Question 1

When the fixed costs are $120,000 and the contribution margin is $30, the break-even point is

Accepted Answer

A)  16,000 units 
B)  8,000 units 
C)  6,000 units 
D)  4,000 units 
A)  16,000 units 
B)  8,000 units 
C)  6,000 units 
D)  4,000 units

Question 2

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 3

Companies with large amounts of fixed costs will generally have a high operating leverage.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not an assumption underlying cost-volume-profit analysis?

Accepted Answer

A)  The break-even point will be passed during the period. 
B)  Total sales and total costs can be represented by straight lines. 
C)  Costs can be accurately divided into fixed and variable components. 
D)  The sales mix is constant. 
A)  The break-even point will be passed during the period. 
B)  Total sales and total costs can be represented by straight lines. 
C)  Costs can be accurately divided into fixed and variable components. 
D)  The sales mix is constant.

Question 5

Only a single line, which represents the difference between total sales revenues and total costs, is plotted on the cost-volume-profit chart.

Accepted Answer

A) True 
 B)False

Question 6

If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio?

Accepted Answer

A)  38% 
B)  26.8% 
C)  11.8% 
D)  62% 
A)  38% 
B)  26.8% 
C)  11.8% 
D)  62%

Question 7

Penny Company sells 25,000 units at $59 per unit. Variable costs are $29 per unit, and loss from operations is ($50,000). Determine the (a) unit contribution margin (b) contribution margin ratio, and (c) fixed costs per unit at production of 25,000 units.

Accepted Answer

a. $30 per unit = $5

Question 8

A company with a break-even point at $900,000 in sales revenue had fixed costs of $225,000. When actual sales were $1,000,000 variable costs were $750,000. 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 A company with a break-even point at...

Question 9

Which of the graphs in Figure 20-1 illustrates the behavior of a total variable cost?

Accepted Answer

A)  Graph 2 
B)  Graph 3 
C)  Graph 4 
D)  Graph 1 
A)  Graph 2 
B)  Graph 3 
C)  Graph 4 
D)  Graph 1

Question 10

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

Accepted Answer

A) True 
 B)False

Question 11

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars)?

Accepted Answer

A)  $2,125,000 
B)  $ 340,000 
C)  $3,400,000 
D)  $1,416,666 
A)  $2,125,000 
B)  $ 340,000 
C)  $3,400,000 
D)  $1,416,666

Question 12

If a business sells four products, it is not possible to estimate the break-even point.

Accepted Answer

A) True 
 B)False

Question 13

If a business sells two products, it is not possible to estimate the break-even point.

Accepted Answer

A) True 
 B)False

Question 14

Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low method of cost estimation, total fixed costs are:

Accepted Answer

A)  $61,875 
B)  $33,875 
C)  $24,750 
D)  cannot be determined from the data given 
A)  $61,875 
B)  $33,875 
C)  $24,750 
D)  cannot be determined from the data given

Question 15

The reliability of cost-volume-profit analysis does NOT depend on the assumption that costs can be accurately divided into fixed and variable components.

Accepted Answer

A) True 
 B)False

Question 16

If direct materials cost per unit increases, the break-even point will decrease.

Accepted Answer

A) True 
 B)False

Question 17

Harold Corporation just started business in January 2012. They had no beginning inventories. During 2012 they manufactured 12,000 units of product, and sold 10,000 units. The selling price of each unit was $20. Variable manufacturing costs were $4 per unit, and variable selling and administrative costs were $2 per unit. Fixed manufacturing costs were $24,000 and fixed selling and administrative costs were $6,000. What would be the difference in Harold Corporation's Net income for 2012 if they used variable costing instead of absorption costing?

Accepted Answer

A)  No difference 
B)  $2,000 greater 
C)  $4,000 less 
D)  $6,000 less 
A)  No difference 
B)  $2,000 greater 
C)  $4,000 less 
D)  $6,000 less

Question 18

In order to choose the proper activity base for a cost, managerial accountants must be familiar with the operations of the entity.

Accepted Answer

A) True 
 B)False

Question 19

The three most common cost behavior classifications are:

Accepted Answer

A)  variable costs, product costs, and sunk costs 
B)  fixed costs, variable costs, and mixed costs 
C)  variable costs, period costs, and differential costs 
D)  variable costs, sunk costs, and opportunity costs 
A)  variable costs, product costs, and sunk costs 
B)  fixed costs, variable costs, and mixed costs 
C)  variable costs, period costs, and differential costs 
D)  variable costs, sunk costs, and opportunity costs

Question 20

When a business sells more than one product at varying selling prices, the business's break-even point can be determined as long as the number of products does not exceed:

Accepted Answer

A)  two 
B)  three 
C)  fifteen 
D)  there is no limit 
A)  two 
B)  three 
C)  fifteen 
D)  there is no limit

When the fixed costs are $120,000 and the contribution margin is $30, the break-even point is

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

Companies with large amounts of fixed costs will generally have a high operating leverage.

Which of the following is not an assumption underlying cost-volume-profit analysis?

Only a single line, which represents the difference between total sales revenues and total costs, is plotted on the cost-volume-profit chart.

If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio?

Penny Company sells 25,000 units at $59 per unit. Variable costs are $29 per unit, and loss from operations is ($50,000). Determine the (a) unit contribution margin (b) contribution margin ratio, and (c) fixed costs per unit at production of 25,000 units.

Which of the graphs in Figure 20-1 illustrates the behavior of a total variable cost?

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars)?

If a business sells four products, it is not possible to estimate the break-even point.

If a business sells two products, it is not possible to estimate the break-even point.

Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low method of cost estimation, total fixed costs are:

The reliability of cost-volume-profit analysis does NOT depend on the assumption that costs can be accurately divided into fixed and variable components.

If direct materials cost per unit increases, the break-even point will decrease.

In order to choose the proper activity base for a cost, managerial accountants must be familiar with the operations of the entity.

The three most common cost behavior classifications are:

When a business sells more than one product at varying selling prices, the business's break-even point can be determined as long as the number of products does not exceed:

Job Order Costing

Process Cost Systems

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Filters

Exam 4: Cost Behavior and Cost-Volume-Profit Analysis

When the fixed costs are $120,000 and the contribution margin is $30, the break-even point is

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

Companies with large amounts of fixed costs will generally have a high operating leverage.

Which of the following is not an assumption underlying cost-volume-profit analysis?

Only a single line, which represents the difference between total sales revenues and total costs, is plotted on the cost-volume-profit chart.

If sales are $425,000, variable costs are 62% of sales, and operating income is $50,000, what is the contribution margin ratio?

Penny Company sells 25,000 units at $59 per unit. Variable costs are $29 per unit, and loss from operations is ($50,000). Determine the (a) unit contribution margin (b) contribution margin ratio, and (c) fixed costs per unit at production of 25,000 units.

Which of the graphs in Figure 20-1 illustrates the behavior of a total variable cost?

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars)?

If a business sells four products, it is not possible to estimate the break-even point.

If a business sells two products, it is not possible to estimate the break-even point.

Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low method of cost estimation, total fixed costs are:

The reliability of cost-volume-profit analysis does NOT depend on the assumption that costs can be accurately divided into fixed and variable components.

If direct materials cost per unit increases, the break-even point will decrease.

In order to choose the proper activity base for a cost, managerial accountants must be familiar with the operations of the entity.

The three most common cost behavior classifications are:

When a business sells more than one product at varying selling prices, the business's break-even point can be determined as long as the number of products does not exceed:

Job Order Costing

Process Cost Systems

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Filters