Question 1

A good example of a cost driver for production supervisor salaries is the number of people supervised.

Accepted Answer

A) True 
 B)False

Question 2

If targeted sales volume in units is 62,300, total fixed costs are $31,200, and contribution margin per unit is $1.20, then the targeted net income is _____.

Accepted Answer

A) $31,200 
B) $43,560 
C) $37,440 
D) $74,760

Question 3

The CVP graph uses the assumption that costs are linear over the relevant range.

Accepted Answer

A) True 
 B)False

Question 4

The break-even point is when enough units are sold that total contribution margin equals total variable costs.

Accepted Answer

A) True 
 B)False

Question 5

Suppose a Holiday Inn Hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel, average daily room rents of $50, and average variable costs of $10 for each room rented.It operates 365 days per year.The break-even point in number of rooms rented is _____.

Accepted Answer

A) 30,000 rooms 
B) 24,000 rooms 
C) 120,000 rooms 
D) none of these answers is correct

Question 6

If total fixed costs are $84,000, contribution margin per unit is $6.20, and targeted after?tax net income is $18,000 with a 40% tax rate, then the number of units that must be sold is _____.

Accepted Answer

A) 14,223 units 
B) 17,853 units 
C) 18,387 units 
D) 21,504 units

Question 7

The break-even point may be reduced by reducing total fixed costs and holding everything else constant.

Accepted Answer

A) True 
 B)False

Question 8

Operating leverage is the ratio of fixed costs to variable costs.

Accepted Answer

A) True 
 B)False

Question 9

At any given volume, this distance on the CVP graph measures the net income or net loss

Accepted Answer

The answer of At any given volume, this distance on...

Question 10

The margin of safety is the difference between planned unit sales and break-even sales.

Accepted Answer

A) True 
 B)False

Question 11

A cost that is not immediately affected by changes in the cost driver

Accepted Answer

The answer of A cost that is not immediately affected...

Question 12

Contribution margin = sales price - all variable expenses.

Accepted Answer

A) True 
 B)False

Question 13

A change in the tax rate will not affect the break?even point.

Accepted Answer

A) True 
 B)False

Question 14

The difference between planned sales and break-even sales

Accepted Answer

The answer of The difference between planned sales and break-even...

Question 15

change in volume in units) x contribution margin per unit) x 1 - tax rate)

Accepted Answer

The answer of change in volume in units) x contribution...

Question 16

What are the assumptions used for CVP analysis?

Accepted Answer

The answer of What are the assumptions used for CVP...

Question 17

With very short time spans, costs become more fixed and less variable.

Accepted Answer

A) True 
 B)False

Question 18

Only managers of profit-seeking organizations find that the cost-volume-profit analysis is useful.

Accepted Answer

A) True 
 B)False

Question 19

The following information is for Kinsner Corporation: $\begin{array}{lr}
\text { Total fixed costs } & \$ 313,500 \
\text { Variable costs per unit } & \$ 99 \
\text { Selling price per unit } & \$ 154
\end{array}$ If management has a targeted net income of $59,400 ignore income taxes), then sales revenue should be _____.

Accepted Answer

A) $580,067 
B) $1,044,120 
C) $239,721 
D) $671,220

Question 20

The break-even point may be reduced by increasing the per unit variable cost.

Accepted Answer

A) True 
 B)False

Exam 2: Introduction to Cost Behavior and Cost-Volume Relationships

A good example of a cost driver for production supervisor salaries is the number of people supervised.

If targeted sales volume in units is 62,300, total fixed costs are $31,200, and contribution margin per unit is $1.20, then the targeted net income is _____.

The CVP graph uses the assumption that costs are linear over the relevant range.

The break-even point is when enough units are sold that total contribution margin equals total variable costs.

Suppose a Holiday Inn Hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel, average daily room rents of $50, and average variable costs of $10 for each room rented.It operates 365 days per year.The break-even point in number of rooms rented is _____.

If total fixed costs are $84,000, contribution margin per unit is $6.20, and targeted after?tax net income is $18,000 with a 40% tax rate, then the number of units that must be sold is _____.

The break-even point may be reduced by reducing total fixed costs and holding everything else constant.

Operating leverage is the ratio of fixed costs to variable costs.

At any given volume, this distance on the CVP graph measures the net income or net loss

The margin of safety is the difference between planned unit sales and break-even sales.

A cost that is not immediately affected by changes in the cost driver

Contribution margin = sales price - all variable expenses.

A change in the tax rate will not affect the break?even point.

The difference between planned sales and break-even sales

change in volume in units) x contribution margin per unit) x 1 - tax rate)

What are the assumptions used for CVP analysis?

With very short time spans, costs become more fixed and less variable.

Only managers of profit-seeking organizations find that the cost-volume-profit analysis is useful.

The break-even point may be reduced by increasing the per unit variable cost.