Question 1

If the property tax rates are increased,this change in fixed costs will result in a decrease in the break-even point.

Accepted Answer

A) True 
 B)False

Question 2

Given the following costs and activities for Dance Company electrical costs,use the high-low method to calculate Dance's variable electrical costs per machine hour. ​

Accepted Answer

A)   ​$2.08
B)   ​$6.00
C)   ​$0.60
D)   ​$1.20E) None of the above
F) C) and D)

Question 3

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) B) and C)
F) C) and D)

Question 4

The fixed cost per unit varies with changes in the level of activity.

Accepted Answer

A) True 
 B)False

Question 5

Zeke Company sells 25,000 units at $21 per unit.Variable costs are $10 per unit,and fixed costs are $75,000.The contribution margin ratio and the unit contribution margin are

Accepted Answer

A)   47% and $11 per unit
B)   53% and $7 per unit
C)   47% and $8 per unit
D)   52% and $11 per unitE) B) and C)
F) None of the above

Question 6

If fixed costs are $500,000 and the unit contribution margin is $20,what is the break-even point in units if fixed costs are reduced by $80,000?

Accepted Answer

A)   25,000
B)   29,000
C)   4,000
D)   21,000E) None of the above
F) C) and D)

Question 7

If employees accept a wage contract that increases the unit contribution margin,the break-even point will decrease.

Accepted Answer

A) True 
 B)False

Question 8

Cost-volume-profit analysis can be presented in both equation form and graphic form.

Accepted Answer

A) True 
 B)False

Question 9

Charlotte Co.has budgeted salary increases to factory supervisors totaling 9%.If selling prices and all other cost relationships are held constant,next year's break-even point

Accepted Answer

A)   will decrease by 9%
B)   will increase by 9%
C)   cannot be determined from the data given
D)   will increase at a rate greater than 9%E) A) and B)
F) None of the above

Question 10

In an absorption costing income statement,the manufacturing margin is the excess of sales over the variable cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 11

If fixed costs are $500,000 and variable costs are 60% of break-even sales,profit is zero when sales revenue is $930,000.

Accepted Answer

A) True 
 B)False

Question 12

If a business sells two products,it is not possible to estimate the break-even point.

Accepted Answer

A) True 
 B)False

Question 13

The three most common cost behavior classifications are

Accepted Answer

A)   variable costs,product costs,and sunk costs
B)   fixed costs,variable costs,and mixed costs
C)   variable costs,period costs,and differential costs
D)   variable costs,sunk costs,and opportunity costsE) A) and B)
F) A) and C)

Question 14

Assume that Corn Co.sold 8,000 units of Product A and 2,000 units of Product B during the past year.The unit contribution margins for Products A and B are $30 and $60,respectively.Corn has fixed costs of $378,000.The break-even point in units is

Accepted Answer

A)   8,000 units
B)   6,300 units
C)   12,600 units
D)   10,500 unitsE) None of the above
F) C) and D)

Question 15

If fixed costs are $850,000 and the unit contribution margin is $50,profit is zero when 15,000 units are sold.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not an assumption underlying cost-volume-profit analysis?

Accepted Answer

A)   The break-even point will be passed during the period.
B)   Total sales and total costs can be represented by straight lines.
C)   Costs can be accurately divided into fixed and variable components.
D)   The sales mix is constant.E) A) and D)
F) C) and D)

Question 17

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) All of the above

Question 18

If the unit selling price is $40,the volume of sales is $3,000,000,sales at the break-even point amount to $2,500,000,and the maximum possible sales are $3,300,000,the margin of safety is 11,500 units.

Accepted Answer

A) True 
 B)False

Question 19

The contribution margin ratio is the same as the profit-volume ratio.

Accepted Answer

A) True 
 B)False

Question 20

A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost.

Accepted Answer

A) True 
 B)False

Exam 19: Cost-Volume-Profit Analysis

As production increases,variable costs per unit

Correct AnswerverifiedShow Answer

If fixed costs are $500,000 and the unit contribution margin is $20,what is the break-even point in units if fixed costs are reduced by $80,000?

Correct AnswerverifiedShow Answer

If fixed costs are $500,000 and variable costs are 60% of break-even sales,profit is zero when sales revenue is $930,000.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Zeke Company sells 25,000 units at $21 per unit.Variable costs are $10 per unit,and fixed costs are $75,000.The contribution margin ratio and the unit contribution margin are

Correct AnswerverifiedShow Answer

Assume that Corn Co.sold 8,000 units of Product A and 2,000 units of Product B during the past year.The unit contribution margins for Products A and B are $30 and $60,respectively.Corn has fixed costs of $378,000.The break-even point in units is

Correct AnswerverifiedShow Answer

Cost-volume-profit analysis can be presented in both equation form and graphic form.

Correct AnswerverifiedShow Answer

If a business sells two products,it is not possible to estimate the break-even point.

Correct AnswerverifiedShow Answer

If fixed costs are $850,000 and the unit contribution margin is $50,profit is zero when 15,000 units are sold.

Correct AnswerverifiedShow Answer

In an absorption costing income statement,the manufacturing margin is the excess of sales over the variable cost of goods sold.

Correct AnswerverifiedShow Answer

Given the following costs and activities for Dance Company electrical costs,use the high-low method to calculate Dance's variable electrical costs per machine hour. ​

Correct AnswerverifiedShow Answer

If employees accept a wage contract that increases the unit contribution margin,the break-even point will decrease.

Correct AnswerverifiedShow Answer

If the property tax rates are increased,this change in fixed costs will result in a decrease in the break-even point.

Correct AnswerverifiedShow Answer

Charlotte Co.has budgeted salary increases to factory supervisors totaling 9%.If selling prices and all other cost relationships are held constant,next year's break-even point

Correct AnswerverifiedShow Answer

The fixed cost per unit varies with changes in the level of activity.

Correct AnswerverifiedShow Answer

The contribution margin ratio is the same as the profit-volume ratio.

Correct AnswerverifiedShow Answer

A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost.

Correct AnswerverifiedShow Answer

If the unit selling price is $40,the volume of sales is $3,000,000,sales at the break-even point amount to $2,500,000,and the maximum possible sales are $3,300,000,the margin of safety is 11,500 units.

Correct AnswerverifiedShow Answer

The three most common cost behavior classifications are

Correct AnswerverifiedShow Answer

Which of the following is not an assumption underlying cost-volume-profit analysis?

Correct AnswerverifiedShow Answer

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Given the following costs and activities for Dance Company electrical costs,use the high-low method to calculate Dance's variable electrical costs per machine hour.

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