Question 1

After the break-even point is reached, each dollar of contribution margin is a dollar of after-tax profit.

Accepted Answer

A) True 
 B)False

Question 2

With respect to fixed costs, CVP analysis assumes total fixed costs

Accepted Answer

A)  per unit remain constant as volume changes. 
B)  remain constant from one period to the next. 
C)  vary directly with volume. 
D)  remain constant across changes in volume.

Question 3

A firm estimates that it will sell 100,000 units of its sole product in the coming period. It projects the sales price at $40 per unit, the CM ratio at 60 percent, and profit at $500,000. What is the firm budgeting for fixed costs in the coming period?

Accepted Answer

A)  $1,600,000 
B)  $2,400,000 
C)  $1,100,000 
D)  $1,900,000

Question 4

The margin of safety is an effective measure of risk for a company.

Accepted Answer

A) True 
 B)False

Question 5

Castle Corporation
The following questions are based on the following data pertaining to two types of products manufactured by Castle Corporation:
  Fixed costs total $300,000 annually. The expected mix in units is 60 percent for Product Y and 40 percent for Product Z.
Refer to Castle Corporation. How much is Castle's break-even point sales in units?

Accepted Answer

The answer of Castle Corporation
The following questions are based on...

Question 6

CVP analysis relies on the assumptions that costs are either strictly fixed or strictly variable. Consistent with these assumptions, as volume decreases total

Accepted Answer

A)  fixed costs decrease. 
B)  variable costs remain constant. 
C)  costs decrease. 
D)  costs remain constant.

Question 7

____ focuses only on factors that change from one course of action to another.

Accepted Answer

A)  Incremental analysis 
B)  Margin of safety 
C)  Operating leverage 
D)  A break-even chart

Question 8

In CVP analysis, sales and production are assumed to be equal.

Accepted Answer

A) True 
 B)False

Question 9

Moonbeam Corporation Moonbeam Corporation manufactures and sells two products: A and B. The operating results of the company are as follows:
 In addition, the company incurred total fixed costs in the amount of $9,000.
Refer to Moonbeam Corporation. How many units would the company have needed to sell to produce a profit of $12,000?

Accepted Answer

A)  8,750 
B)  20,000 
C)  10,000 
D)  8,400

Question 10

What are the major assumptions of CVP analysis?

Accepted Answer

The answer of What are the major assumptions of CVP...

Question 11

Palmer Company Below is an income statement for Palmer Company:
 Refer to Palmer Company. Assuming that the fixed costs are expected to remain at $200,000 for the coming year and the sales price per unit and variable costs per unit are also expected to remain constant, how much profit before taxes will be produced if the company anticipates sales for the coming year rising to 130 percent of the current year's level?

Accepted Answer

A)  $97,500 
B)  $195,000 
C)  $157,500 
D)  A prediction cannot be made from the information given.

Question 12

In a CVP graph, the area between the total cost line and the total fixed cost line yields the

Accepted Answer

A)  fixed costs per unit. 
B)  total variable costs. 
C)  profit. 
D)  contribution margin.

Question 13

The relationship between a company's variable costs and fixed costs is referred to as its ______________________________.

Accepted Answer

The answer of The relationship between a company's variable costs...

Question 14

CVP analysis is based on concepts from

Accepted Answer

A)  standard costing. 
B)  variable costing. 
C)  job order costing. 
D)  process costing.

Question 15

Teal Company The following information relates to financial projections of Teal Company:
 Refer to Teal Company. If Teal Company achieves its projections, what will be its degree of operating leverage?

Accepted Answer

A)  6.00 
B)  1.20 
C)  1.68 
D)  2.40

Question 16

Given the following notation, what is the break-even sales level in units? SP = selling price per unit, FC = total fixed cost, VC = variable cost per unit

Accepted Answer

A)  SP/(FC/V
C)  
B)  FC/(VC/SP) 
C)  VC/(SP - F
C)  
D)  FC/(SP - V
C)

Question 17

The formula for margin of safety is _____________________________________________.

Accepted Answer

The answer of The formula for margin of safety is...

Question 18

Break-even point may be expressed in terms of units or dollars.

Accepted Answer

A) True 
 B)False

Question 19

Information concerning Simmons Corporation's Product A follows:  Assuming that Simmons increased sales of Product A by 25 percent, what should the profit from Product A be?

Accepted Answer

A)  $ 50,000 
B)  $ 62,500 
C)  $ 75,000 
D)  $170,000

Question 20

Castle Corporation
The following questions are based on the following data pertaining to two types of products manufactured by Castle Corporation:
  Fixed costs total $300,000 annually. The expected mix in units is 60 percent for Product Y and 40 percent for Product Z.
Refer to Castle Corporation. What is Castle's break-even point in sales dollars?

Accepted Answer

The answer of Castle Corporation
The following questions are based on...

Exam 9: Break-Even Point and Cost-Volume-Profit Analysis

After the break-even point is reached, each dollar of contribution margin is a dollar of after-tax profit.

With respect to fixed costs, CVP analysis assumes total fixed costs

A firm estimates that it will sell 100,000 units of its sole product in the coming period. It projects the sales price at $40 per unit, the CM ratio at 60 percent, and profit at $500,000. What is the firm budgeting for fixed costs in the coming period?

The margin of safety is an effective measure of risk for a company.

CVP analysis relies on the assumptions that costs are either strictly fixed or strictly variable. Consistent with these assumptions, as volume decreases total

____ focuses only on factors that change from one course of action to another.

In CVP analysis, sales and production are assumed to be equal.

What are the major assumptions of CVP analysis?

In a CVP graph, the area between the total cost line and the total fixed cost line yields the

The relationship between a company's variable costs and fixed costs is referred to as its ______________________________.

CVP analysis is based on concepts from

Teal Company The following information relates to financial projections of Teal Company: Refer to Teal Company. If Teal Company achieves its projections, what will be its degree of operating leverage?

Given the following notation, what is the break-even sales level in units? SP = selling price per unit, FC = total fixed cost, VC = variable cost per unit

The formula for margin of safety is _____________________________________________.

Break-even point may be expressed in terms of units or dollars.

Information concerning Simmons Corporation's Product A follows: Assuming that Simmons increased sales of Product A by 25 percent, what should the profit from Product A be?