Question 1

Segment profitability analysis may be used to evaluate the profitability of:

Accepted Answer

A) Divisions. 
B) Sales territories. 
C) Product lines. 
D) All of these are correct. 
A) Divisions. 
B) Sales territories. 
C) Product lines. 
D) All of these are correct.

Question 2

Consider the income statement for Bayless Company:   What is the break-even point in sales dollars (rounded to the nearest dollar)?

Accepted Answer

A) $264,063 
B) $92,308 
C) $160,000 
D) $240,000 
A) $264,063 
B) $92,308 
C) $160,000 
D) $240,000

Question 3

An example of a distribution cost that can be directly assigned to selling activity would be:

Accepted Answer

A) Advertising costs. 
B) Commissions. 
C) Sales manager's salary. 
D) Telephone expenses. 
A) Advertising costs. 
B) Commissions. 
C) Sales manager's salary. 
D) Telephone expenses.

Question 4

The margin of safety is the amount:

Accepted Answer

A) by which the sales price per unit exceeds the variable cost per unit. 
B) that the contribution margin exceeds fixed cost. 
C) by which the profit calculated under absorption costing exceeds the profit calculated under variable costing. 
D) that sales can decrease before the company will suffer a loss. 
A) by which the sales price per unit exceeds the variable cost per unit. 
B) that the contribution margin exceeds fixed cost. 
C) by which the profit calculated under absorption costing exceeds the profit calculated under variable costing. 
D) that sales can decrease before the company will suffer a loss.

Question 5

Absorption cost is required for:

Accepted Answer

A) income tax purposes. 
B) external financial reporting but not income tax purposes. 
C) both external financial reporting and income tax purposes. 
D) neither external financial reporting nor income tax purposes. 
A) income tax purposes. 
B) external financial reporting but not income tax purposes. 
C) both external financial reporting and income tax purposes. 
D) neither external financial reporting nor income tax purposes.

Question 6

Mobile,Inc. ,manufactured 700 units of Product A,a new product,during the year.Product A's variable and fixed manufacturing costs per unit were $6.00 and $2.00,respectively.The inventory of Product A on December 31 of the year consisted of 100 units.There was no inventory of Product A on January 1 of the year.What would be the change in the dollar amount of inventory on December 31 if variable costing were used instead of absorption costing?

Accepted Answer

A) $800 decrease 
B) $200 decrease 
C) $600 decrease 
D) $200 increase 
A) $800 decrease 
B) $200 decrease 
C) $600 decrease 
D) $200 increase

Question 7

On a variable costing income statement,the difference between sales and variable cost of goods sold is called:

Accepted Answer

A) gross margin. 
B) contribution margin. 
C) profit margin. 
D) manufacturing margin. 
A) gross margin. 
B) contribution margin. 
C) profit margin. 
D) manufacturing margin.

Question 8

Tennenholtz Company's break-even graph is depicted below.Which area indicates the break-even point?   ​

Accepted Answer

A) E. 
B) G. 
C) A. 
D) H. 
A) E. 
B) G. 
C) A. 
D) H.

Question 9

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 $10.00.The selling price for a tickets $30.00.The Blue Saints Band has sold 23,000 tickets so far. ​
How many tickets does the Blue Saints Band need to sell to break even?

Accepted Answer

A) 23,000 
B) 20,000 
C) 14,000 
D) 17,500 
A) 23,000 
B) 20,000 
C) 14,000 
D) 17,500

Question 10

Net income reported under variable costing will exceed net income reported under absorption costing for a given period if:

Accepted Answer

A) Production equals sales for that period. 
B) Production exceeds sales for that period. 
C) Sales exceed production for that period. 
D) The variable overhead exceeds the fixed overhead. 
A) Production equals sales for that period. 
B) Production exceeds sales for that period. 
C) Sales exceed production for that period. 
D) The variable overhead exceeds the fixed overhead.

Question 11

A basic tenet of variable costing is that fixed overhead costs should be currently expensed.What is the basic rationale behind this procedure?

Accepted Answer

A) Fixed overhead costs will occur whether or not production occurs and so it presents a clearer picture of how changes in production volume affect costs and income. 
B) Fixed overhead costs are generally immaterial in amount and the cost of assigning the amounts to specific products would outweigh the benefits. 
C) Allocation of fixed overhead costs is arbitrary at best and could lead to erroneous decisions by management. 
D) Fixed overhead costs are uncontrollable and should not be charged to a specific product. 
A) Fixed overhead costs will occur whether or not production occurs and so it presents a clearer picture of how changes in production volume affect costs and income. 
B) Fixed overhead costs are generally immaterial in amount and the cost of assigning the amounts to specific products would outweigh the benefits. 
C) Allocation of fixed overhead costs is arbitrary at best and could lead to erroneous decisions by management. 
D) Fixed overhead costs are uncontrollable and should not be charged to a specific product.

Question 12

The Tijama Manufacturing Company has determined the cost of manufacturing a unit of product to be as follows,based on normal production of 50,000 units per year:   Operating statistics for the month of August and September include:   The selling price is $70 per unit.There were no inventories on August 1,and there is no work in process at September 30.
Prepare comparative income statements for each month under the following methods: 
a.Absorption costing method
b.Direct costing method

Accepted Answer

The answer of The Tijama Manufacturing Company has determined the...

Question 13

Break-even sales volume in units is determined by:

Accepted Answer

A) Dividing the fixed cost by the difference between the unit selling price and unit variable costs. 
B) Subtracting the fixed cost from the contribution margin. 
C) Dividing the fixed cost by the unit selling price. 
D) Subtracting the variable cost per unit from the unit selling price. 
A) Dividing the fixed cost by the difference between the unit selling price and unit variable costs. 
B) Subtracting the fixed cost from the contribution margin. 
C) Dividing the fixed cost by the unit selling price. 
D) Subtracting the variable cost per unit from the unit selling price.

Question 14

A company increased the selling price for its product from $1.00 to $1.20 a unit when total fixed costs increased from $400,000 to $450,000 and variable cost per unit remained unchanged.How would these changes affect the break-even point?

Accepted Answer

A) The break-even point in units would be increased. 
B) The break-even point in units would be decreased. 
C) The break-even point in units would remain unchanged. 
D) The effect cannot be determined from the information given. 
A) The break-even point in units would be increased. 
B) The break-even point in units would be decreased. 
C) The break-even point in units would remain unchanged. 
D) The effect cannot be determined from the information given.

Question 15

A company has fixed costs of $700,000.The selling price and variable cost per unit are $50.00,and $10.00,respectively. ​
How many units does the company need to sell to achieve net income of $100,000 after income tax,assuming the income tax rate is 50%?

Accepted Answer

A) 2,500 
B) 18,000 
C) 22,500 
D) 17,500 
A) 2,500 
B) 18,000 
C) 22,500 
D) 17,500

Question 16

When evaluating profitability of a segment,costs that would disappear if the company eliminated the segment are called:

Accepted Answer

A) Direct costs. 
B) Common costs. 
C) Indirect costs. 
D) Fixed costs. 
A) Direct costs. 
B) Common costs. 
C) Indirect costs. 
D) Fixed costs.

Question 17

Consider the following information for the Cornwall Company:   How many units must Cornwall sell to break even?

Accepted Answer

A) 7,000 
B) 16,800 
C) 12,000 
D) 8,400 
A) 7,000 
B) 16,800 
C) 12,000 
D) 8,400

Question 18

The Company is planning to sell Product Z for $20 a unit.Variable costs are $12 a unit and fixed costs are $100,000.What must total sales be to break even?

Accepted Answer

A) $266,667 
B) $250,000 
C) $200,000 
D) $166,667 
A) $266,667 
B) $250,000 
C) $200,000 
D) $166,667

Segment profitability analysis may be used to evaluate the profitability of:

Consider the income statement for Bayless Company: What is the break-even point in sales dollars (rounded to the nearest dollar)?

An example of a distribution cost that can be directly assigned to selling activity would be:

The margin of safety is the amount:

Absorption cost is required for:

On a variable costing income statement,the difference between sales and variable cost of goods sold is called:

Tennenholtz Company's break-even graph is depicted below.Which area indicates the break-even point?

Net income reported under variable costing will exceed net income reported under absorption costing for a given period if:

A basic tenet of variable costing is that fixed overhead costs should be currently expensed.What is the basic rationale behind this procedure?

Break-even sales volume in units is determined by:

A company increased the selling price for its product from $1.00 to $1.20 a unit when total fixed costs increased from $400,000 to $450,000 and variable cost per unit remained unchanged.How would these changes affect the break-even point?

A company has fixed costs of $700,000.The selling price and variable cost per unit are $50.00,and $10.00,respectively. How many units does the company need to sell to achieve net income of $100,000 after income tax,assuming the income tax rate is 50%?

When evaluating profitability of a segment,costs that would disappear if the company eliminated the segment are called:

Consider the following information for the Cornwall Company: How many units must Cornwall sell to break even?

The Company is planning to sell Product Z for $20 a unit.Variable costs are $12 a unit and fixed costs are $100,000.What must total sales be to break even?

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

Segment profitability analysis may be used to evaluate the profitability of:

Consider the income statement for Bayless Company: What is the break-even point in sales dollars (rounded to the nearest dollar)?

An example of a distribution cost that can be directly assigned to selling activity would be:

The margin of safety is the amount:

Absorption cost is required for:

On a variable costing income statement,the difference between sales and variable cost of goods sold is called:

Tennenholtz Company's break-even graph is depicted below.Which area indicates the break-even point? ​

Net income reported under variable costing will exceed net income reported under absorption costing for a given period if:

A basic tenet of variable costing is that fixed overhead costs should be currently expensed.What is the basic rationale behind this procedure?

Break-even sales volume in units is determined by:

A company increased the selling price for its product from $1.00 to $1.20 a unit when total fixed costs increased from $400,000 to $450,000 and variable cost per unit remained unchanged.How would these changes affect the break-even point?

A company has fixed costs of $700,000.The selling price and variable cost per unit are $50.00,and $10.00,respectively. ​ How many units does the company need to sell to achieve net income of $100,000 after income tax,assuming the income tax rate is 50%?

When evaluating profitability of a segment,costs that would disappear if the company eliminated the segment are called:

Consider the following information for the Cornwall Company: How many units must Cornwall sell to break even?

The Company is planning to sell Product Z for $20 a unit.Variable costs are $12 a unit and fixed costs are $100,000.What must total sales be to break even?

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.Which area indicates the break-even point?

A company has fixed costs of $700,000.The selling price and variable cost per unit are $50.00,and $10.00,respectively. How many units does the company need to sell to achieve net income of $100,000 after income tax,assuming the income tax rate is 50%?