Question 1

Which of the following is an output measure for a hospital?

Accepted Answer

A) number of doctors needed to cater to patients 
B) number of patients admitted every day in a hospital 
C) number of days spent by a patient in a hospital 
D) charges applicable on the number of days spent by a patient in a hospital 
A) number of doctors needed to cater to patients 
B) number of patients admitted every day in a hospital 
C) number of days spent by a patient in a hospital 
D) charges applicable on the number of days spent by a patient in a hospital

Question 2

In CVP analysis,focusing on target net income rather than operating income ________.

Accepted Answer

A) will increase the breakeven point 
B) will decrease the breakeven point 
C) will not change the breakeven point 
D) will help managers construct a better capital policy 
A) will increase the breakeven point 
B) will decrease the breakeven point 
C) will not change the breakeven point 
D) will help managers construct a better capital policy

Question 3

Tom's Tire Tower,Inc. ,sells tires for $110.The unit variable cost per tire is $85.Fixed costs total $475,000.
Required:
a.What is the contribution margin per tire?
b.What is the breakeven point in tires?
c.How many tires must be sold to earn a pretax income of $450,000?
d.What is the margin of safety,assuming 33,000 tires are sold?

Accepted Answer

a.Contribution margin per tire

Question 4

Sensitivity analysis is a simple approach to recognizing uncertainty.

Accepted Answer

A) True 
 B)False

Question 5

A planned decrease in selling price would be expected to cause an increase in the quantity sold.

Accepted Answer

A) True 
 B)False

Question 6

If the contribution margin ratio is 0.25,targeted operating income is $50,000,and targeted sales volume in dollars is $260,000,then total fixed costs are ________.

Accepted Answer

A) $35,000 
B) $210,000 
C) $157,500 
D) $15,000 
A) $35,000 
B) $210,000 
C) $157,500 
D) $15,000

Question 7

Answer the following questions using the information below:
Southwestern College is planning to hold a fund raising banquet at one of the local country clubs.It has two options for the banquet:
     Southwestern College has budgeted $1,800 for administrative and marketing expenses.It plans to hire a band which will cost another $800.Tickets are expected to be $30 per person.Local business supporters will donate any other items required for the event.
-Which option has the lowest breakeven point?

Accepted Answer

A) Option one 
B) Option two 
C) Both options have the same breakeven point. 
D) The lowest breakeven point cannot be determined. 
A) Option one 
B) Option two 
C) Both options have the same breakeven point. 
D) The lowest breakeven point cannot be determined.

Question 8

The selling price per unit is $25,variable cost per unit $15,and fixed cost per unit is $4 when sales are 10,000 units.If one more unit is sold,operating income will increase by $6.

Accepted Answer

A) True 
 B)False

Question 9

Answer the following questions using the information below:
Southwestern College is planning to hold a fund raising banquet at one of the local country clubs.It has two options for the banquet:
     Southwestern College has budgeted $1,800 for administrative and marketing expenses.It plans to hire a band which will cost another $800.Tickets are expected to be $30 per person.Local business supporters will donate any other items required for the event.
-Which option provides the greatest operating income if 600 people attend?

Accepted Answer

A) Option one 
B) Option two 
C) Operating incomes are identical. 
D) It depends on how many donations it receives. 
A) Option one 
B) Option two 
C) Operating incomes are identical. 
D) It depends on how many donations it receives.

Question 10

Contribution margin and gross margin are terms that can be used interchangeably.

Accepted Answer

A) True 
 B)False

Question 11

Rosewood company sells wooden carvings for $300 each.The direct materials cost per unit is $160 and the direct labor is 2 hours at a rate of $26 per hour.Manufacturing overhead is applied on the basis of labor hours at a rate of $36 per hour.Rosewood makes and sells 1,000 units per period.How many units must Rosewood sell to breakeven?

Accepted Answer

A) 409 units 
B) 450 units 
C) 240 units 
D) 818 units 
A) 409 units 
B) 450 units 
C) 240 units 
D) 818 units

Question 12

Which of the following is true of net income?

Accepted Answer

A) Net income is operating income divided by income tax rate. 
B) Net income is operating income plus operating revenues minus operating costs minus income taxes. 
C) Net income is operating income plus nonoperating revenues minus nonoperating costs minus income taxes. 
D) Net income is operating income minus nonoperating revenues minus nonoperating costs minus sales taxes. 
A) Net income is operating income divided by income tax rate. 
B) Net income is operating income plus operating revenues minus operating costs minus income taxes. 
C) Net income is operating income plus nonoperating revenues minus nonoperating costs minus income taxes. 
D) Net income is operating income minus nonoperating revenues minus nonoperating costs minus sales taxes.

Question 13

Craylon Manufacturing produces a single product that sells for $140.Variable costs per unit equal $35.The company expects total fixed costs to be $60,000 for the next month at the projected sales level of 1,500 units.In an attempt to improve performance,management is considering a number of alternative actions.Each situation is to be evaluated separately.One alternative is to increase advertising expenses by $11,000.What is the effect on operating income with the increase of advertising expenses?

Accepted Answer

A) Operating income will decrease by $11,000. 
B) Operating income will increase by $11,000. 
C) Operating income will decrease by $86,500. 
D) Operating income will increase by $86,500. 
A) Operating income will decrease by $11,000. 
B) Operating income will increase by $11,000. 
C) Operating income will decrease by $86,500. 
D) Operating income will increase by $86,500.

Question 14

Globus Autos sells a single product.8,000 units were sold resulting in $83,000 of sales revenue,$21,000 of variable costs,and $20,000 of fixed costs.If variable costs decrease by $1.00 per unit,the new margin of safety is ________.(Round intermediate calculations to the nearest cent. )

Accepted Answer

A) $83,000 
B) $21,000 
C) $59,190 
D) $63,000 
A) $83,000 
B) $21,000 
C) $59,190 
D) $63,000

Question 15

The following information is for High Corp:
 
The number of units that High Corp must sell to reach targeted operating income of $25,000 is ________.(Round up to the nearest unit. )

Accepted Answer

A) 6,750 units 
B) 8,000 units 
C) 1,250 units 
D) 2,667 units 
A) 6,750 units 
B) 8,000 units 
C) 1,250 units 
D) 2,667 units

Question 16

Freddie's Company has mostly fixed costs and Valerie's Company has mostly variable costs.Which company has the greatest risk of a net loss? Explain why.

Accepted Answer

Freddie's Company has the greatest risk

Question 17

The contribution margin income statement ________.

Accepted Answer

A) reports gross margin 
B) is allowed for external reporting to shareholders 
C) categorizes costs as either direct or indirect 
D) can be used to predict operating income at different levels of activity 
A) reports gross margin 
B) is allowed for external reporting to shareholders 
C) categorizes costs as either direct or indirect 
D) can be used to predict operating income at different levels of activity

Question 18

A company with sales of $50,000,a contribution margin ratio of 30%,and fixed costs of $25,000 will earn a net income of $10,000.

Accepted Answer

A) True 
 B)False

Question 19

Zirconia Fantasy sells only necklaces.11,000 units were sold resulting in $270,000 of sales revenue,$80,000 of variable costs,and $40,000 of fixed costs.The breakeven point in total sales dollars is ________.

Accepted Answer

A) $40,000 
B) $56,843 
C) $120,000 
D) $72,000 
A) $40,000 
B) $56,843 
C) $120,000 
D) $72,000

Question 20

Answer the following questions using the information below:
Southwestern College is planning to hold a fund raising banquet at one of the local country clubs.It has two options for the banquet:
     Southwestern College has budgeted $1,800 for administrative and marketing expenses.It plans to hire a band which will cost another $800.Tickets are expected to be $30 per person.Local business supporters will donate any other items required for the event.
-Which option provides the least amount of risk?

Accepted Answer

A) Option one 
B) Option two 
C) Both options provide the same amount of risk. 
D) It depends on how many donations it receives. 
A) Option one 
B) Option two 
C) Both options provide the same amount of risk. 
D) It depends on how many donations it receives.

Which of the following is an output measure for a hospital?

In CVP analysis,focusing on target net income rather than operating income ________.

Sensitivity analysis is a simple approach to recognizing uncertainty.

A planned decrease in selling price would be expected to cause an increase in the quantity sold.

If the contribution margin ratio is 0.25,targeted operating income is $50,000,and targeted sales volume in dollars is $260,000,then total fixed costs are ________.

The selling price per unit is $25,variable cost per unit $15,and fixed cost per unit is $4 when sales are 10,000 units.If one more unit is sold,operating income will increase by $6.

Contribution margin and gross margin are terms that can be used interchangeably.

Which of the following is true of net income?

Globus Autos sells a single product.8,000 units were sold resulting in $83,000 of sales revenue,$21,000 of variable costs,and $20,000 of fixed costs.If variable costs decrease by $1.00 per unit,the new margin of safety is ________.(Round intermediate calculations to the nearest cent. )

The following information is for High Corp: The number of units that High Corp must sell to reach targeted operating income of $25,000 is ________.(Round up to the nearest unit. )

Freddie's Company has mostly fixed costs and Valerie's Company has mostly variable costs.Which company has the greatest risk of a net loss? Explain why.

The contribution margin income statement ________.

A company with sales of $50,000,a contribution margin ratio of 30%,and fixed costs of $25,000 will earn a net income of $10,000.

Zirconia Fantasy sells only necklaces.11,000 units were sold resulting in $270,000 of sales revenue,$80,000 of variable costs,and $40,000 of fixed costs.The breakeven point in total sales dollars is ________.

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

Which of the following is an output measure for a hospital?

In CVP analysis,focusing on target net income rather than operating income ________.

Sensitivity analysis is a simple approach to recognizing uncertainty.

A planned decrease in selling price would be expected to cause an increase in the quantity sold.

If the contribution margin ratio is 0.25,targeted operating income is $50,000,and targeted sales volume in dollars is $260,000,then total fixed costs are ________.

The selling price per unit is $25,variable cost per unit $15,and fixed cost per unit is $4 when sales are 10,000 units.If one more unit is sold,operating income will increase by $6.

Contribution margin and gross margin are terms that can be used interchangeably.

Which of the following is true of net income?

Globus Autos sells a single product.8,000 units were sold resulting in $83,000 of sales revenue,$21,000 of variable costs,and $20,000 of fixed costs.If variable costs decrease by $1.00 per unit,the new margin of safety is ________.(Round intermediate calculations to the nearest cent. )

The following information is for High Corp: The number of units that High Corp must sell to reach targeted operating income of $25,000 is ________.(Round up to the nearest unit. )

Freddie's Company has mostly fixed costs and Valerie's Company has mostly variable costs.Which company has the greatest risk of a net loss? Explain why.

The contribution margin income statement ________.

A company with sales of $50,000,a contribution margin ratio of 30%,and fixed costs of $25,000 will earn a net income of $10,000.

Zirconia Fantasy sells only necklaces.11,000 units were sold resulting in $270,000 of sales revenue,$80,000 of variable costs,and $40,000 of fixed costs.The breakeven point in total sales dollars is ________.

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