Question 1

If fixed costs are $490,000, the unit selling price is $35, and the unit variable costs are $20, what is the break-even sales (units)  if fixed costs are reduced by $40,000?

Accepted Answer

A)   32,667 units
B)   14,000 units
C)   30,000 units
D)   24,500 unitsE) None of the above
F) All of the above

Question 2

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents:

Accepted Answer

A)   the maximum possible operating loss
B)   the maximum possible operating income
C)   the total fixed costs
D)   the break-even pointE) None of the above
F) B) and C)

Question 3

Kissimmee Paint Co. reported the following data for the month of July. There were no beginning inventories and all units were completed (no work in process).
   In the month of July, 28,000 of the 30,000 units manufactured were sold at a price of $80 per unit.

Accepted Answer

_TB2013_00 (b)

_TB2013_00 (c)
The diffe...

Question 4

As production increases, what would you expect to happen to fixed cost per unit?

Accepted Answer

A)   Increase
B)   Decrease
C)   Remain the same
D)   Either increase or decrease, depending on the variable costsE) None of the above
F) A) and B)

Question 5

The manufacturing cost of Prancer Industries for three months of the year are provided below:  Using the high-low method, the variable cost per unit, and the total fixed costs are:

Accepted Answer

A)   $32.30 per unit and $77,520 respectively.
B)   $33 per unit and $21,100 respectively.
C)   $32 per unit and $76,800 respectively.
D)   $32.30 per unit and $22,780 respectively.E) A) and B)
F) A) and D)

Question 6

Rental charges of $40,000 per year plus $3 for each machine hour over 18,000 hours is an example of a fixed cost.

Accepted Answer

A) True 
 B)False

Question 7

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars) ?

Accepted Answer

A)   $2,125,000
B)   $ 340,000
C)   $3,400,000
D)   $1,416,666E) B) and C)
F) A) and B)

Question 8

Douglas Company has a contribution margin ratio of 30%. If Douglas has $336,420 in fixed costs, what amount of sales will need to be generated in order for the company to break even?

Accepted Answer

$336,420 /...

Question 9

If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 60%.

Accepted Answer

A) True 
 B)False

Question 10

A firm operated at 80% of capacity for the past year, during which fixed costs were $210,000, variable costs were 70% of sales, and sales were $1,000,000. Operating profit was:

Accepted Answer

A)   $90,000
B)   $210,000
C)   $590,000
D)   $490,000E) A) and B)
F) A) and C)

Question 11

Which of the graphs in Figure 20-1 illustrates the behavior of a total variable cost?

Accepted Answer

A)   Graph 2
B)   Graph 3
C)   Graph 4
D)   Graph 1E) A) and D)
F) A) and C)

Question 12

With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. This is called:

Accepted Answer

A)   "What if" or sensitivity analysis
B)   vary the data analysis
C)   computer aided analysis
D)   data gatheringE) All of the above
F) A) and B)

Question 13

For purposes of analysis, mixed costs are generally:

Accepted Answer

A)   classified as fixed costs
B)   classified as variable costs
C)   classified as period costs
D)   separated into their variable and fixed cost componentsE) C) and D)
F) A) and D)

Question 14

Currently, the unit selling price is $50, the variable cost, $34, and the total fixed costs, $108,000. A proposal is being evaluated to increase the selling price to $54.

Accepted Answer

The answer of Currently, the unit selling price is $50,...

Question 15

What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

Accepted Answer

A)   Margin of safety ratio
B)   Contribution margin ratio
C)   Costs and expenses ratio
D)   Profit ratioE) C) and D)
F) B) and C)

Exam 21: Cost Behavior and Cost-Volume-Profit Analysis

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents:

Correct Answer
verified

Douglas Company has a contribution margin ratio of 30%. If Douglas has $336,420 in fixed costs, what amount of sales will need to be generated in order for the company to break even?

Correct Answer
verified
$336,420 /...
View Answer

Kissimmee Paint Co. reported the following data for the month of July. There were no beginning inventories and all units were completed (no work in process). In the month of July, 28,000 of the 30,000 units manufactured were sold at a price of $80 per unit.

Correct Answer
verified
_TB2013_00 (b)
_TB2013_00 (c)
The diffe...
View Answer

What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

Correct Answer
verified

For purposes of analysis, mixed costs are generally:

Correct Answer
verified

Currently, the unit selling price is $50, the variable cost, $34, and the total fixed costs, $108,000. A proposal is being evaluated to increase the selling price to $54.

Correct Answer
verified

Which of the graphs in Figure 20-1 illustrates the behavior of a total variable cost?

Correct Answer
verified

As production increases, what would you expect to happen to fixed cost per unit?

Correct Answer
verified

Rental charges of $40,000 per year plus $3 for each machine hour over 18,000 hours is an example of a fixed cost.

Correct Answer
verified

The manufacturing cost of Prancer Industries for three months of the year are provided below: Using the high-low method, the variable cost per unit, and the total fixed costs are:

Correct Answer
verified

With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. This is called:

Correct Answer
verified

If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 60%.

Correct Answer
verified

If fixed costs are $490,000, the unit selling price is $35, and the unit variable costs are $20, what is the break-even sales (units) if fixed costs are reduced by $40,000?

Correct Answer
verified

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars) ?

Correct Answer
verified

A firm operated at 80% of capacity for the past year, during which fixed costs were $210,000, variable costs were 70% of sales, and sales were $1,000,000. Operating profit was:

Correct Answer
verified

Exam 21: Cost Behavior and Cost-Volume-Profit Analysis

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents:

Correct AnswerverifiedShow Answer

Douglas Company has a contribution margin ratio of 30%. If Douglas has $336,420 in fixed costs, what amount of sales will need to be generated in order for the company to break even?

Correct Answerverified$336,420 /...View AnswerShow Answer

Kissimmee Paint Co. reported the following data for the month of July. There were no beginning inventories and all units were completed (no work in process). In the month of July, 28,000 of the 30,000 units manufactured were sold at a price of $80 per unit.

Correct Answerverified_TB2013_00 (b) _TB2013_00 (c)The diffe...View AnswerShow Answer

What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

Correct AnswerverifiedShow Answer

For purposes of analysis, mixed costs are generally:

Correct AnswerverifiedShow Answer

Currently, the unit selling price is $50, the variable cost, $34, and the total fixed costs, $108,000. A proposal is being evaluated to increase the selling price to $54.

Correct AnswerverifiedShow Answer

Which of the graphs in Figure 20-1 illustrates the behavior of a total variable cost?

Correct AnswerverifiedShow Answer

As production increases, what would you expect to happen to fixed cost per unit?

Correct AnswerverifiedShow Answer

Rental charges of $40,000 per year plus $3 for each machine hour over 18,000 hours is an example of a fixed cost.

Correct AnswerverifiedShow Answer

The manufacturing cost of Prancer Industries for three months of the year are provided below: Using the high-low method, the variable cost per unit, and the total fixed costs are:

Correct AnswerverifiedShow Answer

With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. This is called:

Correct AnswerverifiedShow Answer

If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 60%.

Correct AnswerverifiedShow Answer

If fixed costs are $490,000, the unit selling price is $35, and the unit variable costs are $20, what is the break-even sales (units) if fixed costs are reduced by $40,000?

Correct AnswerverifiedShow Answer

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars) ?

Correct AnswerverifiedShow Answer

A firm operated at 80% of capacity for the past year, during which fixed costs were $210,000, variable costs were 70% of sales, and sales were $1,000,000. Operating profit was:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
$336,420 /...
View Answer

Correct Answer
verified
_TB2013_00 (b)
_TB2013_00 (c)
The diffe...
View Answer

Correct Answer
verified

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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