Question 1

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

Accepted Answer

A) Fixed costs will not change over a wide range of activity. 
B) All costs behave linearly. 
C) Sales prices change in the relevant range. 
D) Sales mix must remain constant. 
A) Fixed costs will not change over a wide range of activity. 
B) All costs behave linearly. 
C) Sales prices change in the relevant range. 
D) Sales mix must remain constant.

Question 2

The formula used in performing cost-volume-profit (CVP)analysis for the "before-tax target",where t is the tax rate,is

Accepted Answer

A) (Total Fixed Costs ´ t)/ Unit Contribution Margin. 
B) (Total Fixed Costs + (Target Profit ´ t))/ Unit Contribution Margin. 
C) (Total Fixed Costs + Target Profit)/ Contribution Margin Ratio. 
D) After-Tax Profit / (1-t). 
A) (Total Fixed Costs ´ t)/ Unit Contribution Margin. 
B) (Total Fixed Costs + (Target Profit ´ t))/ Unit Contribution Margin. 
C) (Total Fixed Costs + Target Profit)/ Contribution Margin Ratio. 
D) After-Tax Profit / (1-t).

Question 3

Break-even and target profits.Analysis of the operations of Reyes Company shows the
fixed costs to be $140,000 and the variable costs to be $7 per unit.Selling price is $14
per unit.
Required:
a.Derive the break-even point expressed in units.
b.How many units must the firm sell to earn a profit of $168,000?
c.What would profits be if revenue from sales were $2,100,000?
(Reyes Company;break-even and target profits. )

Accepted Answer

a.Contribution Margin (per Unit)
= Unit

Question 4

Deering Company is contemplating an expansion program based on the following budget data:
 
Calculate the budgeted break-even point in sales dollars.

Accepted Answer

A) $200,000 
B) $210,000 
C) $270,000 
D) $330,000 
A) $200,000 
B) $210,000 
C) $270,000 
D) $330,000

Question 5

How is target profit volume calculated?

Accepted Answer

A) The sum of fixed costs and target profit divided by contribution margin per unit. 
B) The sum of fixed costs and target profit divided by variable cost per unit. 
C) The sum of fixed costs and target profit divided by sales price per unit. 
D) None of the answers is correct. 
A) The sum of fixed costs and target profit divided by contribution margin per unit. 
B) The sum of fixed costs and target profit divided by variable cost per unit. 
C) The sum of fixed costs and target profit divided by sales price per unit. 
D) None of the answers is correct.

Question 6

What is the formula for Target Profit in Sales Dollars?

Accepted Answer

A) Total Fixed Costs / Unit Contribution Margin. 
B) (Total Fixed Costs + Target Profit)/ Unit Contribution Margin. 
C) (Total Fixed Costs + Target Profit)/ Contribution Margin Ratio. 
D) Total Fixed Costs / Contribution Margin Ratio 
A) Total Fixed Costs / Unit Contribution Margin. 
B) (Total Fixed Costs + Target Profit)/ Unit Contribution Margin. 
C) (Total Fixed Costs + Target Profit)/ Contribution Margin Ratio. 
D) Total Fixed Costs / Contribution Margin Ratio

Question 7

Operating leverage is high in firms with:
Fixed Costs Variable Costs Contribution Margin Per Unit

Accepted Answer

A) small proportion high proportion high 
B) high proportion small proportion high 
C) small proportion high proportion low 
D) high proportion small proportion low 
A) small proportion high proportion high 
B) high proportion small proportion high 
C) small proportion high proportion low 
D) high proportion small proportion low

Question 8

Explain the use of financial modeling in a multiple product setting.

Accepted Answer

Multiple products make using financial m

Question 9

How is the contribution margin ratio calculated?

Accepted Answer

A) variable costs/contribution margin. 
B) fixed costs/contribution margin. 
C) sales/contribution margin. 
D) contribution margin/sales. 
A) variable costs/contribution margin. 
B) fixed costs/contribution margin. 
C) sales/contribution margin. 
D) contribution margin/sales.

Question 10

What happens to the contribution margin if fixed expenses decrease while variable cost per unit remain constant.

Accepted Answer

A) Contribution margin will be unchanged. 
B) Contribution margin will be higher. 
C) Contribution margin will be lower. 
D) Cannot determine the change. 
A) Contribution margin will be unchanged. 
B) Contribution margin will be higher. 
C) Contribution margin will be lower. 
D) Cannot determine the change.

Question 11

Multiple-product profit analysis.Coney Island produces two types of hotdogs,chili dogs and cheese dogs,with the following characteristics:
   
The total fixed costs for the company are $100,000.
Required:
a.What is the anticipated level of profits for the expected sales volumes?
b.Assuming that the product mix would be 75 percent chili and 25 percent cheese at the break-even point,compute the break-even volume.
c.If the product sales mix were to change to four chili dogs for each cheese dog,what would be the new break-even volume?

Accepted Answer

(Coney Island;multiple product profit an

Question 12

Which statement is true concerning the cost-volume-profit (CVP)model?

Accepted Answer

A) The CVP model can be used to determine a desired selling price. 
B) The CVP model can be used to determine a new break-even point when fixed costs increase. 
C) The CVP model can be used to determine a new break-even point when variable costs decrease. 
D) All of the answers are correct. 
A) The CVP model can be used to determine a desired selling price. 
B) The CVP model can be used to determine a new break-even point when fixed costs increase. 
C) The CVP model can be used to determine a new break-even point when variable costs decrease. 
D) All of the answers are correct.

Question 13

Cost-volume-profit;volume defined in sales dollars.An excerpt from the income statement of the Kingston Company follows.Fixed costs in Year 1 are $325,000.
Kingston Company
Income Statement
Year ended December 31,year 1
   
Required:
a.What percentage of sales revenue is variable cost?
b.What is the break-even point in sales dollars for Kingston Company?
c.If sales revenue falls to $2,900,000,what will be the estimated amount of profit?
d.What amount of sales dollars produces a profit of $1,000,000?
(Kingston Company;cost-volume-profit;volume defined in sales dollars. )

Accepted Answer

a.$1,925,000 - $325,000 = $1,600,000
$1,

Question 14

Which of the following statements best defines the contribution margin ratio?

Accepted Answer

A) Total contribution margin divided by total sales. 
B) Unit contribution margin divided by unit sales price. 
C) Total contribution margin divided by total sales and unit contribution margin divided by unit sales price. 
D) None of the answers is correct. 
A) Total contribution margin divided by total sales. 
B) Unit contribution margin divided by unit sales price. 
C) Total contribution margin divided by total sales and unit contribution margin divided by unit sales price. 
D) None of the answers is correct.

Question 15

Which of the following is not a valid assumption for cost-volume-profit analysis?

Accepted Answer

A) Variable costs per unit are not affected by changes in the rate of production. 
B) An increase in fixed costs will cause the break-even point to rise. 
C) Demand is constant regardless of price. 
D) A decrease in variable cost per unit will lower the break-even point. 
A) Variable costs per unit are not affected by changes in the rate of production. 
B) An increase in fixed costs will cause the break-even point to rise. 
C) Demand is constant regardless of price. 
D) A decrease in variable cost per unit will lower the break-even point.

Question 16

How can financial modeling be used for profit planning purposes?

Accepted Answer

Financial models help management to anal

Question 17

Which of the following represents the formula for the margin of safety?

Accepted Answer

A) Total Fixed Costs / Unit Contribution Margin. 
B) (Total Fixed Costs + Target Profit)/ Unit Contribution Margin. 
C) Sales Units - Break-Even Sales Units. 
D) None of the answers is correct. 
A) Total Fixed Costs / Unit Contribution Margin. 
B) (Total Fixed Costs + Target Profit)/ Unit Contribution Margin. 
C) Sales Units - Break-Even Sales Units. 
D) None of the answers is correct.

Question 18

Shenandoah Company
Shenandoah Company is considering the introduction of a new product with the following price and cost characteristics
 
The company expects to sell 2,000 units for the year.
Refer Shenandoah Company.How many units must be sold to break even?

Accepted Answer

A) 900 
B) 2,250 
C) 2,000 
D) 1,500 
A) 900 
B) 2,250 
C) 2,000 
D) 1,500

Question 19

Catfish Company produces two products,C and F,with the following characteristics:
   
Total fixed costs for the company are $21,000.
REQUIRED:

Accepted Answer

The answer of Catfish Company produces two products,C and F,with...

Question 20

Which of the following is the major assumption as to cost and revenue behavior underlying conventional cost-volume-profit calculations?

Accepted Answer

A) variability of fixed costs. 
B) variability of unit prices and efficiency. 
C) curvilinearity of relationships. 
D) linearity of relationships. 
A) variability of fixed costs. 
B) variability of unit prices and efficiency. 
C) curvilinearity of relationships. 
D) linearity of relationships.

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

The formula used in performing cost-volume-profit (CVP)analysis for the "before-tax target",where t is the tax rate,is

Deering Company is contemplating an expansion program based on the following budget data: Calculate the budgeted break-even point in sales dollars.

How is target profit volume calculated?

What is the formula for Target Profit in Sales Dollars?

Operating leverage is high in firms with: Fixed Costs Variable Costs Contribution Margin Per Unit

Explain the use of financial modeling in a multiple product setting.

How is the contribution margin ratio calculated?

What happens to the contribution margin if fixed expenses decrease while variable cost per unit remain constant.

Which statement is true concerning the cost-volume-profit (CVP)model?

Which of the following statements best defines the contribution margin ratio?

Which of the following is not a valid assumption for cost-volume-profit analysis?

How can financial modeling be used for profit planning purposes?

Which of the following represents the formula for the margin of safety?

Shenandoah Company Shenandoah Company is considering the introduction of a new product with the following price and cost characteristics The company expects to sell 2,000 units for the year. Refer Shenandoah Company.How many units must be sold to break even?

Catfish Company produces two products,C and F,with the following characteristics: Total fixed costs for the company are $21,000. REQUIRED:

Which of the following is the major assumption as to cost and revenue behavior underlying conventional cost-volume-profit calculations?

Fundamental Concepts

Measuring Product Costs

Activity-Based Management

Strategic Management of Costs,quality,and Time

Cost Drivers and Cost Behavior

Differential Cost Analysis for Operating Decisions

Capital Expenditure Decisions

Profit Planning and Budgeting

Profit and Cost Center Performance Evaluation

Investment Center Performance Evaluation

Incentive Issues

Allocating Costs to Responsibility Centers

Filters

Exam 6: Financial Modeling for Short-Term Decision Making

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

The formula used in performing cost-volume-profit (CVP)analysis for the "before-tax target",where t is the tax rate,is

Deering Company is contemplating an expansion program based on the following budget data: Calculate the budgeted break-even point in sales dollars.

How is target profit volume calculated?

What is the formula for Target Profit in Sales Dollars?

Operating leverage is high in firms with: Fixed Costs Variable Costs Contribution Margin Per Unit

Explain the use of financial modeling in a multiple product setting.

How is the contribution margin ratio calculated?

What happens to the contribution margin if fixed expenses decrease while variable cost per unit remain constant.

Which statement is true concerning the cost-volume-profit (CVP)model?

Which of the following statements best defines the contribution margin ratio?

Which of the following is not a valid assumption for cost-volume-profit analysis?

How can financial modeling be used for profit planning purposes?

Which of the following represents the formula for the margin of safety?

Shenandoah Company Shenandoah Company is considering the introduction of a new product with the following price and cost characteristics The company expects to sell 2,000 units for the year. Refer Shenandoah Company.How many units must be sold to break even?

Catfish Company produces two products,C and F,with the following characteristics: Total fixed costs for the company are $21,000. REQUIRED:

Which of the following is the major assumption as to cost and revenue behavior underlying conventional cost-volume-profit calculations?

Fundamental Concepts

Measuring Product Costs

Activity-Based Management

Strategic Management of Costs,quality,and Time

Cost Drivers and Cost Behavior

Differential Cost Analysis for Operating Decisions

Capital Expenditure Decisions

Profit Planning and Budgeting

Profit and Cost Center Performance Evaluation

Investment Center Performance Evaluation

Incentive Issues

Allocating Costs to Responsibility Centers

Filters