Question 1

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

Accepted Answer

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

Question 2

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

Accepted Answer

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

Question 3

The following information is available for a company:
$\begin{array}{ll}\text { Sales }&\$1,000,000\
\text { Variable Selling Expenses } & 23,000 \
\text { Fixed Selling Expenses } & 33,000 \
\text { Variable Administrative Expenses } & 39,000 \
\text { Fixed Administrative Expenses } & 10,000 \
\text { Variable Cost of Goods Sold } & 300,000 \
\text { Fixed Cost of Goods Sold } & 100,000
\end{array}$
What is the contribution margin for this company?

Accepted Answer

A)  $500,000 
B)  $600,000 
C)  $638,000 
D)  $700,000 
A)  $500,000 
B)  $600,000 
C)  $638,000 
D)  $700,000

Question 4

Jensen Company produces dolls.Each doll sells for $20.00.Variable costs are $14.00 per unit.If the break-even volume in dollars is $1,446,000,then the total fixed costs for the period are ________.

Accepted Answer

A)  $361,500 
B)  $433,800 
C)  $516,425 
D)  $1,446,000 
A)  $361,500 
B)  $433,800 
C)  $516,425 
D)  $1,446,000

Question 5

It is misleading to call a cost-volume-profit graph a break-even graph.Why?

Accepted Answer

A)  The graph reveals more information than the break-even point. 
B)  The graph does not show the break-even point. 
C)  The main purpose of the graph is to show the cost drivers for different activity levels. 
D)  The main purpose of the graph is to show the margin of safety. 
A)  The graph reveals more information than the break-even point. 
B)  The graph does not show the break-even point. 
C)  The main purpose of the graph is to show the cost drivers for different activity levels. 
D)  The main purpose of the graph is to show the margin of safety.

Question 6

Assume the following facts for two products,Zip and Zap:
$\begin{array}{ll}&zip&zap\
\text { Sales mix } & 3 \text { units }& 1 \text { units } \
\text { Selling price per unit } & \$ 21.00&\$28.00 \
\text { Variable costs per unit } & \$ 14.00&\$16.00
\end{array}$
If total fixed costs are $132,000,the break-even point in units would be ________.

Accepted Answer

A)  4,000 units of Zip and 12,000 units of Zap 
B)  1,200 units of Zip and 400 units of Zap 
C)  12,000 units of Zip and 4,000 units of Zap 
D)  8,400 units of Zip and 2,800 units of Zap 
A)  4,000 units of Zip and 12,000 units of Zap 
B)  1,200 units of Zip and 400 units of Zap 
C)  12,000 units of Zip and 4,000 units of Zap 
D)  8,400 units of Zip and 2,800 units of Zap

Question 7

Goy Company has a break-even point of 88,000 units.The contribution margin per unit is $9.60.The desired target profit is $18,096.How many units must be sold to achieve the desired profit?

Accepted Answer

A)  1,885 units 
B)  88,000 units 
C)  89,885 units 
D)  106,096 units 
A)  1,885 units 
B)  88,000 units 
C)  89,885 units 
D)  106,096 units

Question 8

Bruder 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 point in dollars.

Accepted Answer

A) @#IMG-DLM& = 25,000
 @#IMG-DLM& B)($1

Question 9

In companies with high operating leverage,small changes in sales volume result in large changes in net income.

Accepted Answer

A) True 
 B)False

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

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

Jensen Company produces dolls.Each doll sells for $20.00.Variable costs are $14.00 per unit.If the break-even volume in dollars is $1,446,000,then the total fixed costs for the period are ________.

It is misleading to call a cost-volume-profit graph a break-even graph.Why?

Assume the following facts for two products,Zip and Zap: zip zap Sales mix 3 units 1 units Selling price per unit \ 21.00 \2 8.00 Variable costs per unit \ 14.00 \1 6.00 If total fixed costs are $132,000,the break-even point in units would be ________.

Goy Company has a break-even point of 88,000 units.The contribution margin per unit is $9.60.The desired target profit is $18,096.How many units must be sold to achieve the desired profit?

In companies with high operating leverage,small changes in sales volume result in large changes in net income.

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

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

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

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

Jensen Company produces dolls.Each doll sells for $20.00.Variable costs are $14.00 per unit.If the break-even volume in dollars is $1,446,000,then the total fixed costs for the period are ________.

It is misleading to call a cost-volume-profit graph a break-even graph.Why?

Assume the following facts for two products,Zip and Zap: zip zap Sales mix 3 units 1 units Selling price per unit \ 21.00 \2 8.00 Variable costs per unit \ 14.00 \1 6.00 If total fixed costs are $132,000,the break-even point in units would be ________.

Goy Company has a break-even point of 88,000 units.The contribution margin per unit is $9.60.The desired target profit is $18,096.How many units must be sold to achieve the desired profit?

In companies with high operating leverage,small changes in sales volume result in large changes in net income.

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