Question 1

The contribution margin per unit is the price at which a unit must be sold in order for the company to break even.

Accepted Answer

A) True 
 B)False

Question 2

A term describing a firm's normal range of operating activities is:

Accepted Answer

A)  Relevant range of operations.
B)  Break-even level of operations.
C)  Margin of safety of operations.
D)  Relevant operating analysis.
E)  High-low level of operations.F) A) and B)
G) C) and E)

Question 3

Contribution margin per unit is the amount by which a product's unit selling price exceeds its total variable cost per unit.

Accepted Answer

A) True 
 B)False

Question 4

During a recent fiscal year,Creek Company reported pretax income of $125,000,a contribution margin ratio of 25% and total contribution margin of $400,000.Total variable costs must have been:

Accepted Answer

A)  $1,100,000.
B)  $1,200,000.
C)  $500,000.
D)  $1,600,000.
E)  $2,100,000.F) B) and C)
G) D) and E)

Question 5

Three important assumptions in cost-volume-profit analysis is that (1)_______________ per unit is constant, (2)_____________ per unit is constant,and (3)______________ are constant in total.
The first and second answers are interchangeable.The third answer must as shown.

Accepted Answer

selling pr...

Question 6

Curvilinear costs always increase:

Accepted Answer

A)  With decreases in volume.
B)  In constant proportion to changes in production levels.
C)  When management performs break-even analysis.
D)  When volume increases,but at a nonconstant rate.
E)  On a per unit basis when volume of activity goes down.F) B) and D)
G) B) and C)

Question 7

A company has fixed costs of $90,000.Its contribution margin ratio is 30% and the product sells for $75 per unit.What is the company's break-even point in dollar sales?

Accepted Answer

A)  $60,000.
B)  $128,571.
C)  $180,000.
D)  $210,000.
E)  $300,000.F) B) and C)
G) None of the above

Question 8

A method that estimates cost behavior by using just the highest and lowest volume levels is called the:

Accepted Answer

A)  Scatter method.
B)  High-low method.
C)  Least-squares method.
D)  Break-even method.
E)  Step-wise method.F) A) and E)
G) A) and B)

Question 9

The contribution margin per unit expressed as a percentage of the product's selling price is the:

Accepted Answer

A)  Volume variance.
B)  Margin of safety.
C)  Contribution margin ratio.
D)  Break-even point.
E)  Rate of return on sales.F) C) and D)
G) B) and C)

Question 10

McCoy Brothers manufactures and sells two products,A and Z in the ratio of 5:2.Product A sells for $75;Z sells for $95.Variable costs for product A are $35;for Z $40.Fixed costs are $418,500.Compute the contribution margin per composite unit.

Accepted Answer

A)  $310.
B)  $200.
C)  $300.
D)  $330.
E)  $285.F) A) and C)
G) B) and D)

Question 11

The extent,or relative size,of fixed costs in the total cost structure is known as operating leverage.

Accepted Answer

A) True 
 B)False

Question 12

Alvarez Company's break-even point in units is 1,000.The sales price per unit is $10 and variable cost per unit is $7.If the company sells 2,500 units,what will net income be?

Accepted Answer

A)  $4,500
B)  $7,500
C)  $17,000
D)  $35,000
E)  $3,000F) None of the above
G) C) and D)

Question 13

A cost that changes in proportion to changes in volume of activity is a(n) :

Accepted Answer

A)  Differential cost.
B)  Fixed cost.
C)  Incremental cost.
D)  Variable cost.
E)  Product cost.F) All of the above
G) B) and D)

Question 14

Gladstone Co.has expected sales of $326,000 for the upcoming month and its monthly break even sales are $300,000.What is the margin of safety as a percent of sales,rounded to the nearest whole percent?

Accepted Answer

A)  9%.
B)  108%.
C)  52%.
D)  8%.
E)  92%.F) B) and E)
G) A) and B)

Question 15

During its most recent fiscal year,Raphael Enterprises sold 200,000 electric screwdrivers at a price of $15 each.Fixed costs amounted to $400,000 and pretax income was $600,000.What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?

Accepted Answer

A)  $2,400,000.
B)  $1,600,000.
C)  $3,000,000.
D)  $2,000,000.
E)  $1,000,000.F) C) and D)
G) A) and D)

Question 16

A product sells for $200 per unit,and its variable costs per unit are $130.The fixed costs are $420,000.If the firm wants to earn $35,000 pretax income,how many units must be sold?

Accepted Answer

A)  6,500.
B)  6,000.
C)  500.
D)  5,000.
E)  5,500.F) A) and B)
G) A) and E)

Question 17

Maroon Company's contribution margin ratio is 24%.Total fixed costs are $84,000.What is Maroon's break-even point in sales dollars?

Accepted Answer

A)  $20,160.
B)  $110,526.
C)  $350,000.
D)  $240,000.
E)  $84,000.F) A) and B)
G) C) and D)

Question 18

A __________ cost is one that includes both fixed and variable cost components;a ______________ cost is one that reflects a step pattern.
Answers must appear in this order.

Accepted Answer

The answer of A __________ cost is one that includes...

Question 19

At Midland Company's break-even point of 9,000 units,fixed costs are $180,000 and variable costs are $540,000 in total.The unit sales price is:

Accepted Answer

A)  $20.
B)  $40.
C)  $60.
D)  $80.
E)  $100.F) All of the above
G) A) and B)

Question 20

A company's product sells at $12 per unit and has a $5 per unit variable cost.The company's total fixed costs are $98,000.The contribution margin per unit is:

Accepted Answer

A)  $5.00.
B)  $7.00.
C)  $8.17.
D)  $12.00.
E)  $17.00.F) A) and B)
G) All of the above

Exam 21: Cost-Volume-Profit Analysis

A cost is one that includes both fixed and variable cost components;a ____ cost is one that reflects a step pattern. Answers must appear in this order.

Correct Answer
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A company's product sells at $12 per unit and has a $5 per unit variable cost.The company's total fixed costs are $98,000.The contribution margin per unit is:

Correct Answer
verified

During a recent fiscal year,Creek Company reported pretax income of $125,000,a contribution margin ratio of 25% and total contribution margin of $400,000.Total variable costs must have been:

Correct Answer
verified

A term describing a firm's normal range of operating activities is:

Correct Answer
verified

The contribution margin per unit expressed as a percentage of the product's selling price is the:

Correct Answer
verified

Gladstone Co.has expected sales of $326,000 for the upcoming month and its monthly break even sales are $300,000.What is the margin of safety as a percent of sales,rounded to the nearest whole percent?

Correct Answer
verified

The extent,or relative size,of fixed costs in the total cost structure is known as operating leverage.

Correct Answer
verified

Correct Answer
verified

The contribution margin per unit is the price at which a unit must be sold in order for the company to break even.

Correct Answer
verified

Alvarez Company's break-even point in units is 1,000.The sales price per unit is $10 and variable cost per unit is $7.If the company sells 2,500 units,what will net income be?

Correct Answer
verified

At Midland Company's break-even point of 9,000 units,fixed costs are $180,000 and variable costs are $540,000 in total.The unit sales price is:

Correct Answer
verified

A product sells for $200 per unit,and its variable costs per unit are $130.The fixed costs are $420,000.If the firm wants to earn $35,000 pretax income,how many units must be sold?

Correct Answer
verified

Three important assumptions in cost-volume-profit analysis is that (1)_________ per unit is constant, (2)_ per unit is constant,and (3)________ are constant in total. The first and second answers are interchangeable.The third answer must as shown.

Correct Answer
verified
selling pr...
View Answer

McCoy Brothers manufactures and sells two products,A and Z in the ratio of 5:2.Product A sells for $75;Z sells for $95.Variable costs for product A are $35;for Z $40.Fixed costs are $418,500.Compute the contribution margin per composite unit.

Correct Answer
verified

A cost that changes in proportion to changes in volume of activity is a(n) :

Correct Answer
verified

A company has fixed costs of $90,000.Its contribution margin ratio is 30% and the product sells for $75 per unit.What is the company's break-even point in dollar sales?

Correct Answer
verified

Contribution margin per unit is the amount by which a product's unit selling price exceeds its total variable cost per unit.

Correct Answer
verified

Maroon Company's contribution margin ratio is 24%.Total fixed costs are $84,000.What is Maroon's break-even point in sales dollars?

Correct Answer
verified

A method that estimates cost behavior by using just the highest and lowest volume levels is called the:

Correct Answer
verified

Curvilinear costs always increase:

Correct Answer
verified

Exam 21: Cost-Volume-Profit Analysis

A __________ cost is one that includes both fixed and variable cost components;a ______________ cost is one that reflects a step pattern. Answers must appear in this order.

Correct AnswerverifiedShow Answer

A company's product sells at $12 per unit and has a $5 per unit variable cost.The company's total fixed costs are $98,000.The contribution margin per unit is:

Correct AnswerverifiedShow Answer

During a recent fiscal year,Creek Company reported pretax income of $125,000,a contribution margin ratio of 25% and total contribution margin of $400,000.Total variable costs must have been:

Correct AnswerverifiedShow Answer

A term describing a firm's normal range of operating activities is:

Correct AnswerverifiedShow Answer

The contribution margin per unit expressed as a percentage of the product's selling price is the:

Correct AnswerverifiedShow Answer

Gladstone Co.has expected sales of $326,000 for the upcoming month and its monthly break even sales are $300,000.What is the margin of safety as a percent of sales,rounded to the nearest whole percent?

Correct AnswerverifiedShow Answer

The extent,or relative size,of fixed costs in the total cost structure is known as operating leverage.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The contribution margin per unit is the price at which a unit must be sold in order for the company to break even.

Correct AnswerverifiedShow Answer

Alvarez Company's break-even point in units is 1,000.The sales price per unit is $10 and variable cost per unit is $7.If the company sells 2,500 units,what will net income be?

Correct AnswerverifiedShow Answer

At Midland Company's break-even point of 9,000 units,fixed costs are $180,000 and variable costs are $540,000 in total.The unit sales price is:

Correct AnswerverifiedShow Answer

A product sells for $200 per unit,and its variable costs per unit are $130.The fixed costs are $420,000.If the firm wants to earn $35,000 pretax income,how many units must be sold?

Correct AnswerverifiedShow Answer

Three important assumptions in cost-volume-profit analysis is that (1)_______________ per unit is constant, (2)_____________ per unit is constant,and (3)______________ are constant in total. The first and second answers are interchangeable.The third answer must as shown.

Correct Answerverifiedselling pr...View AnswerShow Answer

McCoy Brothers manufactures and sells two products,A and Z in the ratio of 5:2.Product A sells for $75;Z sells for $95.Variable costs for product A are $35;for Z $40.Fixed costs are $418,500.Compute the contribution margin per composite unit.

Correct AnswerverifiedShow Answer

A cost that changes in proportion to changes in volume of activity is a(n) :

Correct AnswerverifiedShow Answer

A company has fixed costs of $90,000.Its contribution margin ratio is 30% and the product sells for $75 per unit.What is the company's break-even point in dollar sales?

Correct AnswerverifiedShow Answer

Contribution margin per unit is the amount by which a product's unit selling price exceeds its total variable cost per unit.

Correct AnswerverifiedShow Answer

Maroon Company's contribution margin ratio is 24%.Total fixed costs are $84,000.What is Maroon's break-even point in sales dollars?

Correct AnswerverifiedShow Answer

A method that estimates cost behavior by using just the highest and lowest volume levels is called the:

Correct AnswerverifiedShow Answer

Curvilinear costs always increase:

Correct AnswerverifiedShow Answer

A cost is one that includes both fixed and variable cost components;a ____ cost is one that reflects a step pattern. Answers must appear in this order.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Three important assumptions in cost-volume-profit analysis is that (1)_________ per unit is constant, (2)_ per unit is constant,and (3)________ are constant in total. The first and second answers are interchangeable.The third answer must as shown.

Correct Answer
verified
selling pr...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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