Question 1

In terms of cost behavior,supervisory salaries and direct labor are classified as

Accepted Answer

A)  fixed and variable, respectively. 
B)  both variable. 
C)  both fixed. 
D)  mixed and fixed, respectively. 
A)  fixed and variable, respectively. 
B)  both variable. 
C)  both fixed. 
D)  mixed and fixed, respectively.

Question 2

a.What is the formula for breakeven units?
b.How is knowledge of the contribution margin of a product helpful?
 In your answer,explain two possible benefits of computing the contribution margin of a product.

Accepted Answer

a.
a.Breakeven (units)= Fixed Costs ÷ Co

Question 3

Walton's Warehouse reported sales of $640,000,a contribution margin of $8 per unit,fixed costs of $314,000,and a profit of $30,000.How many units did Walton's Warehouse sell?

Accepted Answer

A)  3,750 units 
B)  23,375 units 
C)  43,000 units 
D)  62,625 units 
A)  3,750 units 
B)  23,375 units 
C)  43,000 units 
D)  62,625 units

Question 4

The typical relationship between variable costs and volume may be described best as follows:

Accepted Answer

A)  Costs increase in an erratic, unpredictable fashion with changes in volume. 
B)  Costs stay fairly constant with changes in volume. 
C)  Costs increase with changes in volume up to a certain point and then remain constant. 
D)  Costs increase in direct proportion to increases in volume. 
A)  Costs increase in an erratic, unpredictable fashion with changes in volume. 
B)  Costs stay fairly constant with changes in volume. 
C)  Costs increase with changes in volume up to a certain point and then remain constant. 
D)  Costs increase in direct proportion to increases in volume.

Question 5

A retail manager is preparing a budget for the coming year and is considering the various costs of the retail store.What is the best approach for the manager to take when budgeting for the cost of the store's merchandise?

Accepted Answer

A)  The total costs will stay the same as last year, but the unit cost will change with each sale. 
B)  The total cost of merchandise for the year and the unit cost will remain constant with each sale. 
C)  The total cost of merchandise for the year will depend on the amount of sales, but the unit cost of each sale will stay fairly constant. 
D)  The total costs will stay the same as last year, and the unit cost will remain constant with each sale. 
A)  The total costs will stay the same as last year, but the unit cost will change with each sale. 
B)  The total cost of merchandise for the year and the unit cost will remain constant with each sale. 
C)  The total cost of merchandise for the year will depend on the amount of sales, but the unit cost of each sale will stay fairly constant. 
D)  The total costs will stay the same as last year, and the unit cost will remain constant with each sale.

Question 6

Theoretical capacity reduced by normal and anticipated work stoppages is called

Accepted Answer

A)  practical capacity. 
B)  normal capacity. 
C)  ideal capacity. 
D)  excess capacity. 
A)  practical capacity. 
B)  normal capacity. 
C)  ideal capacity. 
D)  excess capacity.

Question 7

The Raquet Business is considering the manufacture of a new type of tennis ball.Each tennis ball would sell for $3.75 and would require $1.75 in variable costs.In addition,annual fixed costs associated with the project would total $64,000.
a. Use the contribution margin approach to calculate:
(1) the breakeven point in units
(2) the breakeven point in dollars
b. Determine the operating income or loss at a sales volume of 30,000 tennis balls.
c. Determine the number of tennis balls that must be sold to earn a profit of $80,000.

Accepted Answer

a.(1)$64,000 ÷ ($3.75 - $1.75)

Question 8

The engineering method of separating costs

Accepted Answer

A)  is generally used to estimate the cost of activities and new products. 
B)  is sometimes called a time and motion study. 
C)  is expensive to use because it is so detailed. 
D)  All of the above are correct. 
A)  is generally used to estimate the cost of activities and new products. 
B)  is sometimes called a time and motion study. 
C)  is expensive to use because it is so detailed. 
D)  All of the above are correct.

Question 9

Cost-volume-profit analysis is not appropriate for service businesses.

Accepted Answer

A) True 
 B)False

Question 10

Cost-volume-profit analysis cannot be used to estimate a targeted profit for service businesses.

Accepted Answer

A) True 
 B)False

Question 11

Straight-line depreciation on the controller's computer is an example of a variable cost.

Accepted Answer

A) True 
 B)False

Question 12

How many total dollars of sales must BAC Company sell to break even if the selling price per unit is $8.50,variable costs are $4.00 per unit,and fixed costs are $9,000?

Accepted Answer

A)  $4,000 
B)  $8,500 
C)  $9,000 
D)  $17,000 
A)  $4,000 
B)  $8,500 
C)  $9,000 
D)  $17,000

Question 13

Regression analysis can be performed using one or more activities to predict costs.

Accepted Answer

A) True 
 B)False

Question 14

Match between columns
                        Premises:  Unit sales forecast
 Production budget
 Sales budget
 Direct materials purchases budget
 Direct labor budget
 Overhead budget
 Selling and administrative expense budget
 Capital expenditures budget

Accepted Answer

The Answer of Is prepared after the production budget has is...

Question 15

Telephone costs are an example of a mixed cost.

Accepted Answer

A) True 
 B)False

Question 16

When managers plan,they may use cost behavior to decide how to change the mix of products to meet changing demand.

Accepted Answer

A) True 
 B)False

Question 17

In breakeven analysis adjusted for a profit factor,increasing the unit sales price will decrease the number of units needed to meet the targeted profit.

Accepted Answer

A) True 
 B)False

Question 18

SHARE is trying to determine how many clients must be serviced in order to cover its monthly service overhead.Using the high-low method,it has determined that the variable cost per client is $800 and that the monthly fixed overhead is $28,000. Assuming an average fee of $1,200 per client,the breakeven point per month is

Accepted Answer

A)  35 clients. 
B)  80 clients. 
C)  70 clients. 
D)  55 clients. 
A)  35 clients. 
B)  80 clients. 
C)  70 clients. 
D)  55 clients.

Question 19

The equation for finding the breakeven point may be written as

Accepted Answer

A)  S - VC - FC = 0. 
B)  VC - FC = S. 
C)  S + FC = VC. 
D)  S + VC + FC = 0. 
A)  S - VC - FC = 0. 
B)  VC - FC = S. 
C)  S + FC = VC. 
D)  S + VC + FC = 0.

Question 20

Using the high-low method and the information below,compute the monthly variable cost per telephone hour for SKP Corporation. $$\begin{array} { l c c } 
\text { Month } & \text { TelephoneHours Used } & \text { Telephone Expenses } \
\text { April } & 100 & \$ 4,500 \
\text { May } & 110 & 4,800 \
\text { June } & 150 & 5,400
\end{array}$$

Accepted Answer

A)  $18.00 
B)  $36.00 
C)  $34.64 
D)  $45.00 
A)  $18.00 
B)  $36.00 
C)  $34.64 
D)  $45.00

Exam 20: Cost Behavior Analysis

In terms of cost behavior,supervisory salaries and direct labor are classified as

a.What is the formula for breakeven units? b.How is knowledge of the contribution margin of a product helpful? In your answer,explain two possible benefits of computing the contribution margin of a product.

Walton's Warehouse reported sales of $640,000,a contribution margin of $8 per unit,fixed costs of $314,000,and a profit of $30,000.How many units did Walton's Warehouse sell?

The typical relationship between variable costs and volume may be described best as follows:

A retail manager is preparing a budget for the coming year and is considering the various costs of the retail store.What is the best approach for the manager to take when budgeting for the cost of the store's merchandise?

Theoretical capacity reduced by normal and anticipated work stoppages is called

The engineering method of separating costs

Cost-volume-profit analysis is not appropriate for service businesses.

Cost-volume-profit analysis cannot be used to estimate a targeted profit for service businesses.

Straight-line depreciation on the controller's computer is an example of a variable cost.

How many total dollars of sales must BAC Company sell to break even if the selling price per unit is $8.50,variable costs are $4.00 per unit,and fixed costs are $9,000?

Regression analysis can be performed using one or more activities to predict costs.

Telephone costs are an example of a mixed cost.

When managers plan,they may use cost behavior to decide how to change the mix of products to meet changing demand.

In breakeven analysis adjusted for a profit factor,increasing the unit sales price will decrease the number of units needed to meet the targeted profit.

The equation for finding the breakeven point may be written as

Using the high-low method and the information below,compute the monthly variable cost per telephone hour for SKP Corporation. Month TelephoneHours Used Telephone Expenses April 100 \ 4,500 May 110 4,800 June 150 5,400

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Cost Concepts and Cost Allocation

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions,incltarget Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

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