Question 1

If sales are $300,000,variable costs are 60% of sales,and operating income is $40,000,what is the operating leverage?

Accepted Answer

A) 3.000 
B) 7.500 
C) 1.875 
D) 4.500 
A) 3.000 
B) 7.500 
C) 1.875 
D) 4.500

Question 2

If variable costs per unit decreased because of a decrease in utility rates,the break-even
Point would

Accepted Answer

A) decrease. 
B) increase. 
C) remain the same. 
D) increase or decrease,depending upon the percentage increase in utility rates. 
A) decrease. 
B) increase. 
C) remain the same. 
D) increase or decrease,depending upon the percentage increase in utility rates.

Question 3

The contribution margin ratio is the same as the variable cost ratio.

Accepted Answer

A) True 
 B)False

Question 4

If the property tax rates are increased,this change in fixed costs will result in an increase in the break-even point.

Accepted Answer

A) True 
 B)False

Question 5

The relative distribution of sales among the various products sold by a business is termed the

Accepted Answer

A) business's basket of goods. 
B) contribution margin mix. 
C) sales mix. 
D) product portfolio. 
A) business's basket of goods. 
B) contribution margin mix. 
C) sales mix. 
D) product portfolio.

Question 6

The range of activity over which changes in cost are of interest to management is called the relevant range.

Accepted Answer

A) True 
 B)False

Question 7

Costs that remain constant on a per-unit level as the level of activity changes are called

Accepted Answer

A) fixed costs. 
B) mixed costs. 
C) opportunity costs. 
D) variable costs. 
A) fixed costs. 
B) mixed costs. 
C) opportunity costs. 
D) variable costs.

Question 8

A firm operated at 90% of capacity for the past year during which fixed costs were $320,000,variable costs were 60% of sales,and sales were $1,200,000.Operating profit was

Accepted Answer

A) $400,000. 
B) $112,000. 
C) $144,000. 
D) $160,000. 
A) $400,000. 
B) $112,000. 
C) $144,000. 
D) $160,000.

Question 9

Which of the following costs is a mixed cost?

Accepted Answer

A) Salary of a factory supervisor 
B) Electricity costs of $2 per kilowatt-hour 
C) Rental costs of $5,000 per month plus $0.30 per machine hour of use 
D) Straight-line depreciation on factory equipment 
A) Salary of a factory supervisor 
B) Electricity costs of $2 per kilowatt-hour 
C) Rental costs of $5,000 per month plus $0.30 per machine hour of use 
D) Straight-line depreciation on factory equipment

Question 10

The point where the profit line intersects the left vertical axis on the profit-volume
Chart represents

Accepted Answer

A) the maximum possible operating loss. 
B) the maximum possible operating income. 
C) the total fixed costs. 
D) the break-even point. 
A) the maximum possible operating loss. 
B) the maximum possible operating income. 
C) the total fixed costs. 
D) the break-even point.

Question 11

The point where the profit line intersects the horizontal axis on the profit-volume chart represents

Accepted Answer

A) the maximum possible operating loss. 
B) the maximum possible operating income. 
C) the total fixed costs. 
D) the break-even point. 
A) the maximum possible operating loss. 
B) the maximum possible operating income. 
C) the total fixed costs. 
D) the break-even point.

Question 12

Company M had fixed costs of $262,500,variable costs of $625,000,and actual sales of $1,000,000.If the company has a break-even point at $700,000 in sales revenue,determine (a)the margin of safety expressed in dollars, (b)the margin of safety expressed as a percentage of sales, (c)the contribution margin ratio,and (d)the operating income.

Accepted Answer

The answer of Company M had fixed costs of $262,500,variable...

Question 13

If a business had a capacity of $10,000,000 of sales,actual sales of $6,000,000,break-even sales of $4,500,000,fixed costs of $1,800,000,and variable costs of 60% of sales,what is the margin of safety expressed as a percentage of sales?

Accepted Answer

A) 25% 
B) 18% 
C) 33.3% 
D) 15% 
A) 25% 
B) 18% 
C) 33.3% 
D) 15%

Question 14

As production increases,what would you expect to happen to fixed costs per unit?

Accepted Answer

A) Increase 
B) Decrease 
C) Remain the same 
D) Either increase or decrease,depending on the variable costs 
A) Increase 
B) Decrease 
C) Remain the same 
D) Either increase or decrease,depending on the variable costs

Question 15

For the current year ending January 31,Ringo Company expects fixed costs of $178,500 and a unit variable cost of $41.50.For the coming year,a new wage contract will increase the unit variable cost to $45.The selling price of $50 per unit is expected to remain the same.

Accepted Answer

The answer of For the current year ending January 31,Ringo...

Question 16

If fixed costs are $500,000 and the unit contribution margin is $40,what is the break-even point in units if fixed costs are reduced by $80,000?

Accepted Answer

A) 25,000 
B) 20,000 
C) 10,500 
D) 12,500 
A) 25,000 
B) 20,000 
C) 10,500 
D) 12,500

Question 17

If fixed costs are $600,000 and the unit contribution margin is $12,what amount of units must be sold in order to realize an operating income of $100,000?

Accepted Answer

A) 33,334 
B) 58,334 
C) 41,667 
D) 50,000 
A) 33,334 
B) 58,334 
C) 41,667 
D) 50,000

Question 18

Vest Food Co.has the following operating data:
 
The company is contemplating moving to another state where direct labor costs can be reduced,thereby reducing the unit variable cost by 10%.The state where the company currently operates has offered to reduce property taxes to encourage Vest to stay.The minimum amount of property tax savings necessary to keep the company,assuming no other changes,would be

Accepted Answer

A) $152,016. 
B) $240,000. 
C) $208,696. 
D) $125,217. 
A) $152,016. 
B) $240,000. 
C) $208,696. 
D) $125,217.

Question 19

If fixed costs are $750,000 and variable costs are 55% of sales,what is the break-even point (in dollars)?

Accepted Answer

A) $1,875,000 
B) $1,363,636 
C) $1,666,667 
D) $1,250,000 
A) $1,875,000 
B) $1,363,636 
C) $1,666,667 
D) $1,250,000

Question 20

If a business had sales of $4,000,000,fixed costs of $1,200,000,a margin of safety of 25%,and a contribution margin ratio of 40%,what was the break-even point?

Accepted Answer

A) $3,000,000 
B) $2,800,000 
C) $4,800,000 
D) $2,000,000 
A) $3,000,000 
B) $2,800,000 
C) $4,800,000 
D) $2,000,000

If sales are $300,000,variable costs are 60% of sales,and operating income is $40,000,what is the operating leverage?

If variable costs per unit decreased because of a decrease in utility rates,the break-even Point would

The contribution margin ratio is the same as the variable cost ratio.

If the property tax rates are increased,this change in fixed costs will result in an increase in the break-even point.

The relative distribution of sales among the various products sold by a business is termed the

The range of activity over which changes in cost are of interest to management is called the relevant range.

Costs that remain constant on a per-unit level as the level of activity changes are called

A firm operated at 90% of capacity for the past year during which fixed costs were $320,000,variable costs were 60% of sales,and sales were $1,200,000.Operating profit was

Which of the following costs is a mixed cost?

The point where the profit line intersects the left vertical axis on the profit-volume Chart represents

The point where the profit line intersects the horizontal axis on the profit-volume chart represents

If a business had a capacity of $10,000,000 of sales,actual sales of $6,000,000,break-even sales of $4,500,000,fixed costs of $1,800,000,and variable costs of 60% of sales,what is the margin of safety expressed as a percentage of sales?

As production increases,what would you expect to happen to fixed costs per unit?

For the current year ending January 31,Ringo Company expects fixed costs of $178,500 and a unit variable cost of $41.50.For the coming year,a new wage contract will increase the unit variable cost to $45.The selling price of $50 per unit is expected to remain the same.

If fixed costs are $500,000 and the unit contribution margin is $40,what is the break-even point in units if fixed costs are reduced by $80,000?

If fixed costs are $600,000 and the unit contribution margin is $12,what amount of units must be sold in order to realize an operating income of $100,000?

If fixed costs are $750,000 and variable costs are 55% of sales,what is the break-even point (in dollars)?

If a business had sales of $4,000,000,fixed costs of $1,200,000,a margin of safety of 25%,and a contribution margin ratio of 40%,what was the break-even point?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley,internal Control,and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 11: Cost Behavior and Cost-Volume-Profit Analysis

If sales are $300,000,variable costs are 60% of sales,and operating income is $40,000,what is the operating leverage?

If variable costs per unit decreased because of a decrease in utility rates,the break-even Point would

The contribution margin ratio is the same as the variable cost ratio.

If the property tax rates are increased,this change in fixed costs will result in an increase in the break-even point.

The relative distribution of sales among the various products sold by a business is termed the

The range of activity over which changes in cost are of interest to management is called the relevant range.

Costs that remain constant on a per-unit level as the level of activity changes are called

A firm operated at 90% of capacity for the past year during which fixed costs were $320,000,variable costs were 60% of sales,and sales were $1,200,000.Operating profit was

Which of the following costs is a mixed cost?

The point where the profit line intersects the left vertical axis on the profit-volume Chart represents

The point where the profit line intersects the horizontal axis on the profit-volume chart represents

If a business had a capacity of $10,000,000 of sales,actual sales of $6,000,000,break-even sales of $4,500,000,fixed costs of $1,800,000,and variable costs of 60% of sales,what is the margin of safety expressed as a percentage of sales?

As production increases,what would you expect to happen to fixed costs per unit?

For the current year ending January 31,Ringo Company expects fixed costs of $178,500 and a unit variable cost of $41.50.For the coming year,a new wage contract will increase the unit variable cost to $45.The selling price of $50 per unit is expected to remain the same.

If fixed costs are $500,000 and the unit contribution margin is $40,what is the break-even point in units if fixed costs are reduced by $80,000?

If fixed costs are $600,000 and the unit contribution margin is $12,what amount of units must be sold in order to realize an operating income of $100,000?

If fixed costs are $750,000 and variable costs are 55% of sales,what is the break-even point (in dollars)?

If a business had sales of $4,000,000,fixed costs of $1,200,000,a margin of safety of 25%,and a contribution margin ratio of 40%,what was the break-even point?

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley,internal Control,and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters