Question 1

The margin of safety ratio is equal to:

Accepted Answer

A) Net operating income percentage / Contribution margin ratio. 
B) Contribution margin / Sales. 
C) Contribution margin / Net operating income. 
D) Margin of safety / Fixed cost. 
A) Net operating income percentage / Contribution margin ratio. 
B) Contribution margin / Sales. 
C) Contribution margin / Net operating income. 
D) Margin of safety / Fixed cost.

Question 2

Kehler Corporation wished to market a new product for $2.00 a unit.Fixed costs to manufacture this product are $100,000.The contribution margin is 40 percent.How many units must be sold to realize net income of $100,000 from this product?

Accepted Answer

A) 200,000 
B) 250,000 
C) 300,000 
D) 350,000 
A) 200,000 
B) 250,000 
C) 300,000 
D) 350,000

Question 3

The difference in cost between two alternatives,such as to make a component part of a final product versus buying the part from an outside supplier is called:

Accepted Answer

A) Variable cost. 
B) Differential cost. 
C) Product cost. 
D) Indirect cost. 
A) Variable cost. 
B) Differential cost. 
C) Product cost. 
D) Indirect cost.

Question 4

Queen,Ltd.has one product.Its sales price and variable cost per unit are $25 and $20,respectively.Last year,Queen sold 25,000 units,which was 5,000 more than the break-even point.What were Queen's fixed expenses?

Accepted Answer

A) $100,000 
B) $125,000 
C) $300,000 
D) There is not enough information to answer the question. 
A) $100,000 
B) $125,000 
C) $300,000 
D) There is not enough information to answer the question.

Question 5

The Gaylord Company has sales of $800,000,variable costs of $400,000,and fixed costs of $250,000.
Compute the following:
a.Contribution margin ratio
b.Break-even sales volume
c.Margin of safety ratio
d.Net income as a percentage of sales

Accepted Answer

The answer of The Gaylord Company has sales of $800,000,variable...

Question 6

A study that highlights the significant cost and revenue data between two alternatives is a(n):

Accepted Answer

A) cost analysis. 
B) income analysis. 
C) differential analysis. 
D) distribution analysis. 
A) cost analysis. 
B) income analysis. 
C) differential analysis. 
D) distribution analysis.

Question 7

If a company has an income tax rate of 40% and fixed costs of $105,000,and wishes to earn an after-tax profit of $150,000,what must its pre-tax income be?

Accepted Answer

A) $375,000 
B) $425,000 
C) $250,000 
D) $175,000 
A) $375,000 
B) $425,000 
C) $250,000 
D) $175,000

Question 8

Sherpa Manufacturing has the following income statement for 6,000 units:   (a)At what sales volume (in sales dollars)does Sherpa break even?
(b)At what sales volume (in units)does Sherpa break even?
(c)Given the income statement above,compute the margin of safety.
(d)What level of sales volume must be attained to reach net income of $200,000?
(e)What level of sales volume must be attained to reach net income of $180,000,assuming Sherpa had to pay income taxes at a rate of 40%?

Accepted Answer

(a)Contribution margin ratio = contribut

Question 9

Consider the following information for the Dehning Company:   What are Dehning's variable costs at the break-even point?

Accepted Answer

A) $490,000 
B) $1,344,000 
C) $840,000 
D) $588,000 
A) $490,000 
B) $1,344,000 
C) $840,000 
D) $588,000

Question 10

Busby Company needs 10,000 units of a certain part to use in its production cycle.The following information is available:
Costs incurred by Busby to make the part:
Direct materials $15
Direct labor 12
Variable factory overhead 13
Fixed factory overhead 10
Total $50
Costs to buy the part from Thurco: $45
If Busby buys the part from Thurco instead of making it,Busby could not use the released facilities in another manufacturing activity.However,twenty percent of the fixed overhead would be avoided because one of the supervisors could be let go.
(a)In deciding whether to make or buy the part,what are the relevant costs that Busby must consider.
(b)What decision should Busby make?

Accepted Answer

(a)Variable costs to manufacture the pro

Question 11

The use of either absorption or variable costing will make little difference in companies

Accepted Answer

A) with large inventories. 
B) using JIT. 
C) with high fixed costs. 
D) with high variable costs. 
A) with large inventories. 
B) using JIT. 
C) with high fixed costs. 
D) with high variable costs.

Question 12

Tennenholtz Company's break-even graph is depicted below.The line labeled "C" is:   ​

Accepted Answer

A) The sales line. 
B) The contribution margin line. 
C) The total cost line. 
D) The variable cost line. 
A) The sales line. 
B) The contribution margin line. 
C) The total cost line. 
D) The variable cost line.

Question 13

A manager can increase income under absorption costing by

Accepted Answer

A) increasing variable costs. 
B) increasing production. 
C) increasing fixed costs. 
D) increasing leased assets. 
A) increasing variable costs. 
B) increasing production. 
C) increasing fixed costs. 
D) increasing leased assets.

Question 14

If the selling price and the variable cost per unit both increase 10 percent and fixed costs do not change,what is the effect on the contribution margin per unit and the contribution margin ratio?

Accepted Answer

A) Contribution margin per unit and the contribution margin ratio both remain unchanged. 
B) Contribution margin per unit and the contribution margin ratio both increase. 
C) Contribution margin per unit increases and the contribution margin ratio decreases. 
D) Contribution margin per unit increases and the contribution ratio remains unchanged. 
A) Contribution margin per unit and the contribution margin ratio both remain unchanged. 
B) Contribution margin per unit and the contribution margin ratio both increase. 
C) Contribution margin per unit increases and the contribution margin ratio decreases. 
D) Contribution margin per unit increases and the contribution ratio remains unchanged.

Question 15

Which of the following would cause the break-even point to change?

Accepted Answer

A) Sales volume increased. 
B) Fixed costs increased due to addition to physical plant. 
C) Total variable costs increased as a function of higher production. 
D) Total production decreased. 
A) Sales volume increased. 
B) Fixed costs increased due to addition to physical plant. 
C) Total variable costs increased as a function of higher production. 
D) Total production decreased.

Question 16

Consider the following information about the Gumm Company:   Budgeted fixed costs are $550,000.The weighted-average unit contribution margin is:

Accepted Answer

A) $2.25 
B) $3.25 
C) $2.20 
D) $2.30 
A) $2.25 
B) $3.25 
C) $2.20 
D) $2.30

Question 17

The following data relate to a year's budgeted activity for Palisades Company,a single product company:   Total fixed costs remain unchanged within the relevant range in which the company is currently operating. 
a.What is the projected annual break-even sales in units?
b.What dollar amount of sales would Jorgenson need to achieve operating income of $50,000?
c.If fixed costs increased $15,000,how many more units must be sold to break even?

Accepted Answer

The answer of The following data relate to a year's...

Question 18

The Blue Saints Band is holding a concert in Toronto.Fixed costs relating to staging a concert are $350,000.Variable costs per patron are $5.00.The selling price for a tickets $25.00.The Blue Saints Band has sold 24,000 tickets so far. ​
At the current level of sales,what is the margin of safety in dollars?

Accepted Answer

A) $162,500 
B) $112,500 
C) $180,000 
D) $115,000 
A) $162,500 
B) $112,500 
C) $180,000 
D) $115,000

Question 19

Chase Company's new product is expected to have a sales price of $15 and variable unit price of $7.Fixed costs are expected to be $560,000.What is the break-even point in sales dollars?

Accepted Answer

A) $840,000 
B) $1,050,000 
C) $560,000 
D) $1,200,000 
A) $840,000 
B) $1,050,000 
C) $560,000 
D) $1,200,000

Question 20

The excess of revenue over variable costs,including manufacturing,selling and administrative costs,is called:

Accepted Answer

A) Gross margin. 
B) Manufacturing margin. 
C) Contribution margin. 
D) Segment margin. 
A) Gross margin. 
B) Manufacturing margin. 
C) Contribution margin. 
D) Segment margin.

The margin of safety ratio is equal to:

Kehler Corporation wished to market a new product for $2.00 a unit.Fixed costs to manufacture this product are $100,000.The contribution margin is 40 percent.How many units must be sold to realize net income of $100,000 from this product?

The difference in cost between two alternatives,such as to make a component part of a final product versus buying the part from an outside supplier is called:

Queen,Ltd.has one product.Its sales price and variable cost per unit are $25 and $20,respectively.Last year,Queen sold 25,000 units,which was 5,000 more than the break-even point.What were Queen's fixed expenses?

The Gaylord Company has sales of $800,000,variable costs of $400,000,and fixed costs of $250,000. Compute the following: a.Contribution margin ratio b.Break-even sales volume c.Margin of safety ratio d.Net income as a percentage of sales

A study that highlights the significant cost and revenue data between two alternatives is a(n):

If a company has an income tax rate of 40% and fixed costs of $105,000,and wishes to earn an after-tax profit of $150,000,what must its pre-tax income be?

Consider the following information for the Dehning Company: What are Dehning's variable costs at the break-even point?

The use of either absorption or variable costing will make little difference in companies

Tennenholtz Company's break-even graph is depicted below.The line labeled "C" is:

A manager can increase income under absorption costing by

If the selling price and the variable cost per unit both increase 10 percent and fixed costs do not change,what is the effect on the contribution margin per unit and the contribution margin ratio?

Which of the following would cause the break-even point to change?

Consider the following information about the Gumm Company: Budgeted fixed costs are $550,000.The weighted-average unit contribution margin is:

Chase Company's new product is expected to have a sales price of $15 and variable unit price of $7.Fixed costs are expected to be $560,000.What is the break-even point in sales dollars?

The excess of revenue over variable costs,including manufacturing,selling and administrative costs,is called:

Introduction to Cost Accounting

Accounting for Materials

Accounting for Labor

Accounting for Factory Overhead

Process Cost Accounting--General Procedures

Process Cost Accounting--Additional Procedures

Master Budget and Flexible Budgeting

Standard Cost Accounting--Materials, labor, and Factory Overhead

Cost Accounting for Service Businesses

Filters

Exam 10: Cost Analysis for Management Decision Making

The margin of safety ratio is equal to:

Kehler Corporation wished to market a new product for $2.00 a unit.Fixed costs to manufacture this product are $100,000.The contribution margin is 40 percent.How many units must be sold to realize net income of $100,000 from this product?

The difference in cost between two alternatives,such as to make a component part of a final product versus buying the part from an outside supplier is called:

Queen,Ltd.has one product.Its sales price and variable cost per unit are $25 and $20,respectively.Last year,Queen sold 25,000 units,which was 5,000 more than the break-even point.What were Queen's fixed expenses?

The Gaylord Company has sales of $800,000,variable costs of $400,000,and fixed costs of $250,000. Compute the following: a.Contribution margin ratio b.Break-even sales volume c.Margin of safety ratio d.Net income as a percentage of sales

A study that highlights the significant cost and revenue data between two alternatives is a(n):

If a company has an income tax rate of 40% and fixed costs of $105,000,and wishes to earn an after-tax profit of $150,000,what must its pre-tax income be?

Consider the following information for the Dehning Company: What are Dehning's variable costs at the break-even point?

The use of either absorption or variable costing will make little difference in companies

Tennenholtz Company's break-even graph is depicted below.The line labeled "C" is: ​

A manager can increase income under absorption costing by

If the selling price and the variable cost per unit both increase 10 percent and fixed costs do not change,what is the effect on the contribution margin per unit and the contribution margin ratio?

Which of the following would cause the break-even point to change?

Consider the following information about the Gumm Company: Budgeted fixed costs are $550,000.The weighted-average unit contribution margin is:

Chase Company's new product is expected to have a sales price of $15 and variable unit price of $7.Fixed costs are expected to be $560,000.What is the break-even point in sales dollars?

The excess of revenue over variable costs,including manufacturing,selling and administrative costs,is called:

Introduction to Cost Accounting

Accounting for Materials

Accounting for Labor

Accounting for Factory Overhead

Process Cost Accounting--General Procedures

Process Cost Accounting--Additional Procedures

Master Budget and Flexible Budgeting

Standard Cost Accounting--Materials, labor, and Factory Overhead

Cost Accounting for Service Businesses

Filters

Tennenholtz Company's break-even graph is depicted below.The line labeled "C" is: