Question 1

Which of the following is characteristic of the profit-volume graph?

Accepted Answer

A)  It is difficult to interpret. 
B)  It fails to reveal how costs change as sales volume changes. 
C)  It can be plotted only if the break-even point is known. 
D)  It can be plotted only if fixed costs are known. 
A)  It is difficult to interpret. 
B)  It fails to reveal how costs change as sales volume changes. 
C)  It can be plotted only if the break-even point is known. 
D)  It can be plotted only if fixed costs are known.

Question 2

Refer to the Figure.What is the contribution margin?

Accepted Answer

A)  $92,500 
B)  $320,000 
C)  $322,500 
D)  $457,500 
A)  $92,500 
B)  $320,000 
C)  $322,500 
D)  $457,500

Question 3

Given the following numbers from Books and Things,match the correct value with its appropriate term.Books and Things sells a product for $40.Unit cost information is as follows: $\begin{array}{lr}
\text { Direct materials } & \$ 14 \
\text { Direct labour } & \$ 6 \
\text { Variable overhead } & \$ 8 \
\text { Fixed overhead } & \$ 2
\end{array}$ Books and Things normally produces 100,000 units,and the fixed overhead rate is based on this amount.Fixed selling and administrative expense is $74,000.
-Variable cost ratio

Accepted Answer

A) $12 
B) 30% 
C) $28 
D) 70% 
E) $580,000
F)14,500 
A) $12 
B) 30% 
C) $28 
D) 70% 
E) $580,000
F)14,500

Question 4

The following information was extracted from the accounting records of Gumbo Corporation: $\begin{array}{lr}
\text { Selling price per unit } & \$ 60 \
\text { Variable cost per unit } & \$ 20 \
\text { Total fixed costs } & \$ 480,000
\end{array}$ 
A.	What is Gumbo’s break-even point in units?
B.	How many units must be sold to earn operating income of $80,000?
C.	What is Gumbo’s break-even point in units is the selling price increases by 20% and the variable costs decrease by 20%?
D.	Using the information in part C, what sales level in dollars is needed to earn an operating income of $80,000?

Accepted Answer

The answer of The following information was extracted from the...

Question 5

Variable costs per unit consist of direct materials,direct labour,variable factory overhead and variable selling and administrative costs.

Accepted Answer

A) True 
 B)False

Question 6

Explain why cost-volume-profit analysis can be useful to managers.

Accepted Answer

Cost-volume-profit (CVP)analysis is a po

Question 7

What is the purpose of doing a cost-volume-profit (CVP)analysis?

Accepted Answer

A)  CVP analysis provides managers with information used for control only. 
B)  CVP analysis allows managers to do sensitivity analysis by examining the impact of various prices or costs on volume. 
C)  CVP analysis shows how revenues,expenses,and profits behave as volume changes. 
D)  CVP analysis is effectively used by single-product firms only. 
A)  CVP analysis provides managers with information used for control only. 
B)  CVP analysis allows managers to do sensitivity analysis by examining the impact of various prices or costs on volume. 
C)  CVP analysis shows how revenues,expenses,and profits behave as volume changes. 
D)  CVP analysis is effectively used by single-product firms only.

Question 8

Most firms would like to earn operating income equal to the break-even point.

Accepted Answer

A) True 
 B)False

Question 9

Match each item with the correct statement below.
-The point where total sales revenue equals total cost

Accepted Answer

A) Break-even point 
B) Common fixed expenses 
C) Contribution margin 
D) Direct fixed expenses 
E) Margin of safety
F)Operating leverage
G)Degree of operating leverage
H)Sales mix 
A) Break-even point 
B) Common fixed expenses 
C) Contribution margin 
D) Direct fixed expenses 
E) Margin of safety
F)Operating leverage
G)Degree of operating leverage
H)Sales mix

Question 10

Match each item with the correct statement below.
-Measured in dollars

Accepted Answer

A) horizontal-axis of CVP graph 
B) vertical-axis of CVP graph 
C) slope of revenue line 
D) slope of cost line 
E) point where the total revenue line and the total cost line intersect 
A) horizontal-axis of CVP graph 
B) vertical-axis of CVP graph 
C) slope of revenue line 
D) slope of cost line 
E) point where the total revenue line and the total cost line intersect

Question 11

The HoltTec Company manufactures two products.Information about the two product lines for the year is as follows: $\begin{array}{lrr}&\text { Basic }\&\text { Model }&\text { Deluxe Model }\
\text { Selling price per unit } & \$ 70 & \$ 100 \
\text { Variable costs per unit } & 30 & 40 \
\text { Contribution margin per unit } & \$ 40 & \$ 60
\end{array}$ The company expects fixed costs to be $192,000.The firm expects 60% of its sales (in units)to be Basic Model.
Required: Determine the break-even point in units for both Basic Model and Deluxe Model.

Accepted Answer

Form a package with three units of Basic

Question 12

Which of the following is a characteristic of the cost-volume-profit graph?

Accepted Answer

A)  It plots three separate lines. 
B)  It plots the total revenue line and the total cost line. 
C)  The vertical axis is measured in units sold,and the horizontal axis is measured in dollars. 
D)  It is hard to interpret. 
A)  It plots three separate lines. 
B)  It plots the total revenue line and the total cost line. 
C)  The vertical axis is measured in units sold,and the horizontal axis is measured in dollars. 
D)  It is hard to interpret.

Question 13

Hammer Company expects the following results for the next accounting period: $\begin{array}{lr}
\text { Sales } & \$ 240,000 \
\text { Variable costs } & \$ 135,000 \
\text { Fixed costs } & \$ 40,000 \
\text { Expected production and sales in units } & 3,000
\end{array}$ The sales manager believes sales could be increased by 400 units if advertising expenditures are increased by $10,000.Suppose advertising expenditures are increased and sales increase by 400 units.What will be the effect on operating income?

Accepted Answer

A)  a decrease of $4,000 
B)  an increase of $22,000 
C)  an increase of $4,000 
D)  an increase of $30,000 
A)  a decrease of $4,000 
B)  an increase of $22,000 
C)  an increase of $4,000 
D)  an increase of $30,000

Question 14

Refer to the Figure.Plastic Gym expects tree house demand to increase from 4,000 to 8,000 units per year.How many jungle gyms are sold at break-even?

Accepted Answer

A)  668 
B)  875 
C)  1,002 
D)  2,625 
A)  668 
B)  875 
C)  1,002 
D)  2,625

Question 15

The linear equation for revenue is price multiplied by fixed cost.

Accepted Answer

A) True 
 B)False

Question 16

Refer to the Figure.How many professional models are sold at break-even?

Accepted Answer

A)  220 
B)  400 
C)  440 
D)  850 
A)  220 
B)  400 
C)  440 
D)  850

Question 17

In a normal month,the Whitewater Company generates total sales of $25,000.To do so they incur variable costs of $15,000 and fixed costs of $10,000.
Required: Determine each of the following values: A. Variable cost ratio
B. Contribution margin ratio
C. Monthly break-even dollar sales volume
D. Monthly margin of safety in doll ars

Accepted Answer

The answer of In a normal month,the Whitewater Company generates...

Question 18

$\begin{array}{lr}
\text { Direct materials } & \$ 1.50 \
\text { Direct labour } & 1.20 \
\text { Variable overhead } & 0.90 \
\text { Variable marketing expense } & 0.40
\end{array}$
-Refer to the Figure.What is the variable expense per unit?

Accepted Answer

A)  $1.30 
B)  $3.70 
C)  $4.00 
D)  $4.60 
A)  $1.30 
B)  $3.70 
C)  $4.00 
D)  $4.60

Question 19

Diamonds in the Ruff sells only one product at a regular price of $7.50 per unit.Variable expenses are 60% of sales,and fixed expenses are $30,000.Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales.How many sales (in dollars)were required to break even at the old price of $7.50 per unit?

Accepted Answer

A)  $12,000 
B)  $18,000 
C)  $50,000 
D)  $75,000 
A)  $12,000 
B)  $18,000 
C)  $50,000 
D)  $75,000

Question 20

What formula is used to calculate the sales dollars needed to earn a desired profit?

Accepted Answer

A)  (fixed costs + contribution margin) / (1 − variable cost ratio) 
B)  (fixed costs + desired profit) / (1 − variable cost ratio) 
C)  (fixed costs + variable costs) / (1 − variable cost ratio) 
D)  (fixed costs + desired profit) / (1 − sales ratio) 
A)  (fixed costs + contribution margin) / (1 − variable cost ratio) 
B)  (fixed costs + desired profit) / (1 − variable cost ratio) 
C)  (fixed costs + variable costs) / (1 − variable cost ratio) 
D)  (fixed costs + desired profit) / (1 − sales ratio)

Which of the following is characteristic of the profit-volume graph?

Refer to the Figure.What is the contribution margin?

Variable costs per unit consist of direct materials,direct labour,variable factory overhead and variable selling and administrative costs.

Explain why cost-volume-profit analysis can be useful to managers.

What is the purpose of doing a cost-volume-profit (CVP)analysis?

Most firms would like to earn operating income equal to the break-even point.

Match each item with the correct statement below. -The point where total sales revenue equals total cost

Match each item with the correct statement below. -Measured in dollars

Which of the following is a characteristic of the cost-volume-profit graph?

Refer to the Figure.Plastic Gym expects tree house demand to increase from 4,000 to 8,000 units per year.How many jungle gyms are sold at break-even?

The linear equation for revenue is price multiplied by fixed cost.

Refer to the Figure.How many professional models are sold at break-even?

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.What is the variable expense per unit?

What formula is used to calculate the sales dollars needed to earn a desired profit?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 4: Costvolumeprofit Analysis: a Managerial Planning Tool

Which of the following is characteristic of the profit-volume graph?

Refer to the Figure.What is the contribution margin?

Variable costs per unit consist of direct materials,direct labour,variable factory overhead and variable selling and administrative costs.

Explain why cost-volume-profit analysis can be useful to managers.

What is the purpose of doing a cost-volume-profit (CVP)analysis?

Most firms would like to earn operating income equal to the break-even point.

Match each item with the correct statement below. -The point where total sales revenue equals total cost

Match each item with the correct statement below. -Measured in dollars

Which of the following is a characteristic of the cost-volume-profit graph?

Refer to the Figure.Plastic Gym expects tree house demand to increase from 4,000 to 8,000 units per year.How many jungle gyms are sold at break-even?

The linear equation for revenue is price multiplied by fixed cost.

Refer to the Figure.How many professional models are sold at break-even?

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.What is the variable expense per unit?

What formula is used to calculate the sales dollars needed to earn a desired profit?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters