Question 1

Curvilinear costs always increase:

Accepted Answer

A)  With decreases in volume. 
B)  In constant proportion to changes in production levels. 
C)  When management performs break-even analysis. 
D)  When volume increases, but not at a constant rate. 
E)  On a per unit basis when volume of activity goes down. 
A)  With decreases in volume. 
B)  In constant proportion to changes in production levels. 
C)  When management performs break-even analysis. 
D)  When volume increases, but not at a constant rate. 
E)  On a per unit basis when volume of activity goes down.

Question 2

A company manufactures and sells a product for $150 per unit. The company's fixed costs are $68,200, and its variable costs are $95 per unit. The company's break-even point in dollars is:

Accepted Answer

A)  $107,700 
B)  $125,000 
C)  $136,450 
D)  $186,000 
E)  $170,550 
A)  $107,700 
B)  $125,000 
C)  $136,450 
D)  $186,000 
E)  $170,550

Question 3

To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and sales price.

Accepted Answer

A) True 
 B)False

Question 4

A line on a scatter diagram that is intended to reflect the past relation between cost and volume is the:

Accepted Answer

A)  Margin of safety line. 
B)  Break-even line. 
C)  Contribution margin line. 
D)  Estimated line of cost behavior. 
E)  Standard cost line. 
A)  Margin of safety line. 
B)  Break-even line. 
C)  Contribution margin line. 
D)  Estimated line of cost behavior. 
E)  Standard cost line.

Question 5

A company is looking into two alternative methods of producing its product. The following information about the two alternatives is available:

Accepted Answer

@#IMG-DLM&
If the company's ex

Question 6

The sales level at which a company neither earns a profit nor incurs a loss is the:

Accepted Answer

A)  Relevant range. 
B)  Margin of safety. 
C)  Step-wise variable level. 
D)  Break-even point. 
E)  Contribution margin. 
A)  Relevant range. 
B)  Margin of safety. 
C)  Step-wise variable level. 
D)  Break-even point. 
E)  Contribution margin.

Question 7

A graphic presentation of cost-volume-profit data is known as a __________________ graph (or chart); this presentation is also sometimes called a ______________ chart.

Accepted Answer

The answer of A graphic presentation of cost-volume-profit data is...

Question 8

Conan Company has total fixed costs of $112,000. Its product sells for $35 per unit and variable costs amount to $25 per unit. Next year Conan Company wishes to earn a pretax income that equals 10% of fixed costs. How many units must be sold to achieve this target income level?

Accepted Answer

A)  1,120 
B)  8,214 
C)  11,200 
D)  12,320 
E)  14,080 
A)  1,120 
B)  8,214 
C)  11,200 
D)  12,320 
E)  14,080

Question 9

The dollar amount of sales needed to achieve a target after-tax income is computed by dividing the sum of fixed costs plus the desired after-tax income plus income taxes by the contribution margin ratio.

Accepted Answer

A) True 
 B)False

Question 10

A company has fixed costs of $90,000. Its contribution margin ratio is 30% and the product sells for $75 per unit. What is the company's break-even point in dollar sales?

Accepted Answer

A)  $60,000 
B)  $128,571 
C)  $180,000 
D)  $210,000 
E)  $300,000 
A)  $60,000 
B)  $128,571 
C)  $180,000 
D)  $210,000 
E)  $300,000

Question 11

The contribution margin per unit is:

Accepted Answer

A)  $5.00 
B)  $7.00 
C)  $8.17 
D)  $12.00 
E)  $17.00 
A)  $5.00 
B)  $7.00 
C)  $8.17 
D)  $12.00 
E)  $17.00

Question 12

A company manufactures and sells a product for $120 per unit. The company's fixed costs are $68,760, and its variable costs are $90 per unit. The company's break-even point in units is:

Accepted Answer

A)  2,292 
B)  573 
C)  764 
D)  327 
E)  840 
A)  2,292 
B)  573 
C)  764 
D)  327 
E)  840

Question 13

The contribution margin ratio is the percent by which the margin of safety exceeds the break-even point.

Accepted Answer

A) True 
 B)False

Question 14

What do unit contribution margin and contribution margin ratio reveal about a company's cost structure?

Accepted Answer

Unit contribution margin is the amount r

Question 15

The break-even point in units is:

Accepted Answer

A)  5,158 
B)  7,000 
C)  8,167 
D)  14,000 
E)  19,600 
A)  5,158 
B)  7,000 
C)  8,167 
D)  14,000 
E)  19,600

Question 16

A __________ cost is one that includes both fixed and variable cost components; a ______________ cost is one that reflects a step pattern.

Accepted Answer

The answer of A __________ cost is one that includes...

Question 17

A break-even point can be calculated either in units or in dollars.

Accepted Answer

A) True 
 B)False

Question 18

The contribution margin per unit expressed as a percentage of the product's selling price is the:

Accepted Answer

A)  Volume variance. 
B)  Margin of safety. 
C)  Contribution margin ratio. 
D)  Break-even point. 
E)  Rate of return on sales. 
A)  Volume variance. 
B)  Margin of safety. 
C)  Contribution margin ratio. 
D)  Break-even point. 
E)  Rate of return on sales.

Question 19

What is an important feature that must be remembered when using cost estimation methods?

Accepted Answer

All three methods of estimation (scatter

Question 20

The sales mix of Palm Company is 5 units of A, 3 units of B, and 1 unit of
C. Per unit sales prices for each product are $30, $40, and $50, respectively. Variable costs per unit are $14, $24, and $34, respectively. Fixed costs are $597,600. What is the break-even point in composite units and in units of A, B, and C?

Accepted Answer

@#IMG-DLM&
Contribution margin of a composite unit

Exam 18: Cost Behavior and Cost-Volume-Profit Analysis

Curvilinear costs always increase:

A company manufactures and sells a product for $150 per unit. The company's fixed costs are $68,200, and its variable costs are $95 per unit. The company's break-even point in dollars is:

To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and sales price.

A line on a scatter diagram that is intended to reflect the past relation between cost and volume is the:

A company is looking into two alternative methods of producing its product. The following information about the two alternatives is available:

The sales level at which a company neither earns a profit nor incurs a loss is the:

A graphic presentation of cost-volume-profit data is known as a __________________ graph (or chart); this presentation is also sometimes called a ______________ chart.

Conan Company has total fixed costs of $112,000. Its product sells for $35 per unit and variable costs amount to $25 per unit. Next year Conan Company wishes to earn a pretax income that equals 10% of fixed costs. How many units must be sold to achieve this target income level?

The dollar amount of sales needed to achieve a target after-tax income is computed by dividing the sum of fixed costs plus the desired after-tax income plus income taxes by the contribution margin ratio.

A company has fixed costs of $90,000. Its contribution margin ratio is 30% and the product sells for $75 per unit. What is the company's break-even point in dollar sales?

The contribution margin per unit is:

A company manufactures and sells a product for $120 per unit. The company's fixed costs are $68,760, and its variable costs are $90 per unit. The company's break-even point in units is:

The contribution margin ratio is the percent by which the margin of safety exceeds the break-even point.

What do unit contribution margin and contribution margin ratio reveal about a company's cost structure?

The break-even point in units is:

A __________ cost is one that includes both fixed and variable cost components; a ______________ cost is one that reflects a step pattern.

A break-even point can be calculated either in units or in dollars.

The contribution margin per unit expressed as a percentage of the product's selling price is the:

What is an important feature that must be remembered when using cost estimation methods?

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Decentralization and Performance Evaluation

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Investments and International Operations

Accounting for Partnerships

Appendix : Accounting With Special Journals

Filters

A graphic presentation of cost-volume-profit data is known as a ____ graph (or chart); this presentation is also sometimes called a chart.

A cost is one that includes both fixed and variable cost components; a ____ cost is one that reflects a step pattern.