Question 1

Variable costs _____.

Accepted Answer

A) vary per unit 
B) are fixed in total 
C) decrease in total as the cost-driver activity level increases 
D) are fixed per unit and vary in total

Question 2

Cherry Wood Company sells desks at $480 per desk.The costs associated with each desk are as follows: $$\begin{array} { l r } 
\text { Direct materials } & \$ 195 \
\text { Direct labor } & 126 \
\text { Variable factory overhead } & 51
\end{array}$$ Total fixed costs for the period are $456,840.The contribution-margin ratio is _____.

Accepted Answer

A) 22.5% 
B) 29.0% 
C) 40.6% 
D) 77.5%

Question 3

If the sales price per unit is $30, the unit contribution margin is $8, and total fixed costs are $32,000, the break?even point in units is _____.

Accepted Answer

A) 4,000 
B) 1,200 
C) 857 
D) 2,000

Question 4

Highly leveraged companies have low fixed costs and high variable costs.

Accepted Answer

A) True 
 B)False

Question 5

Sizzling Company, a producer of salsa, has the following information: $$\begin{array} { l r } 
\text { Income tax rate } & 30 \% \
\text { Selling price per unit } & \$ 5.00 \
\text { Variable cost per unit } & \$ 3.00 \
\text { Total fixed costs } & \$ 90,000.00
\end{array}$$ The break-even point in dollars is _____.

Accepted Answer

A) $150,000 
B) $180,000 
C) $225,000 
D) $270,000

Question 6

As the cost-driver activity level increases within the relevant range _____.

Accepted Answer

A) total fixed costs remain unchanged 
B) fixed costs per unit increases 
C) total variable costs decrease 
D) variable costs per unit increases

Question 7

Break-even volume in units = fixed costs / unit contribution margin.

Accepted Answer

A) True 
 B)False

Question 8

The level of sales at which revenues equal expenses and net income is zero is called the _____.

Accepted Answer

A) margin of safety 
B) contribution margin 
C) break?even point 
D) marginal income point

Question 9

If fixed expenses were the same and contribution margin per unit was cut in half, then the break?even point would _____.

Accepted Answer

A) be cut in half 
B) double 
C) be the same 
D) be undeterminable

Question 10

Companies with high contribution-margin percentages

Accepted Answer

The answer of Companies with high contribution-margin percentages...

Question 11

Assume the following cost information for Katherine Company: $\begin{array}{lr}
\text { Selling price per unit } & \$ 144 \
\text { Variable costs per unit } & \$ 95 \
\text { Total fixed costs } & \$ 80,000 \
\text { Tax rate } & 40 \%
\end{array}$ The break-even point in units is _____.

Accepted Answer

A) 500 units 
B) 556 units 
C) 1,000 units 
D) 1,633 units

Question 12

Generally, companies that spend heavily for advertising are willing to do so because they have low contribution-margin percentages.

Accepted Answer

A) True 
 B)False

Question 13

Shows how far sales can fall below the planned level of sales before losses occur

Accepted Answer

The answer of Shows how far sales can fall below...

Question 14

On the CVP graph, where the total expenses line crosses the sales line

Accepted Answer

The answer of On the CVP graph, where the total...

Question 15

An accountant may have difficulty classifying costs as fixed or variable because _____.

Accepted Answer

A) costs may behave in a nonlinear way 
B) costs may be affected by more than one cost driver 
C) the decision situation may cause the costs to be fixed in the short term 
D) all of these answers are correct

Question 16

As the cost driver activity level decreases within the relevant range _____.

Accepted Answer

A) total fixed costs increase 
B) fixed costs per unit decrease 
C) total variable costs decrease 
D) variable costs per unit decrease

Question 17

Total fixed expenses / unit contribution margin

Accepted Answer

The answer of Total fixed expenses / unit contribution margin...

Question 18

Target sales - variable expenses - fixed expenses = target net income.

Accepted Answer

A) True 
 B)False

Question 19

If targeted after?tax net income is $67,500 with a 40% tax rate, contribution margin per unit is $2.00, and total fixed costs are $370,000, then the number of units that must be sold is _____.

Accepted Answer

A) 160,833 units 
B) 167,250 units 
C) 218,750 units 
D) 241,250 units

Question 20

_____ is not an underlying assumption of the cost?volume-profit graph.

Accepted Answer

A) Expenses are categorized into variable and fixed costs 
B) Sales mix will be constant 
C) Revenues and expenses are nonlinear over the relevant range 
D) Efficiency and productivity will be unchanged

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

Variable costs _____.

If the sales price per unit is $30, the unit contribution margin is $8, and total fixed costs are $32,000, the break?even point in units is _____.

Highly leveraged companies have low fixed costs and high variable costs.

As the cost-driver activity level increases within the relevant range _____.

Break-even volume in units = fixed costs / unit contribution margin.

The level of sales at which revenues equal expenses and net income is zero is called the _____.

If fixed expenses were the same and contribution margin per unit was cut in half, then the break?even point would _____.

Companies with high contribution-margin percentages

Assume the following cost information for Katherine Company: $\begin{array}{lr}\text { Selling price per unit } & \$ 144 \\\text { Variable costs per unit } & \$ 95 \\\text { Total fixed costs } & \$ 80,000 \\\text { Tax rate } & 40 \%\end{array}$ The break-even point in units is _____.

Generally, companies that spend heavily for advertising are willing to do so because they have low contribution-margin percentages.

Shows how far sales can fall below the planned level of sales before losses occur

On the CVP graph, where the total expenses line crosses the sales line

An accountant may have difficulty classifying costs as fixed or variable because _____.

As the cost driver activity level decreases within the relevant range _____.

Total fixed expenses / unit contribution margin

Target sales - variable expenses - fixed expenses = target net income.

If targeted after?tax net income is $67,500 with a 40% tax rate, contribution margin per unit is $2.00, and total fixed costs are $370,000, then the number of units that must be sold is _____.

_____ is not an underlying assumption of the cost?volume-profit graph.