Question 1

How many units 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)  1,000 
B)  1,059 
C)  2,000 
D)  2,250 
A)  1,000 
B)  1,059 
C)  2,000 
D)  2,250

Question 2

The contribution margin income statement enables managers to view revenue and cost relationships on a per unit basis or as a percentage of sales.

Accepted Answer

A) True 
 B)False

Question 3

If fixed costs are $180,000,variable costs are $38 per unit,and the product sells for $70,the breakeven point in sales dollars is $393,750.

Accepted Answer

A) True 
 B)False

Question 4

The delivery trucks of Italiana's Pizzeria incurred maintenance costs of $2,400 during its busiest month of 20xx,in which 8,000 miles were driven collectively.During its slowest month,$1,800 in maintenance costs were incurred,resulting from 5,000 miles being driven.Using the high-low method,what maintenance cost would the company expect to incur at 6,800 miles of driving?

Accepted Answer

A)  $2,160 
B)  $2,060 
C)  $2,310 
D)  $2,010 
A)  $2,160 
B)  $2,060 
C)  $2,310 
D)  $2,010

Question 5

If fixed costs are increased,then a breakeven analysis with an adjustment for profit will yield an increase in the number of sales or targeted sales units.

Accepted Answer

A) True 
 B)False

Question 6

If direct materials costs are decreased,the breakeven point will decrease.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Theoretical operating capacity is the level at which management expects to operate during a normal business environment.

Accepted Answer

A) True 
 B)False

Question 9

An insurance company pays its employees a commission of 6 percent on each sale.What is the proper classification of the cost of sales commissions?

Accepted Answer

A)  Constant cost 
B)  Variable cost 
C)  Mixed cost 
D)  Fixed cost 
A)  Constant cost 
B)  Variable cost 
C)  Mixed cost 
D)  Fixed cost

Question 10

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 $1,400 per client and a targeted profit of $26,000,the number of clients to be serviced is

Accepted Answer

A)  80 clients. 
B)  120 clients. 
C)  47 clients. 
D)  90 clients. 
A)  80 clients. 
B)  120 clients. 
C)  47 clients. 
D)  90 clients.

Question 11

If Oui Watches sells 300 watches at $48 per watch and has variable costs of $20 per watch and fixed costs of $4,000,what is the projected profit?

Accepted Answer

A)  $4,000 
B)  $4,400 
C)  $8,400 
D)  $12,000 
A)  $4,000 
B)  $4,400 
C)  $8,400 
D)  $12,000

Question 12

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 13

J & C Stacy Enterprises is expecting to earn a profit of $180,000 in 20xx.The company manufactures wrought iron lamps.Each lamp requires variable costs of $13 for direct materials,$9 for direct labor,and $12 for overhead.Total variable costs are thus $34 per lamp.Fixed costs for 20xx are expected to be $630,000.Each lamp will sell for $79.
a. Determine how many lamps the company must sell to earn its targeted profit, and convert this amount to sales dollars.
b. Compute breakeven sales in dollars.
c. Explain the dollar difference between breakeven sales dollars and the sales dollars necessary to earn the targeted profit. Use the contribution margin as part of your explanation.

Accepted Answer

a.
 \[\begin{aligned}
\text { Unit Sales

Question 14

Martin,Inc.,has two products: a pocket metronome (unit sales price,$25; unit variable cost,$15)and a pocket tuner (unit sales price,$14; unit variable cost,$9).The company's sales mix of the pocket metronome to the pocket tuner is 4:1 and fixed costs are $32,850.
a. Determine the weighted-average contribution margin.
b. Calculate the weighted-average breakeven point.
c. Compute the breakeven point for each product.

Accepted Answer

a.
 \(\begin{array}{lrrrrr}
&&\text { Un

Question 15

The new Corina watch has an expected selling price per watch of $42,the projected variable cost per unit is $24,and estimated fixed costs per month are $31,680. The breakeven point in watches per month is

Accepted Answer

A)  1,535 watches. 
B)  2,010 watches. 
C)  1,760 watches. 
D)  2,200 watches. 
A)  1,535 watches. 
B)  2,010 watches. 
C)  1,760 watches. 
D)  2,200 watches.

Question 16

In a graph of cost-volume-profit analysis,the

Accepted Answer

A)  total revenue line typically begins at a required minimum level. 
B)  slope of the total cost line is dependent on the variable cost per unit. 
C)  total cost line normally begins at zero. 
D)  sales level at which total cost and total revenue lines intersect is also equal to fixed costs. 
A)  total revenue line typically begins at a required minimum level. 
B)  slope of the total cost line is dependent on the variable cost per unit. 
C)  total cost line normally begins at zero. 
D)  sales level at which total cost and total revenue lines intersect is also equal to fixed costs.

Question 17

Cost-volume-profit analysis assumes costs and revenues have a close linear approximation.

Accepted Answer

A) True 
 B)False

Question 18

Fixed costs always remain constant.

Accepted Answer

A) True 
 B)False

Question 19

The breakeven point is

Accepted Answer

A)  where fixed and variable costs reach the upper level of the relevant range. 
B)  the level of activity where all fixed costs are recovered. 
C)  where total revenue equals total costs. 
D)  where fixed costs meet variable costs. 
A)  where fixed and variable costs reach the upper level of the relevant range. 
B)  the level of activity where all fixed costs are recovered. 
C)  where total revenue equals total costs. 
D)  where fixed costs meet variable costs.

Question 20

Listed below are selected costs of sports car manufacturer at a production level of 4,000 cars.(a)Identify three variable costs.(b)Support your answer by illustrating the cost behavior pattern per unit and in total as the annual volume of motorcycles produced increases from 4,000 cars to 8,000 cars for one variable cost.
 $\begin{array}{lr}
\text { Monthly machine rental charge } & \$ 8,000 \
\text { Monthly insurance premiums on the plant } & 800 \
\text { Sports car tire cost (per tire) } & 100\
\text { Salaried employees' weekly payroll cost } & 51,000 \
\text { Manufacturing hourly employees' weekly payroll } & 88,000 \
\text { Depreciation on the equipment for the month } & 6,000\
\text { Car battery (one batterv) }&70
\end{array}$

Accepted Answer

a.Sports car tire cost (per tire)($100),

Exam 20: Cost Behavior Analysis

How many units 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?

The contribution margin income statement enables managers to view revenue and cost relationships on a per unit basis or as a percentage of sales.

If fixed costs are $180,000,variable costs are $38 per unit,and the product sells for $70,the breakeven point in sales dollars is $393,750.

If fixed costs are increased,then a breakeven analysis with an adjustment for profit will yield an increase in the number of sales or targeted sales units.

If direct materials costs are decreased,the breakeven point will decrease.

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?

Theoretical operating capacity is the level at which management expects to operate during a normal business environment.

An insurance company pays its employees a commission of 6 percent on each sale.What is the proper classification of the cost of sales commissions?

If Oui Watches sells 300 watches at $48 per watch and has variable costs of $20 per watch and fixed costs of $4,000,what is the projected profit?

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 new Corina watch has an expected selling price per watch of $42,the projected variable cost per unit is $24,and estimated fixed costs per month are $31,680. The breakeven point in watches per month is

In a graph of cost-volume-profit analysis,the

Cost-volume-profit analysis assumes costs and revenues have a close linear approximation.

Fixed costs always remain constant.

The breakeven point is

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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