Question 1

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

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 2

Match each item with the correct statement below.
-The relative combination of products (or services)being sold by an organization

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 3

Refer to the Figure.What is the contribution ratio?

Accepted Answer

A)  35% 
B)  50% 
C)  58% 
D)  65% 
A)  35% 
B)  50% 
C)  58% 
D)  65%

Question 4

Suppose the selling price per unit increases.What will be the effect on the break-even point in units?

Accepted Answer

A)  The units will decrease. 
B)  The units will increase. 
C)  The units will remain the same. 
D)  The units will remain the same; however,contribution per unit will decrease. 
A)  The units will decrease. 
B)  The units will increase. 
C)  The units will remain the same. 
D)  The units will remain the same; however,contribution per unit will decrease.

Question 5

Suppose variable costs per unit decrease.What will be the effect on sales volume at the break-even point?

Accepted Answer

A)  Sales volume will increase. 
B)  Sales volume will decrease. 
C)  Sales volume will remain the same. 
D)  Sales volume will remain the same; however,contribution margin per unit will decrease. 
A)  Sales volume will increase. 
B)  Sales volume will decrease. 
C)  Sales volume will remain the same. 
D)  Sales volume will remain the same; however,contribution margin per unit will decrease.

Question 6

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.
-Contribution margin 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 7

The cost-volume-profit graph shows the relationship between cost,volume,and operating income.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)  33% 
B)  40% 
C)  50% 
D)  60% 
A)  33% 
B)  40% 
C)  50% 
D)  60%

Question 9

Refer to the Figure.What is the budgeted operating income?

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 10

Suppose the contribution margin ratio increases.What will be the effect on the break-even point in sales dollars?

Accepted Answer

A)  The dollar value will increase. 
B)  The dollar value will decrease. 
C)  The dollar value will remain the same. 
D)  The dollar value will double. 
A)  The dollar value will increase. 
B)  The dollar value will decrease. 
C)  The dollar value will remain the same. 
D)  The dollar value will double.

Question 11

$\begin{array}{lr}
\text { Direct materials } & \$ 1.50 \
\text { Direct labour } & 1.20 \
\text { Variable overhead } & 0.90 \
\text { Variable marketing expense } & 0.40
\end{array}$
-Refer to the Figure.What is the break-even point in sales dollars?

Accepted Answer

A)  $130,000 
B)  $195,000 
C)  $252,000 
D)  $342,000 
A)  $130,000 
B)  $195,000 
C)  $252,000 
D)  $342,000

Question 12

Wendall Company 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 in hopes of increasing its volume of sales.What is the contribution margin ratio when the selling price is reduced to $6 per unit?

Accepted Answer

A)  25% 
B)  40% 
C)  60% 
D)  75% 
A)  25% 
B)  40% 
C)  60% 
D)  75%

Question 13

What is the formula to calculate the margin of safety in dollars?

Accepted Answer

A)  expected sales - expected profit 
B)  expected sales - sales at break-even 
C)  costs at break-even - expected profit 
D)  expected costs - costs at break-even 
A)  expected sales - expected profit 
B)  expected sales - sales at break-even 
C)  costs at break-even - expected profit 
D)  expected costs - costs at break-even

Question 14

If fixed costs increase,the break-even point also increases.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is NOT an assumption used to prepare a cost-volume-profit graph?

Accepted Answer

A)  Linear costs are within the relevant range. 
B)  Units produced equals units sold. 
C)  The sales mix is constant. 
D)  The constant cost fluctuates. 
A)  Linear costs are within the relevant range. 
B)  Units produced equals units sold. 
C)  The sales mix is constant. 
D)  The constant cost fluctuates.

Question 16

What would be the effect on the break-even point if sales remain the same and the margin of safety increases?

Accepted Answer

A)  The break-even point would increase. 
B)  The break-even point would decrease. 
C)  The break-even point would decrease by half. 
D)  The break-even point would remain the same. 
A)  The break-even point would increase. 
B)  The break-even point would decrease. 
C)  The break-even point would decrease by half. 
D)  The break-even point would remain the same.

Question 17

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

Accepted Answer

A)  668 
B)  875 
C)  1,002 
D)  1,750 
A)  668 
B)  875 
C)  1,002 
D)  1,750

Question 18

Match each item with the correct statement below.
-A measure of the sensitivity of profit changes to changes in sales volume

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 19

$\begin{array}{lr}
\text { Direct materials } & \$ 1.50 \
\text { Direct labour } & 1.20 \
\text { Variable overhead } & 0.90 \
\text { Variable marketing expense } & 0.40
\end{array}$
-Refer to the Figure.What is the break-even point in units?

Accepted Answer

A)  2,167 
B)  2,800 
C)  5,833 
D)  8,000 
A)  2,167 
B)  2,800 
C)  5,833 
D)  8,000

Question 20

What fixed expenses can NOT be directly traced to individual segments?

Accepted Answer

A)  direct fixed expenses 
B)  common fixed expenses 
C)  contribution margin 
D)  overall fixed expenses 
A)  direct fixed expenses 
B)  common fixed expenses 
C)  contribution margin 
D)  overall fixed expenses

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

Match each item with the correct statement below. -The relative combination of products (or services)being sold by an organization

Refer to the Figure.What is the contribution ratio?

Suppose the selling price per unit increases.What will be the effect on the break-even point in units?

Suppose variable costs per unit decrease.What will be the effect on sales volume at the break-even point?

The cost-volume-profit graph shows the relationship between cost,volume,and operating income.

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.What is the contribution margin ratio?

Refer to the Figure.What is the budgeted operating income?

Suppose the contribution margin ratio increases.What will be the effect on the break-even point in sales dollars?

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.What is the break-even point in sales dollars?

What is the formula to calculate the margin of safety in dollars?

If fixed costs increase,the break-even point also increases.

Which of the following is NOT an assumption used to prepare a cost-volume-profit graph?

What would be the effect on the break-even point if sales remain the same and the margin of safety increases?

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

Match each item with the correct statement below. -A measure of the sensitivity of profit changes to changes in sales volume

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.What is the break-even point in units?

What fixed expenses can NOT be directly traced to individual segments?

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

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

Match each item with the correct statement below. -The relative combination of products (or services)being sold by an organization

Refer to the Figure.What is the contribution ratio?

Suppose the selling price per unit increases.What will be the effect on the break-even point in units?

Suppose variable costs per unit decrease.What will be the effect on sales volume at the break-even point?

The cost-volume-profit graph shows the relationship between cost,volume,and operating income.

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.What is the contribution margin ratio?

Refer to the Figure.What is the budgeted operating income?

Suppose the contribution margin ratio increases.What will be the effect on the break-even point in sales dollars?

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.What is the break-even point in sales dollars?

What is the formula to calculate the margin of safety in dollars?

If fixed costs increase,the break-even point also increases.

Which of the following is NOT an assumption used to prepare a cost-volume-profit graph?

What would be the effect on the break-even point if sales remain the same and the margin of safety increases?

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

Match each item with the correct statement below. -A measure of the sensitivity of profit changes to changes in sales volume

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.What is the break-even point in units?

What fixed expenses can NOT be directly traced to individual segments?

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