Question 1

What formula is used to calculate the number of units needed to earn a desired profit?

Accepted Answer

A)  (fixed costs + variable costs) / sales 
B)  (fixed costs + desired profit) / sales 
C)  (fixed costs + desired profit) / contribution margin per unit 
D)  (fixed costs + variable costs) / contribution margin per unit 
A)  (fixed costs + variable costs) / sales 
B)  (fixed costs + desired profit) / sales 
C)  (fixed costs + desired profit) / contribution margin per unit 
D)  (fixed costs + variable costs) / contribution margin per unit

Question 2

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

Accepted Answer

A)  $90,000 
B)  $168,000 
C)  $174,000 
D)  $342,000 
A)  $90,000 
B)  $168,000 
C)  $174,000 
D)  $342,000

Question 3

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

Accepted Answer

A)  It is hard to interpret. 
B)  It reveals how costs change as sales volume remains the same. 
C)  It cannot be plotted if the break-even point is known. 
D)  It shows the relationship among cost,volume,and profits. 
A)  It is hard to interpret. 
B)  It reveals how costs change as sales volume remains the same. 
C)  It cannot be plotted if the break-even point is known. 
D)  It shows the relationship among cost,volume,and profits.

Question 4

$\begin{array}{lr}
\text { Selling price per unit } & \$ 80 \
\text { Variable cost per unit } & \$ 60 \
\text { Total fixed costs } & \$ 400,000
\end{array}$
-Refer to the Figure.How many units must Acme sell to earn a profit of $40,000?

Accepted Answer

A)  2,000 
B)  8,500 
C)  20,000 
D)  22,000 
A)  2,000 
B)  8,500 
C)  20,000 
D)  22,000

Question 5

The operating leverage measures the difference between actual sales and break-even sales.

Accepted Answer

A) True 
 B)False

Question 6

The profit-volume graph shows the relationship between operating income and the number of units sold.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  $6.50 
B)  $14.00 
C)  $21.00 
D)  $35.00 
A)  $6.50 
B)  $14.00 
C)  $21.00 
D)  $35.00

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 break-even point in hours (rounded to the nearest whole hour)?

Accepted Answer

A)  1,393 
B)  2,229 
C)  3,714 
D)  5,571 
A)  1,393 
B)  2,229 
C)  3,714 
D)  5,571

Question 9

What relationship is visually portrayed by a profit-volume graph?

Accepted Answer

A)  total sales and total cost 
B)  profits and units sold 
C)  fixed costs and variable costs 
D)  total sales and units sold 
A)  total sales and total cost 
B)  profits and units sold 
C)  fixed costs and variable costs 
D)  total sales and units sold

Question 10

What is the break-even point?

Accepted Answer

A)  Total revenue minus total cost. 
B)  Profit is greater than zero. 
C)  Total contribution margin equals total fixed cost. 
D)  Margin of safety is positive. 
A)  Total revenue minus total cost. 
B)  Profit is greater than zero. 
C)  Total contribution margin equals total fixed cost. 
D)  Margin of safety is positive.

Question 11

Roundstreet Company sells a product for $14.Variable costs are $7 per unit,and total fixed costs are $7,000.What is the break-even point in units?

Accepted Answer

A)  210 
B)  360 
C)  504 
D)  1,000 
A)  210 
B)  360 
C)  504 
D)  1,000

Question 12

Which of the following can be considered a measure of risk in cost-volume-profit analysis?

Accepted Answer

A)  margin of safety 
B)  contribution margin ratio 
C)  contribution margin 
D)  fixed cost 
A)  margin of safety 
B)  contribution margin ratio 
C)  contribution margin 
D)  fixed cost

Question 13

Refer to the Figure.Plastic Gym expects tree house demand to increase from 4,000 to 8,000 units per year.What is the new contribution margin ratio?

Accepted Answer

A)  38% 
B)  40% 
C)  50% 
D)  60% 
A)  38% 
B)  40% 
C)  50% 
D)  60%

Question 14

Which of the following should be used to compute the sales mix so that the break-even computation is meaningful to management?

Accepted Answer

A)  the expected mix 
B)  the most desirable mix 
C)  the least desirable mix 
D)  the traditional mix 
A)  the expected mix 
B)  the most desirable mix 
C)  the least desirable mix 
D)  the traditional mix

Question 15

Campbell Corporation developed the following income statement using a contribution margin approach: Campbell Corporation
Projected Income Statement
For the Current Year Ending December 31
$\begin{array}{lr}\text { Sales }&\$750,000\
\text { Less variable costs: }\
\text { Variable manu facturing costs } & \$ 280,000 \
\text { Variable selling costs } & 120,000\\text { Total variable costs }&\$400,000\\text { Contribution margin }&\$350,000\\text { Less fixed costs: }\\text { Fixed manufacturing costs } & \$ 130,000 \
\text { Fixed selling and } & 80,000\\text { administrative costs }\\text { Total fixed costs }&\$210,000\\text { Operating income }&\$140,000
\end{array}$ 
The projected income statement was based on sales of 100,000 units.Thomas has the capacity to produce 120,000 units during the year. 
A.	Determine the break-even point in units.
B.	The sales manager believes the company could increase sales by 8,000 units if advertising expenditures were increased by $22,000. By how much will income increase or decrease if this plan is put into effect?
C.	What is the maximum amount the company could pay for advertising if the sales would really increase by 8,000 units?

Accepted Answer

The answer of Campbell Corporation developed the following income statement...

Question 16

Refer to the Figure.What is the variable cost ratio?

Accepted Answer

A)  19% 
B)  42% 
C)  50% 
D)  54% 
A)  19% 
B)  42% 
C)  50% 
D)  54%

Question 17

What is the result when the contribution margin ratio increases?

Accepted Answer

A)  The variable cost ratio decreases. 
B)  The break-even point increases. 
C)  The fixed costs decrease. 
D)  The price decreases. 
A)  The variable cost ratio decreases. 
B)  The break-even point increases. 
C)  The fixed costs decrease. 
D)  The price decreases.

Question 18

If variable expenses decrease and the price increases,the break-even point decreases.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  180 
B)  220 
C)  440 
D)  1,320 
A)  180 
B)  220 
C)  440 
D)  1,320

Question 20

What are two concepts useful to management when assessing risk?

Accepted Answer

The two concepts are Margin of Safety an

What formula is used to calculate the number of units needed to earn a desired profit?

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.What is the budgeted operating income?

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

Selling price per unit \ 80 Variable cost per unit \ 60 Total fixed costs \ 400,000 -Refer to the Figure.How many units must Acme sell to earn a profit of $40,000?

The operating leverage measures the difference between actual sales and break-even sales.

The profit-volume graph shows the relationship between operating income and the number of units sold.

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 per hour?

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 hours (rounded to the nearest whole hour)?

What relationship is visually portrayed by a profit-volume graph?

What is the break-even point?

Roundstreet Company sells a product for $14.Variable costs are $7 per unit,and total fixed costs are $7,000.What is the break-even point in units?

Which of the following can be considered a measure of risk in cost-volume-profit analysis?

Refer to the Figure.Plastic Gym expects tree house demand to increase from 4,000 to 8,000 units per year.What is the new contribution margin ratio?

Which of the following should be used to compute the sales mix so that the break-even computation is meaningful to management?

Refer to the Figure.What is the variable cost ratio?

What is the result when the contribution margin ratio increases?

If variable expenses decrease and the price increases,the break-even point decreases.

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

What are two concepts useful to management when assessing risk?

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

What formula is used to calculate the number of units needed to earn a desired profit?

Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.What is the budgeted operating income?

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

Selling price per unit \ 80 Variable cost per unit \ 60 Total fixed costs \ 400,000 -Refer to the Figure.How many units must Acme sell to earn a profit of $40,000?

The operating leverage measures the difference between actual sales and break-even sales.

The profit-volume graph shows the relationship between operating income and the number of units sold.

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 per hour?

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 hours (rounded to the nearest whole hour)?

What relationship is visually portrayed by a profit-volume graph?

What is the break-even point?

Roundstreet Company sells a product for $14.Variable costs are $7 per unit,and total fixed costs are $7,000.What is the break-even point in units?

Which of the following can be considered a measure of risk in cost-volume-profit analysis?

Refer to the Figure.Plastic Gym expects tree house demand to increase from 4,000 to 8,000 units per year.What is the new contribution margin ratio?

Which of the following should be used to compute the sales mix so that the break-even computation is meaningful to management?

Refer to the Figure.What is the variable cost ratio?

What is the result when the contribution margin ratio increases?

If variable expenses decrease and the price increases,the break-even point decreases.

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

What are two concepts useful to management when assessing risk?

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