Question 1

Jamie Quinn, a sole proprietor, has the following projected figures for next year:

Accepted Answer

A)  $426,000 
B)  $900,000 
C)  $189,000 
D)  $2,100,000 
A)  $426,000 
B)  $900,000 
C)  $189,000 
D)  $2,100,000 D

Question 2

Gigondas Incorporated had the following information:
   
a. Calculate the break-even point in units using the traditional approach to CVP analysis.
b. Calculate the break-even point in units using the activity-based costing approach to CVP analysis.
c. Calculate the number of units using the activity-based costing approach, that must be sold to earn a before-tax profit of $40,000.
d. Suppose Gilbert could reduce setup costs by $300 per setup and could reduce the number of engineering hours needed to 900. How many units must be sold to break even in this case?

Accepted Answer

a. $100,000/($40 - $20) = 5,000 units
b. [$50,000 + ($1,000 × 40) + ($60 × $1,000)]/$20 = 7,500 units c. ($50,000 + $40,000 + $60,000 + $40,000)/$20 = 9,500 units d. [$50,000 + ($700 × 40) + ($60 × 900)]/$20 = 6,600 units

Question 3

The cost-volume-profit graph portrays the relationship between profits and sales volume.

Accepted Answer

A) True 
 B)False  False

Question 4

Nonesuch Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60 percent of sales and fixed expenses are $30,000. Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales. What is the new break-even point in units for Nonesuch Company when the selling price is $6.00?

Accepted Answer

A)  10,000 units 
B)  20,000 units 
C)  4,000 units 
D)  6,667 units 
A)  10,000 units 
B)  20,000 units 
C)  4,000 units 
D)  6,667 units

Question 5

Symbiosis Company had the following information:   How many units need to be sold to produce a before-tax profit of $120,000 using ABC?

Accepted Answer

A)  36,000 units 
B)  51,000 units 
C)  21,000 units 
D)  81,000 units 
A)  36,000 units 
B)  51,000 units 
C)  21,000 units 
D)  81,000 units

Question 6

Increased sales of high contribution margin products increase the break-even point.

Accepted Answer

A) True 
 B)False

Question 7

The profit-volume graph depicts the relationship among cost, volume, and profit.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following equations is TRUE?

Accepted Answer

A)  Contribution margin = Sales revenue × Variable cost ratio 
B)  Contribution margin ratio = Contribution margin/Variable costs 
C)  Contribution margin = Fixed costs 
D)  Contribution margin ratio = 1 - Variable cost ratio 
A)  Contribution margin = Sales revenue × Variable cost ratio 
B)  Contribution margin ratio = Contribution margin/Variable costs 
C)  Contribution margin = Fixed costs 
D)  Contribution margin ratio = 1 - Variable cost ratio

Question 9

The variable cost ratio

Accepted Answer

A)  expresses variable costs as a percentage of total costs. 
B)  expresses the proportion between fixed costs and variable costs. 
C)  expresses variable cost in terms of sales dollars. 
D)  expresses the proportion of sales dollars available to cover fixed costs and provide for a profit. 
A)  expresses variable costs as a percentage of total costs. 
B)  expresses the proportion between fixed costs and variable costs. 
C)  expresses variable cost in terms of sales dollars. 
D)  expresses the proportion of sales dollars available to cover fixed costs and provide for a profit.

Question 10

Income taxes are generally calculated as a percentage of income.

Accepted Answer

A) True 
 B)False

Question 11

The break-even point is the point where total costs equal sales revenues.

Accepted Answer

A) True 
 B)False

Question 12

The Mildmanner Corporation has the following data for 2016:   The margin of safety in units will be (round to the nearest whole unit)

Accepted Answer

A)  667. 
B)  2,500. 
C)  4,000. 
D)  7,500. 
A)  667. 
B)  2,500. 
C)  4,000. 
D)  7,500.

Question 13

The DesMaris Company had the following income statement for the month of November 2016: DesMaris Company Income Statement
For the Month of November 2016
  If the monthly sales volume increases by 450 units, DesMaris Company's monthly profits will increase by

Accepted Answer

A)  $13,500.00. 
B)  $1,282.50. 
C)  $9,450.00. 
D)  $14,175.00. 
A)  $13,500.00. 
B)  $1,282.50. 
C)  $9,450.00. 
D)  $14,175.00.

Question 14

ChowMein Company is the exclusive Montana distributor of lawn mowers for a small manufacturing company. It sells only one model at $600 per unit and for which ChowMein pays $250. ChowMein's other variable costs amount to $50 per unit. Fixed costs are $2,000. In April, ChowMein sold 15 lawn mowers and it sold 20 in May.
Required:
Calculate the following values:
a. Monthly break-even point in sales dollars
b. Monthly break-even point in units
c. Monthly income for April
d. Monthly income for May
e. Margin of safety for April

Accepted Answer

a. $2,000/[($600 - $250 - $50)/$600] = $

Question 15

Hologram Printing Company projected the following information for next year:

Accepted Answer

A)  $200,000 
B)  $120,000 
C)  $300,000 
D)  $500,000 
A)  $200,000 
B)  $120,000 
C)  $300,000 
D)  $500,000

Question 16

The following diagram is a cost-volume-profit graph for a manufacturing company:   The difference between line AB and line AC (area BAC) is the

Accepted Answer

A)  contribution ratio. 
B)  total variable cost. 
C)  contribution margin per unit. 
D)  total fixed cost. 
A)  contribution ratio. 
B)  total variable cost. 
C)  contribution margin per unit. 
D)  total fixed cost.

Question 17

In a cost-volume-profit graph, the total revenue line rises with a slope equal to

Accepted Answer

A)  the selling price. 
B)  the contribution margin. 
C)  the variable cost per unit. 
D)  none of the above. 
A)  the selling price. 
B)  the contribution margin. 
C)  the variable cost per unit. 
D)  none of the above.

Question 18

The break-even point in units can be calculated using the contribution margin approach in the formula

Accepted Answer

A)  Total Costs / Unit Contribution Margin. 
B)  Total Costs / Fixed Costs. 
C)  Fixed Costs / Selling Price per unit. 
D)  Fixed Costs / Unit Contribution Margin. 
A)  Total Costs / Unit Contribution Margin. 
B)  Total Costs / Fixed Costs. 
C)  Fixed Costs / Selling Price per unit. 
D)  Fixed Costs / Unit Contribution Margin.

Question 19

Symbiosis Company had the following information:   What is the break-even point in units using ABC?

Accepted Answer

A)  15,000 units 
B)  45,000 units 
C)  30,000 units 
D)  75,000 units 
A)  15,000 units 
B)  45,000 units 
C)  30,000 units 
D)  75,000 units

Question 20

Bugatti, Inc. decided to institute an advertising campaign that would cost $75,000. Variable costs will remain at $15 per unit. Bugatti is currently selling 100,000 units of its product at $25 per unit. The marketing department is estimating that there will be a 10 percent increase in sales volume. With all else remaining the same, what will be the result of this decision?

Accepted Answer

A)  An increase in sales of $25,000 
B)  A decrease in operating income of $75,000 
C)  An increase in operating income of $25,000 
D)  none of the above 
A)  An increase in sales of $25,000 
B)  A decrease in operating income of $75,000 
C)  An increase in operating income of $25,000 
D)  none of the above

Jamie Quinn, a sole proprietor, has the following projected figures for next year:

The cost-volume-profit graph portrays the relationship between profits and sales volume.

Symbiosis Company had the following information: How many units need to be sold to produce a before-tax profit of $120,000 using ABC?

Increased sales of high contribution margin products increase the break-even point.

The profit-volume graph depicts the relationship among cost, volume, and profit.

Which of the following equations is TRUE?

The variable cost ratio

Income taxes are generally calculated as a percentage of income.

The break-even point is the point where total costs equal sales revenues.

The Mildmanner Corporation has the following data for 2016: The margin of safety in units will be (round to the nearest whole unit)

The DesMaris Company had the following income statement for the month of November 2016: DesMaris Company Income Statement For the Month of November 2016 If the monthly sales volume increases by 450 units, DesMaris Company's monthly profits will increase by

Hologram Printing Company projected the following information for next year:

The following diagram is a cost-volume-profit graph for a manufacturing company: The difference between line AB and line AC (area BAC) is the

In a cost-volume-profit graph, the total revenue line rises with a slope equal to

The break-even point in units can be calculated using the contribution margin approach in the formula

Symbiosis Company had the following information: What is the break-even point in units using ABC?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility, Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 16: Cost-Volume-Profit Analysis

Jamie Quinn, a sole proprietor, has the following projected figures for next year:

The cost-volume-profit graph portrays the relationship between profits and sales volume.

Symbiosis Company had the following information: How many units need to be sold to produce a before-tax profit of $120,000 using ABC?

Increased sales of high contribution margin products increase the break-even point.

The profit-volume graph depicts the relationship among cost, volume, and profit.

Which of the following equations is TRUE?

The variable cost ratio

Income taxes are generally calculated as a percentage of income.

The break-even point is the point where total costs equal sales revenues.

The Mildmanner Corporation has the following data for 2016: The margin of safety in units will be (round to the nearest whole unit)

The DesMaris Company had the following income statement for the month of November 2016: DesMaris Company Income Statement For the Month of November 2016 If the monthly sales volume increases by 450 units, DesMaris Company's monthly profits will increase by

Hologram Printing Company projected the following information for next year:

The following diagram is a cost-volume-profit graph for a manufacturing company: The difference between line AB and line AC (area BAC) is the

In a cost-volume-profit graph, the total revenue line rises with a slope equal to

The break-even point in units can be calculated using the contribution margin approach in the formula

Symbiosis Company had the following information: What is the break-even point in units using ABC?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility, Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters