit of cost driver 
C)  per-unit; per unit of cost driver 
D)  in total; per year

Cost drivers are ________.

Wetzel Company has variable costs of $5 per unit and a selling price of $10 per unit.Fixed costs are $200,000.Planned unit sales for 2015 are 45,000 units.Actual unit sales for 2014 were 42,000.What is the margin of safety in units for 2015?

The sales mix is the relative proportions or combinations of quantities of different products that constitute total sales.

A compensation plan where the sales force is paid salary plus commission is a ________.

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

On a cost-volume-profit graph,when the Total Cost line is higher than the Total Revenue line,the difference represents ________.

Yemen Company has the following information available: Selling price per unit \1 00 Variable cost per unit \4 5 Fixed costs per year \4 20,000 Expected sales per year (units) 20,000 If variable costs increase to $65 per unit and fixed costs increase by $200,000,what is the break-even point in units?

The Todd Dolhun Company has the following information available: Targeted after-tax net income \1 20,000 Total fixed costs \ 300,000 Contribution margin per unit \ 2 Taxrate 40\% How many units should be sold to achieve the targeted after-tax net income?

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

Why is it important to identify the most appropriate cost drivers for a particular product?

Which of the following costs is a fixed cost?

The contribution margin per unit of a given product guides managers when deciding which product to emphasize in a sales mix.

A small margin of safety may indicate a risky situation.

Assume Mussa Company has the following information available: Selling price per unit \1 00 Variable cost per unit \4 5 Fixed costs per year \4 20,000 Expected sales per year (units) 20,000 If fixed costs increase by $200,000,what is the expected operating income?

What does the margin of safety in units measure?

Assume Unicorn Company has the following information available: Selling price per unit \1 00 Variable cost per unit \4 5 Fixed costs per year \4 20,000 Expected sales per year 20,000 units If variable costs increase to $65 per unit,what is the expected net income for one year?

Benjamin Company has the following information available: Income tax rate 30\% Selling price per unit \ 5.00 Variable cost per unit \ 3.00 Total fixed costs \9 0,000.00 If Benjamin Company wants a targeted after-tax net income of $14,000,how many units must be sold?

The CVP graph shows how costs behave over different relevant ranges.

The degree of operating leverage for Geesling Company is 8.0 at 80,000 units of sales.At 80,000 units of sales,the net profit is $10,000.If the sales volume increases to 90,000 units,what is the net profit?

As cost-driver level increases in the relevant range,a fixed cost does not change ,but the fixed cost becomes progressively smaller.

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

Cost drivers are ________.

Wetzel Company has variable costs of $5 per unit and a selling price of $10 per unit.Fixed costs are $200,000.Planned unit sales for 2015 are 45,000 units.Actual unit sales for 2014 were 42,000.What is the margin of safety in units for 2015?

The sales mix is the relative proportions or combinations of quantities of different products that constitute total sales.

A compensation plan where the sales force is paid salary plus commission is a ________.

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

On a cost-volume-profit graph,when the Total Cost line is higher than the Total Revenue line,the difference represents ________.

The Todd Dolhun Company has the following information available: Targeted after-tax net income \1 20,000 Total fixed costs \ 300,000 Contribution margin per unit \ 2 Taxrate 40\% How many units should be sold to achieve the targeted after-tax net income?

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

Why is it important to identify the most appropriate cost drivers for a particular product?

Which of the following costs is a fixed cost?

The contribution margin per unit of a given product guides managers when deciding which product to emphasize in a sales mix.

A small margin of safety may indicate a risky situation.

Assume Mussa Company has the following information available: Selling price per unit \1 00 Variable cost per unit \4 5 Fixed costs per year \4 20,000 Expected sales per year (units) 20,000 If fixed costs increase by $200,000,what is the expected operating income?

What does the margin of safety in units measure?

Assume Unicorn Company has the following information available: Selling price per unit \1 00 Variable cost per unit \4 5 Fixed costs per year \4 20,000 Expected sales per year 20,000 units If variable costs increase to $65 per unit,what is the expected net income for one year?

Benjamin Company has the following information available: Income tax rate 30\% Selling price per unit \ 5.00 Variable cost per unit \ 3.00 Total fixed costs \9 0,000.00 If Benjamin Company wants a targeted after-tax net income of $14,000,how many units must be sold?

The CVP graph shows how costs behave over different relevant ranges.

The degree of operating leverage for Geesling Company is 8.0 at 80,000 units of sales.At 80,000 units of sales,the net profit is $10,000.If the sales volume increases to 90,000 units,what is the net profit?

As cost-driver level increases in the relevant range,a fixed cost does not change ________,but the fixed cost ________ becomes progressively smaller.

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 cost-driver level increases in the relevant range,a fixed cost does not change ,but the fixed cost becomes progressively smaller.