Question 1

In terms of cost behavior, supervisory salaries and direct labor are classified as

Accepted Answer

A)  fixed and variable, respectively. 
B)  both variable. 
C)  both fixed. 
D)  mixed and fixed, respectively. 
A)  fixed and variable, respectively. 
B)  both variable. 
C)  both fixed. 
D)  mixed and fixed, respectively.

Question 2

A contribution margin income statement is formatted to emphasize cost behavior rather than organizational functions.

Accepted Answer

A) True 
 B)False

Question 3

When using the high-low method, the accountant assumes the fixed portion of mixed costs to be the lowest fixed amount incurred during the period under review.

Accepted Answer

A) True 
 B)False

Question 4

Using the contribution margin approach, find the contribution margin ratio for Consumer Products if the selling price per unit is $12, the variable cost per unit is $3, and the fixed costs are $8,040.

Accepted Answer

A)  25% 
B)  50% 
C)  75% 
D)  100% 
A)  25% 
B)  50% 
C)  75% 
D)  100%

Question 5

Theoretical capacity refers to

Accepted Answer

A)  extra machinery and equipment kept on hand. 
B)  the maximum productive output possible. 
C)  an output level that allows for normal work stoppages. 
D)  the operating capacity that will meet expected sales demand. 
A)  extra machinery and equipment kept on hand. 
B)  the maximum productive output possible. 
C)  an output level that allows for normal work stoppages. 
D)  the operating capacity that will meet expected sales demand.

Question 6

The contribution margin and the gross margin can be used interchangeably.

Accepted Answer

A) True 
 B)False

Question 7

Ditex is a manufacturer of digital cameras and is preparing production and sales forecasts for the coming fiscal year. The company needs to determine the point at which the projected sales revenue will equal the total of all fixed and variable costs. Fixed costs are estimated to be $314,390, and variable costs are expected to be maintained at $150 per camera. Each camera will sell for $299. Compute (a) the breakeven point in sales units and (b) the breakeven point in sales dollars.

Accepted Answer

None

Question 8

If fixed costs are increased, then a breakeven analysis with an adjustment for profit will yield an increase in the number of sales or targeted sales units.

Accepted Answer

A) True 
 B)False

Question 9

Cost behavior is defined as the manner in which costs respond to changes in volume or activity.

Accepted Answer

A) True 
 B)False

Question 10

Practical capacity and normal capacity are synonymous terms.

Accepted Answer

A) True 
 B)False

Question 11

Dapper Hat Makers is in the business of designing and producing specialty hats. The material used for derbies costs $4.50 per unit, and Dapper pays each of its two full-time employees $250 per week.
- If the employees make 50 derbies in one week, what is the fixed cost per derby? (Round to two decimal places where necessary.)

Accepted Answer

A)  $4.50 
B)  $5.00 
C)  $10.00 
D)  $14.50 
A)  $4.50 
B)  $5.00 
C)  $10.00 
D)  $14.50

Question 12

Telephone costs are an example of a mixed cost.

Accepted Answer

A) True 
 B)False

Question 13

Unit variable costs vary with changes in productive output, whereas total variable costs remain constant.

Accepted Answer

A) True 
 B)False

Question 14

The point at which the total cost line intersects with the total revenue line provides information on the number of units that must be sold to break even.

Accepted Answer

A) True 
 B)False

Question 15

Straight-line depreciation on the controller's computer is an example of a variable cost.

Accepted Answer

A) True 
 B)False

Question 16

The engineering method of separating costs is sometimes called a time and motion study.

Accepted Answer

A) True 
 B)False

Question 17

Ryan's Landscaping sells a quality brand of hoes, shovels, and rakes in a sales mix of 2:4:2. The company's fixed costs are $61,600. Product data include the following:
 $\begin{array}{|l|l|l|}
\hline & \text { Unit Sales Price } & \text { Unit Variable Costs } \
\hline \text { Hoes } & \$ 12 & \$ 8 \
\hline \text { Shovels } & 15 & 7 \
\hline \text { Rakes } & 16 & 8 \
\hline
\end{array}$

a. Compute the weighted-average contribution margin.
b. Determine the weighted-average breakeven point.
c. Calculate the breakeven point for each product.
d. Determine the breakeven point in sales dollars.

Accepted Answer

a.
 \(\begin{array}{|l|l|l|l|l|l|} 
\hli

Question 18

A new product, an easy to store guitar stand, is being planned, with the following cost estimates: variable cost per unit, $9, and total fixed costs, $58,000. The projected sales price is $13 each.
a. Using the contribution margin approach, compute the number of units that must be sold to break even.
b. Using the same approach and assuming that fixed costs can be reduced by $8,000, how many units must be sold to produce a profit of $65,000?
c. Given the original information and the projection that 50,000 units can be sold, compute the selling price that the producer must use to obtain a profit of $150,000.

Accepted Answer

None

Question 19

The breakeven point is the point at which

Accepted Answer

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

Question 20

Contribution margin equals sales minus

Accepted Answer

A)  cost of goods sold. 
B)  total costs. 
C)  fixed costs. 
D)  variable costs. 
A)  cost of goods sold. 
B)  total costs. 
C)  fixed costs. 
D)  variable costs.

In terms of cost behavior, supervisory salaries and direct labor are classified as

A contribution margin income statement is formatted to emphasize cost behavior rather than organizational functions.

When using the high-low method, the accountant assumes the fixed portion of mixed costs to be the lowest fixed amount incurred during the period under review.

Using the contribution margin approach, find the contribution margin ratio for Consumer Products if the selling price per unit is $12, the variable cost per unit is $3, and the fixed costs are $8,040.

Theoretical capacity refers to

The contribution margin and the gross margin can be used interchangeably.

If fixed costs are increased, then a breakeven analysis with an adjustment for profit will yield an increase in the number of sales or targeted sales units.

Cost behavior is defined as the manner in which costs respond to changes in volume or activity.

Practical capacity and normal capacity are synonymous terms.

Telephone costs are an example of a mixed cost.

Unit variable costs vary with changes in productive output, whereas total variable costs remain constant.

The point at which the total cost line intersects with the total revenue line provides information on the number of units that must be sold to break even.

Straight-line depreciation on the controller's computer is an example of a variable cost.

The engineering method of separating costs is sometimes called a time and motion study.

The breakeven point is the point at which

Contribution margin equals sales minus

The Changing Business Environment - a Managers Perspective

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, Incl Target Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

Filters

Exam 5: Cost Behavior Analysis

In terms of cost behavior, supervisory salaries and direct labor are classified as

A contribution margin income statement is formatted to emphasize cost behavior rather than organizational functions.

When using the high-low method, the accountant assumes the fixed portion of mixed costs to be the lowest fixed amount incurred during the period under review.

Using the contribution margin approach, find the contribution margin ratio for Consumer Products if the selling price per unit is $12, the variable cost per unit is $3, and the fixed costs are $8,040.

Theoretical capacity refers to

The contribution margin and the gross margin can be used interchangeably.

If fixed costs are increased, then a breakeven analysis with an adjustment for profit will yield an increase in the number of sales or targeted sales units.

Cost behavior is defined as the manner in which costs respond to changes in volume or activity.

Practical capacity and normal capacity are synonymous terms.

Telephone costs are an example of a mixed cost.

Unit variable costs vary with changes in productive output, whereas total variable costs remain constant.

The point at which the total cost line intersects with the total revenue line provides information on the number of units that must be sold to break even.

Straight-line depreciation on the controller's computer is an example of a variable cost.

The engineering method of separating costs is sometimes called a time and motion study.

The breakeven point is the point at which

Contribution margin equals sales minus

The Changing Business Environment - a Managers Perspective

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, Incl Target Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

Filters