Question 1

All else being constant,an increase in operating income will result in an increase in net income.

Accepted Answer

A) True 
 B)False

Question 2

Pacific Company sells only one product for $12 per unit,variable production costs are $3 per unit,and selling and administrative costs are $1.70 per unit.Fixed costs for 11,000 units are $6,000.The operating income is ________ when 11,000 units are sold.

Accepted Answer

A) $8.45 per unit 
B) $6.75 per unit 
C) $7.30 per unit 
D) $4.70 per unit 
A) $8.45 per unit 
B) $6.75 per unit 
C) $7.30 per unit 
D) $4.70 per unit

Question 3

In the manufacturing sector,________.

Accepted Answer

A) only variable costs are subtracted to determine gross margin 
B) fixed overhead costs are subtracted to determine gross margin 
C) fixed overhead costs are subtracted to determine contribution margin 
D) all operating costs are subtracted to determine contribution margin 
A) only variable costs are subtracted to determine gross margin 
B) fixed overhead costs are subtracted to determine gross margin 
C) fixed overhead costs are subtracted to determine contribution margin 
D) all operating costs are subtracted to determine contribution margin

Question 4

Quality Stores,Inc. ,sells several products.Information of average revenue and costs is as follows:
$\begin{array}{ll}
\text { Selling price per unit } & \$ 23 \
\text { Variable costs per unit: } & \
\text { Direct material } & \$ 6 \
\text { Direct manufacturing labor } & \$ 1.90 \
\text { Manufacturing overhead } & \$ 0.40 \
\text { Selling costs } & \$ 2 \
\text { Annual fixed costs } & \$ 96,000
\end{array}$
The revenues that the company must earn annually to make a profit of $144,000 are ________.(Round the final answer to the nearest dollar. )

Accepted Answer

A) $375,510 
B) $365,563 
C) $434,646 
D) $324,706 
A) $375,510 
B) $365,563 
C) $434,646 
D) $324,706

Question 5

The following information is for Alex Corp:

What is the operating income,assuming actual sales total 120,000 units,and the sales mix is two units of Product X and one unit of Product Y?

Accepted Answer

A) 1,159,500 
B) 1,200,000 
C) 1,960,000 
D) 1,240,500 
A) 1,159,500 
B) 1,200,000 
C) 1,960,000 
D) 1,240,500

Question 6

One of the first steps to take when using CVP analysis to help make decisions is ________.

Accepted Answer

A) calculating the break-even point 
B) identifying the variable and fixed costs 
C) calculation of the degree of operating leverage for the company 
D) estimating the volume of sales to make a good profit 
A) calculating the break-even point 
B) identifying the variable and fixed costs 
C) calculation of the degree of operating leverage for the company 
D) estimating the volume of sales to make a good profit

Question 7

Query Company sells pillows for $25.00 each.The manufacturing cost,all variable,is $10 per pillow.The company is planning on renting an exhibition booth for both display and selling purposes at the annual crafts and art convention.The convention coordinator allows three options for each participating company.They are:
   
Required:
a.Compute the breakeven sales in pillows of each option.
b.Which option should Query Company choose,assuming sales are expected to be 800 pillows?

Accepted Answer

a.Option 1 N = Breakeven in pi

Question 8

When a greater proportion of costs are fixed costs,then ________.

Accepted Answer

A) a small increase in sales results in a small decrease in operating income 
B) when demand is low the risk of loss is high 
C) a decrease in sales reduces the total fixed cost per unit 
D) a decrease in sales reduces the cost per unit 
A) a small increase in sales results in a small decrease in operating income 
B) when demand is low the risk of loss is high 
C) a decrease in sales reduces the total fixed cost per unit 
D) a decrease in sales reduces the cost per unit

Question 9

Answer the following questions using the information below:
Patrick Ross has three booth rental options at the county fair where he plans to sell his new product.The booth rental options are:
   The product sells for $37.50 per unit.He is able to purchase the units for $12.50 each.
-How many actions and events will a decision table contain?

Accepted Answer

A) 1 action and 3 events 
B) 1 action and 6 events 
C) 2 actions and 3 events 
D) 3 actions and 6 events 
A) 1 action and 3 events 
B) 1 action and 6 events 
C) 2 actions and 3 events 
D) 3 actions and 6 events

Question 10

If a company is planning to reduce the selling price,they must believe that ________.

Accepted Answer

A) variable costs will decline as well 
B) the fixed costs will cover the lower sales price 
C) more units will be sold 
D) increased collections will increase income 
A) variable costs will decline as well 
B) the fixed costs will cover the lower sales price 
C) more units will be sold 
D) increased collections will increase income

Question 11

Assume only the specified parameters change in a cost-volume-profit analysis.If the contribution margin increases by $6 per unit,then ________.

Accepted Answer

A) fixed costs increases by $6 per unit 
B) operating income decreases by $6 per unit 
C) fixed costs decreases by $6 per unit 
D) operating income increases by $6 per unit 
A) fixed costs increases by $6 per unit 
B) operating income decreases by $6 per unit 
C) fixed costs decreases by $6 per unit 
D) operating income increases by $6 per unit

Question 12

If a company increases fixed costs,then the breakeven point will be lower.

Accepted Answer

A) True 
 B)False

Question 13

How many units would have to be sold to yield a target operating income of $26,000,assuming variable costs are $27 per unit,total fixed costs are $2,000,and the unit selling price is $32?

Accepted Answer

A) 400 units 
B) 1,038 units 
C) 5,600 units 
D) 1,273 units 
A) 400 units 
B) 1,038 units 
C) 5,600 units 
D) 1,273 units

Question 14

At breakeven point,________.

Accepted Answer

A) operating income is equal to zero 
B) contribution margin minus fixed costs is equal to profits earned 
C) revenues equal fixed costs minus variable costs 
D) breakeven revenues equal fixed costs divided by the variable cost per unit 
A) operating income is equal to zero 
B) contribution margin minus fixed costs is equal to profits earned 
C) revenues equal fixed costs minus variable costs 
D) breakeven revenues equal fixed costs divided by the variable cost per unit

Question 15

James Corporation gathered the following information:
 $\begin{array}{ll}
\text { Variable costs } & \$ 550,000 \
\text { Income tax rate } & 40 \% \
\text { Contribution-margin ratio } & 30 \%
\end{array}$ 
Required:
a.Calculate the fixed costs,assuming breakeven revenue is $2,000,000.
b.Calculate sales volume in dollars to produce an after-tax net income of $150,000.

Accepted Answer

a.$2,000,000 revenue x CM% 30% = CM of $

Question 16

Helping Hands is a nonprofit organization that supplies electric fans during summer for individuals in need.Fixed costs are $290,000.The fans cost $26 each.The organization has a budgeted appropriation of $675,000.How many people can receive a fan during summer?

Accepted Answer

A) 11,154 people 
B) 14,808 people 
C) 25,962 people 
D) 37,116 people 
A) 11,154 people 
B) 14,808 people 
C) 25,962 people 
D) 37,116 people

Question 17

If the breakeven point is 1,300 units and each unit sells for $50,then ________.

Accepted Answer

A) selling 1,340 units will result in a loss 
B) selling $85,000 will result in a loss 
C) selling $65,000 will result in zero profit 
D) selling $58,000 will result in profit 
A) selling 1,340 units will result in a loss 
B) selling $85,000 will result in a loss 
C) selling $65,000 will result in zero profit 
D) selling $58,000 will result in profit

Question 18

Beta Corp reported the following:
 $\begin{array}{ll}
\text { Revenues } & \$ 2,500 \
\text { Variable manufacturing costs } & \$ 300 \
\text { Variable nonmanufacturing costs } & \$ 480 \
\text { Fixed manufacturing costs } & \$ 350 \
\text { Fixed nonmanufacturing costs } & \$ 270
\end{array}$ 
Required:
a.Compute contribution margin.
b.Compute gross margin.
c.Compute operating income.

Accepted Answer

a.Contribution margin $2,500 −

Question 19

Maria makes tortillas and sells them from her house.She is concerned about purchasing too many ingredients and having to throw away unsold tortillas at the end of the day.It costs her $5.00 to make 100 tortillas and she sells them for $20.00 per 100.She has kept track of sales and discovered that she can sell 1,500 tortillas about 25% of the time,1,000 tortillas about 50% of the time and only 500 tortillas the rest of the time.What is the minimum number of tortillas should she make daily to maximize profit? Round to the nearest 100 tortillas.

Accepted Answer

1,000 tortillas.
She cannot sell more th

Question 20

The contribution income statement highlights ________.

Accepted Answer

A) gross margin 
B) the segregation of costs into period costs and inventoriable costs 
C) different product lines 
D) variable and fixed costs 
A) gross margin 
B) the segregation of costs into period costs and inventoriable costs 
C) different product lines 
D) variable and fixed costs

All else being constant,an increase in operating income will result in an increase in net income.

Pacific Company sells only one product for $12 per unit,variable production costs are $3 per unit,and selling and administrative costs are $1.70 per unit.Fixed costs for 11,000 units are $6,000.The operating income is ________ when 11,000 units are sold.

In the manufacturing sector,________.

The following information is for Alex Corp: What is the operating income,assuming actual sales total 120,000 units,and the sales mix is two units of Product X and one unit of Product Y?

One of the first steps to take when using CVP analysis to help make decisions is ________.

When a greater proportion of costs are fixed costs,then ________.

If a company is planning to reduce the selling price,they must believe that ________.

Assume only the specified parameters change in a cost-volume-profit analysis.If the contribution margin increases by $6 per unit,then ________.

If a company increases fixed costs,then the breakeven point will be lower.

How many units would have to be sold to yield a target operating income of $26,000,assuming variable costs are $27 per unit,total fixed costs are $2,000,and the unit selling price is $32?

At breakeven point,________.

James Corporation gathered the following information: Variable costs \ 550,000 Income tax rate 40\% Contribution-margin ratio 30\% Required: a.Calculate the fixed costs,assuming breakeven revenue is $2,000,000. b.Calculate sales volume in dollars to produce an after-tax net income of $150,000.

Helping Hands is a nonprofit organization that supplies electric fans during summer for individuals in need.Fixed costs are $290,000.The fans cost $26 each.The organization has a budgeted appropriation of $675,000.How many people can receive a fan during summer?

If the breakeven point is 1,300 units and each unit sells for $50,then ________.

Beta Corp reported the following: Revenues \ 2,500 Variable manufacturing costs \ 300 Variable nonmanufacturing costs \ 480 Fixed manufacturing costs \ 350 Fixed nonmanufacturing costs \ 270 Required: a.Compute contribution margin. b.Compute gross margin. c.Compute operating income.

The contribution income statement highlights ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 3: Cost-Volume-Profit Analysis

All else being constant,an increase in operating income will result in an increase in net income.

Pacific Company sells only one product for $12 per unit,variable production costs are $3 per unit,and selling and administrative costs are $1.70 per unit.Fixed costs for 11,000 units are $6,000.The operating income is ________ when 11,000 units are sold.

In the manufacturing sector,________.

The following information is for Alex Corp: What is the operating income,assuming actual sales total 120,000 units,and the sales mix is two units of Product X and one unit of Product Y?

One of the first steps to take when using CVP analysis to help make decisions is ________.

When a greater proportion of costs are fixed costs,then ________.

If a company is planning to reduce the selling price,they must believe that ________.

Assume only the specified parameters change in a cost-volume-profit analysis.If the contribution margin increases by $6 per unit,then ________.

If a company increases fixed costs,then the breakeven point will be lower.

How many units would have to be sold to yield a target operating income of $26,000,assuming variable costs are $27 per unit,total fixed costs are $2,000,and the unit selling price is $32?

At breakeven point,________.

James Corporation gathered the following information: Variable costs \ 550,000 Income tax rate 40\% Contribution-margin ratio 30\% Required: a.Calculate the fixed costs,assuming breakeven revenue is $2,000,000. b.Calculate sales volume in dollars to produce an after-tax net income of $150,000.

Helping Hands is a nonprofit organization that supplies electric fans during summer for individuals in need.Fixed costs are $290,000.The fans cost $26 each.The organization has a budgeted appropriation of $675,000.How many people can receive a fan during summer?

If the breakeven point is 1,300 units and each unit sells for $50,then ________.

Beta Corp reported the following: Revenues \ 2,500 Variable manufacturing costs \ 300 Variable nonmanufacturing costs \ 480 Fixed manufacturing costs \ 350 Fixed nonmanufacturing costs \ 270 Required: a.Compute contribution margin. b.Compute gross margin. c.Compute operating income.

The contribution income statement highlights ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters