Question 1

The ______________________ is the sales level at which a company neither earns a profit nor incurs a loss.

Accepted Answer

The answer of The ______________________ is the sales level at...

Question 2

The high-low method is used to derive the variable cost per unit and total fixed costs using just the highest and lowest volume levels.

Accepted Answer

A) True 
 B)False

Question 3

The contribution margin ratio is the percent by which the margin of safety exceeds the break-even point.

Accepted Answer

A) True 
 B)False

Question 4

A firm expects to sell 25,000 units of its product at $11 per unit and to incur variable costs per unit of $6.Total fixed costs are $70,000.The pretax net income is:

Accepted Answer

A)  $55,000.
B)  $90,000.
C)  $125,000.
D)  $150,000.
E)  $380,000.F) A) and C)
G) A) and B)

Question 5

Select cost information for Klondike Corporation is as follows:  Based on this information:

Accepted Answer

A)  Both direct materials and rent expense are variable costs.
B)  Direct materials is a fixed cost and rent expense is a variable cost.
C)  Both direct materials and rent expense are fixed costs.
D)  Direct materials is a variable cost and rent expense is a fixed cost.
E)  Both direct materials and utilities expense are mixed costs.F) A) and E)
G) A) and C)

Question 6

Whiting Company sells a mix of three related products.Total fixed costs are $144,000.The following additional information is available for Whiting Company.  Use the weighted average method to determine the company's break-even point for composite units.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Break-eve...

Question 7

Leeks Company's product has a contribution margin per unit of $11.25 and a contribution margin ratio of 22.5%.What is the selling price of the product?

Accepted Answer

A)  $5.
B)  $20.
C)  $30.
D)  $40.
E)  $50.F) None of the above
G) A) and B)

Question 8

Select cost information for Seacrest Enterprises is as follows:  Based on this information:

Accepted Answer

A)  Both direct materials and rent expense are variable costs.
B)  Utilities expense is a mixed cost and rent expense is a variable cost.
C)  Utilities expense is a mixed cost and rent expense is a fixed cost.
D)  Direct materials is a fixed cost and utilities expense is a mixed cost.
E)  Both direct materials and utilities expense are mixed costs.F) A) and B)
G) A) and C)

Question 9

A step-wise variable cost can be separated into a fixed component and a variable component.

Accepted Answer

A) True 
 B)False

Question 10

Kent Manufacturing produces a product that sells for $50.00 and has variable costs of $24.00 per unit.Fixed costs are $260,000.Kent can buy a new production machine that will increase fixed costs by $11,400 per year,but will decrease variable costs by $3.50 per unit.Compute the contribution margin per unit if the machine is purchased.

Accepted Answer

A)  $22.50.
B)  $26.00.
C)  $29.50.
D)  $28.50.
E)  $27.50.F) B) and D)
G) D) and E)

Question 11

Raven Company has a target of earning $70,000 pre-tax income.The contribution margin ratio is 30%.What amount of dollar sales must be achieved to reach the goal if fixed costs are $36,000?

Accepted Answer

A)  $23,333.
B)  $36,000.
C)  $300,000.
D)  $353,333.
E)  $420,000.F) A) and E)
G) B) and E)

Question 12

Total contribution margin in dollars divided by pretax income is the:

Accepted Answer

A)  Degree of operating leverage.
B)  Contribution margin ratio.
C)  Margin of safety.
D)  Sales mix.
E)  Break-even point in units.F) D) and E)
G) All of the above

Question 13

The unit contribution margin divided by the selling price per unit is the _____________.

Accepted Answer

contributi...

Question 14

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 break-even point in composite units.

Accepted Answer

A)  2,092.
B)  3,805.
C)  1,350.
D)  1,395.
E)  1,550.F) A) and B)
G) A) and C)

Question 15

The margin of safety is the amount that sales can drop before the company incurs a loss.

Accepted Answer

A) True 
 B)False

Question 16

Assume that sales are predicted to be $3,750,the expected contribution margin is $1,500,and a net loss of $250 is anticipated.The break-even point in sales dollars is:

Accepted Answer

A)  $1,750.
B)  $2,500.
C)  $4,000.
D)  $4,250.
E)  $4,375.F) None of the above
G) All of the above

Question 17

Ludington Corporation provides the following data from a recent period for its manufacture of shoes: variable manufacturing costs,$24,000;variable selling costs,$12,000;and total fixed costs,$40,000.Sales were $60,000 based on 12,000 units sold during the period.Calculate the contribution margin and the contribution margin ratio.

Accepted Answer

The answer of Ludington Corporation provides the following data from...

Question 18

A target income refers to:

Accepted Answer

A)  Income at the break-even point.
B)  Income from the most recent period.
C)  Income planned for a future period.
D)  Income only in a multiproduct environment.
E)  Income at the minimum contribution margin.F) C) and E)
G) B) and C)

Question 19

Use the following information to determine the break-even point in sales dollars:

Accepted Answer

A)  $88,500.
B)  $108,500.
C)  $173,600.
D)  $326,400.
E)  $500,000.F) None of the above
G) B) and C)

Question 20

The relevant range of operations is a range of volume neither close to zero nor at maximum capacity.

Accepted Answer

A) True 
 B)False

Exam 21: Cost-Volume-Profit Analysis

Raven Company has a target of earning $70,000 pre-tax income.The contribution margin ratio is 30%.What amount of dollar sales must be achieved to reach the goal if fixed costs are $36,000?

Correct Answer
verified

The high-low method is used to derive the variable cost per unit and total fixed costs using just the highest and lowest volume levels.

Correct Answer
verified

Correct Answer
verified

A firm expects to sell 25,000 units of its product at $11 per unit and to incur variable costs per unit of $6.Total fixed costs are $70,000.The pretax net income is:

Correct Answer
verified

The contribution margin ratio is the percent by which the margin of safety exceeds the break-even point.

Correct Answer
verified

Leeks Company's product has a contribution margin per unit of $11.25 and a contribution margin ratio of 22.5%.What is the selling price of the product?

Correct Answer
verified

Use the following information to determine the break-even point in sales dollars:

Correct Answer
verified

Select cost information for Klondike Corporation is as follows: Based on this information:

Correct Answer
verified

The relevant range of operations is a range of volume neither close to zero nor at maximum capacity.

Correct Answer
verified

Correct Answer
verified

Select cost information for Seacrest Enterprises is as follows: Based on this information:

Correct Answer
verified

Whiting Company sells a mix of three related products.Total fixed costs are $144,000.The following additional information is available for Whiting Company. Use the weighted average method to determine the company's break-even point for composite units.

Correct Answer
verified
Break-eve...
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The margin of safety is the amount that sales can drop before the company incurs a loss.

Correct Answer
verified

A step-wise variable cost can be separated into a fixed component and a variable component.

Correct Answer
verified

Total contribution margin in dollars divided by pretax income is the:

Correct Answer
verified

Assume that sales are predicted to be $3,750,the expected contribution margin is $1,500,and a net loss of $250 is anticipated.The break-even point in sales dollars is:

Correct Answer
verified

A target income refers to:

Correct Answer
verified

The ______________________ is the sales level at which a company neither earns a profit nor incurs a loss.

Correct Answer
verified

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 break-even point in composite units.

Correct Answer
verified

The unit contribution margin divided by the selling price per unit is the _____________.

Correct Answer
verified
contributi...
View Answer

Exam 21: Cost-Volume-Profit Analysis

Raven Company has a target of earning $70,000 pre-tax income.The contribution margin ratio is 30%.What amount of dollar sales must be achieved to reach the goal if fixed costs are $36,000?

Correct AnswerverifiedShow Answer

The high-low method is used to derive the variable cost per unit and total fixed costs using just the highest and lowest volume levels.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A firm expects to sell 25,000 units of its product at $11 per unit and to incur variable costs per unit of $6.Total fixed costs are $70,000.The pretax net income is:

Correct AnswerverifiedShow Answer

The contribution margin ratio is the percent by which the margin of safety exceeds the break-even point.

Correct AnswerverifiedShow Answer

Leeks Company's product has a contribution margin per unit of $11.25 and a contribution margin ratio of 22.5%.What is the selling price of the product?

Correct AnswerverifiedShow Answer

Use the following information to determine the break-even point in sales dollars:

Correct AnswerverifiedShow Answer

Select cost information for Klondike Corporation is as follows: Based on this information:

Correct AnswerverifiedShow Answer

The relevant range of operations is a range of volume neither close to zero nor at maximum capacity.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Select cost information for Seacrest Enterprises is as follows: Based on this information:

Correct AnswerverifiedShow Answer

Whiting Company sells a mix of three related products.Total fixed costs are $144,000.The following additional information is available for Whiting Company. Use the weighted average method to determine the company's break-even point for composite units.

Correct Answerverified Break-eve...View AnswerShow Answer

The margin of safety is the amount that sales can drop before the company incurs a loss.

Correct AnswerverifiedShow Answer

A step-wise variable cost can be separated into a fixed component and a variable component.

Correct AnswerverifiedShow Answer

Total contribution margin in dollars divided by pretax income is the:

Correct AnswerverifiedShow Answer

Assume that sales are predicted to be $3,750,the expected contribution margin is $1,500,and a net loss of $250 is anticipated.The break-even point in sales dollars is:

Correct AnswerverifiedShow Answer

A target income refers to:

Correct AnswerverifiedShow Answer

The ______________________ is the sales level at which a company neither earns a profit nor incurs a loss.

Correct AnswerverifiedShow 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 break-even point in composite units.

Correct AnswerverifiedShow Answer

The unit contribution margin divided by the selling price per unit is the _____________.

Correct Answerverifiedcontributi...View AnswerShow Answer

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contributi...
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