Question 1

Direct materials cost that varies with the number of units produced is an example of a fixed cost of production.

Accepted Answer

A) True 
 B)False

Question 2

If direct materials cost per unit increases, the break-even point will decrease.

Accepted Answer

A) True 
 B)False

Question 3

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) All of the above
F) B) and C)

Question 4

-Which of the graphs in Figure 21-1 illustrates the behavior of a total variable cost?

Accepted Answer

A)   Graph 2
B)   Graph 3
C)   Graph 4
D)   Graph 1E) A) and B)
F) All of the above

Question 5

For purposes of analysis, mixed costs can generally be separated into their variable and fixed components.

Accepted Answer

A) True 
 B)False

Question 6

Because variable costs are assumed to change in direct proportion to changes in the activity level, the graph of the variable costs when plotted against the activity level appears as a circle.

Accepted Answer

A) True 
 B)False

Question 7

Only a single line, which represents the difference between total sales revenues and total costs, is plotted on the profit-volume chart.

Accepted Answer

A) True 
 B)False

Question 8

Blane Company has the following data:Total sales$800,000Total variable costs$300,000Fixed costs$200,000Units sold50,000 units​What will operating income be if units sold double to 100,000 units?

Accepted Answer

The answer of Blane Company has the following data:Total sales$800,000Total...

Question 9

Dean Company has sales of $500,000, and the break-even point in sales dollars is $300,000. Determine the company's margin of safety percentage. If required, round answer to nearest whole number.

Accepted Answer

40%  ($500,000 - $300,000)/$500,000

Question 10

Use this information for Rusty Co. to answer the questions that follow.
​
Rusty Co. sells two products, X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows:
​
  ​
-What was Rusty Co.'s weighted average unit selling price?

Accepted Answer

A)   $180
B)   $75
C)   $100
D)   $110E) C) and D)
F) None of the above

Question 11

The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed the contribution margin ratio.

Accepted Answer

A) True 
 B)False

Question 12

A firm operated at 80% of capacity for the past year, during which fixed costs were $330,000, variable costs were 70% of sales, and sales were $1,000,000. Operating profit (loss)  was

Accepted Answer

A)   $140,000
B)   $(30,000) 
C)   $370,000
D)   $670,000E) A) and B)
F) A) and C) B

Question 13

Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low method of cost estimation, total fixed costs

Accepted Answer

A)   are $61,875
B)   are $33,875
C)   are $24,750
D)   cannot be determined from the data givenE) None of the above
F) B) and D) C

Question 14

Assuming that last year's fixed costs totaled $960,000, what was Carter Co.'s break-even point in units?

Accepted Answer

A)   40,000 units
B)   12,000 units
C)   35,000 units
D)   28,000 unitsE) B) and D)
F) None of the above

Question 15

If fixed costs are $561,000 and the unit contribution margin is $8.00, what is the break-even point in units if variable costs are decreased by $0.50 a unit?

Accepted Answer

A)   66,000
B)   70,125
C)   74,800
D)   60,000E) None of the above
F) A) and B)

Question 16

If the contribution margin ratio for France Company is 45%, sales were $425,000, and fixed costs were $100,000, what was the income from operations?

Accepted Answer

A)   $233,750
B)   $91,250
C)   $191,250
D)   $133,750E) A) and B)
F) All of the above

Question 17

Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service?

Accepted Answer

A)   number of truck drivers
B)   total miles driven
C)   number of trucks in service
D)   number of packages picked upE) A) and C)
F) A) and D)

Question 18

As production increases, variable costs per unit

Accepted Answer

A)   stay the same
B)   increase
C)   decrease
D)   either increase or decrease, depending on the fixed costsE) C) and D)
F) A) and B)

Question 19

In cost-volume-profit analysis, all costs are classified into which of the following two categories?

Accepted Answer

A)   mixed costs and variable costs
B)   sunk costs and fixed costs
C)   discretionary costs and sunk costs
D)   variable costs and fixed costsE) A) and B)
F) C) and D)

Question 20

Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?

Accepted Answer

A)   direct labor
B)   salary of a factory supervisor
C)   units-of-production depreciation on factory equipment
D)   direct materialsE) A) and B)
F) A) and C)

Exam 21: Cost-Volume-Profit Analysis

Direct materials cost that varies with the number of units produced is an example of a fixed cost of production.

Correct AnswerverifiedShow Answer

If direct materials cost per unit increases, the break-even point will decrease.

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

-Which of the graphs in Figure 21-1 illustrates the behavior of a total variable cost?

Correct AnswerverifiedShow Answer

For purposes of analysis, mixed costs can generally be separated into their variable and fixed components.

Correct AnswerverifiedShow Answer

Because variable costs are assumed to change in direct proportion to changes in the activity level, the graph of the variable costs when plotted against the activity level appears as a circle.

Correct AnswerverifiedShow Answer

Only a single line, which represents the difference between total sales revenues and total costs, is plotted on the profit-volume chart.

Correct AnswerverifiedShow Answer

Blane Company has the following data:Total sales$800,000Total variable costs$300,000Fixed costs$200,000Units sold50,000 units​What will operating income be if units sold double to 100,000 units?

Correct AnswerverifiedShow Answer

Dean Company has sales of $500,000, and the break-even point in sales dollars is $300,000. Determine the company's margin of safety percentage. If required, round answer to nearest whole number.

Correct Answerverified40% ($500,000 - $300,000)/$500,000

Use this information for Rusty Co. to answer the questions that follow. ​ Rusty Co. sells two products, X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows: ​ ​ -What was Rusty Co.'s weighted average unit selling price?

Correct AnswerverifiedShow Answer

The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed the contribution margin ratio.

Correct AnswerverifiedShow Answer

A firm operated at 80% of capacity for the past year, during which fixed costs were $330,000, variable costs were 70% of sales, and sales were $1,000,000. Operating profit (loss) was

Correct AnswerverifiedB

Manley Co. manufactures office furniture. During the most productive month of the year, 4,500 desks were manufactured at a total cost of $86,625. In its slowest month, the company made 1,800 desks at a cost of $49,500. Using the high-low method of cost estimation, total fixed costs

Correct AnswerverifiedC

Assuming that last year's fixed costs totaled $960,000, what was Carter Co.'s break-even point in units?

Correct AnswerverifiedShow Answer

If fixed costs are $561,000 and the unit contribution margin is $8.00, what is the break-even point in units if variable costs are decreased by $0.50 a unit?

Correct AnswerverifiedShow Answer

If the contribution margin ratio for France Company is 45%, sales were $425,000, and fixed costs were $100,000, what was the income from operations?

Correct AnswerverifiedShow Answer

Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service?

Correct AnswerverifiedShow Answer

As production increases, variable costs per unit

Correct AnswerverifiedShow Answer

In cost-volume-profit analysis, all costs are classified into which of the following two categories?

Correct AnswerverifiedShow Answer

Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Blane Company has the following data:Total sales$800,000Total variable costs$300,000Fixed costs$200,000Units sold50,000 unitsWhat will operating income be if units sold double to 100,000 units?

Correct Answer
verified

Correct Answer
verified
40% ($500,000 - $300,000)/$500,000

Use this information for Rusty Co. to answer the questions that follow. Rusty Co. sells two products, X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are as follows: -What was Rusty Co.'s weighted average unit selling price?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified