Question 1

The following data relate to a product sold by Nelson Company:
Total Variable costs $90,000
Total fixed costs 27,000
Predicted after-tax income (30% tax) 12,600
Contribution margin per unit 5
(a)Calculate the number of units expected to be sold.
(b)Calculate the expected total dollar sales.

Accepted Answer

(a)

Question 2

Cost-volume-profit analysis is frequently based on the assumption that the production level is the same as the sales level.

Accepted Answer

A) True 
 B)False

Question 3

Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300.Annual fixed costs are $990,000.Current sales volume is $4,200,000.Compute the current margin of safety in dollars for Dunkin Company.

Accepted Answer

A)  $3,210,000.
B)  $2,640,000.
C)  $1,560,000.
D)  $2,440,000.
E)  $3,500,000.F) A) and B)
G) C) and E)

Question 4

Baines Brothers manufactures and sells two products,A and Z in the ratio of 4: 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)  $270.
B)  $240.
C)  $300.
D)  $330.
E)  $285.F) A) and E)
G) A) and B)

Question 5

A company has total fixed costs of $360,000.Its product sells for $40 per unit and variable costs amount to $25 per unit.What is the break-even point in dollar sales?

Accepted Answer

Contribution margin ratio = ($...

Question 6

The ratio of the volumes of the various products sold by a company is called the ______________________________.

Accepted Answer

The answer of The ratio of the volumes of the...

Question 7

Variable costs per unit increase proportionately with increases in output activity.

Accepted Answer

A) True 
 B)False

Question 8

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 not at a constant rate.
E)  On a per unit basis when volume of activity goes down.F) None of the above
G) C) and E)

Question 9

What are the unit contribution margin and the contribution margin ratio?
 What do these measures reveal about a company's cost structure?

Accepted Answer

The unit contribution margin is the sale...

Question 10

A cost that changes with volume,but not at a constant rate,is called a:

Accepted Answer

A)  Variable cost.
B)  Curvilinear cost.
C)  Step-wise variable cost.
D)  Fixed cost.
E)  Differential cost.F) C) and E)
G) None of the above

Question 11

A company's normal operating range,which excludes extremely high and low volumes that are not likely to occur,is called the:

Accepted Answer

A)  Margin of safety.
B)  Contribution range.
C)  Break-even point.
D)  Relevant range.
E)  High-low point.F) A) and D)
G) C) and D)

Question 12

Cost-volume-profit analysis is based on three basic assumptions.Which of the following is not one of these assumptions?

Accepted Answer

A)  Total fixed costs remain constant over changes in volume.
B)  Curvilinear costs change proportionately with changes in volume throughout the relevant range.
C)  Variable costs per unit of output remain constant as volume changes.
D)  Sales price per unit remains constant as volume changes.
E)  All of these are basic assumptions.F) C) and D)
G) B) and E)

Question 13

As the level of output activity increases,fixed cost per unit remains constant.

Accepted Answer

A) True 
 B)False

Question 14

A visual line fit to points in a scatter diagram may be used to identify the approximate relation between past cost and volume.

Accepted Answer

A) True 
 B)False  True

Question 15

Break-even analysis is a special case of cost-volume-profit analysis.

Accepted Answer

A) True 
 B)False

Question 16

On a typical cost-volume-profit graph,unit sales are shown on the horizontal axis and both dollars of sales and dollars of costs are represented on the vertical axis.

Accepted Answer

A) True 
 B)False

Question 17

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) All of the above
G) A) and C) B

Question 18

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) C) and D)
G) None of the above

Question 19

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 break-even point in units is:

Accepted Answer

A)  5,158.
B)  7,000.
C)  8,167.
D)  14,000.
E)  19,600.F) B) and E)
G) B) and D)

Question 20

A cost-volume-profit chart is also known as a(n)

Accepted Answer

A)  Operating profit chart.
B)  Operating leverage chart.
C)  Break-even chart.
D)  Margin of safety chart.
E)  Sales chart.F) B) and E)
G) A) and B)

Exam 21: Cost-Volume-Profit Analysis

The following data relate to a product sold by Nelson Company: Total Variable costs $90,000 Total fixed costs 27,000 Predicted after-tax income (30% tax) 12,600 Contribution margin per unit 5 (a)Calculate the number of units expected to be sold. (b)Calculate the expected total dollar sales.

Correct Answerverified(a) 11ea7277_edfe_451f_9608_0520d8ea47be_TB2411_00 11ea7277_edfe_4520_9608_d51b34789ae2_TB2411_00

Cost-volume-profit analysis is frequently based on the assumption that the production level is the same as the sales level.

Correct AnswerverifiedShow Answer

Dunkin Company manufactures and sells a single product that sells for $480 per unit; variable costs are $300.Annual fixed costs are $990,000.Current sales volume is $4,200,000.Compute the current margin of safety in dollars for Dunkin Company.

Correct AnswerverifiedShow Answer

Baines Brothers manufactures and sells two products,A and Z in the ratio of 4: 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 company has total fixed costs of $360,000.Its product sells for $40 per unit and variable costs amount to $25 per unit.What is the break-even point in dollar sales?

Correct AnswerverifiedContribution margin ratio = ($...View AnswerShow Answer

The ratio of the volumes of the various products sold by a company is called the ______________________________.

Correct AnswerverifiedShow Answer

Variable costs per unit increase proportionately with increases in output activity.

Correct AnswerverifiedShow Answer

Curvilinear costs always increase:

Correct AnswerverifiedShow Answer

What are the unit contribution margin and the contribution margin ratio? What do these measures reveal about a company's cost structure?

Correct AnswerverifiedThe unit contribution margin is the sale...View AnswerShow Answer

A cost that changes with volume,but not at a constant rate,is called a:

Correct AnswerverifiedShow Answer

A company's normal operating range,which excludes extremely high and low volumes that are not likely to occur,is called the:

Correct AnswerverifiedShow Answer

Cost-volume-profit analysis is based on three basic assumptions.Which of the following is not one of these assumptions?

Correct AnswerverifiedShow Answer

As the level of output activity increases,fixed cost per unit remains constant.

Correct AnswerverifiedShow Answer

A visual line fit to points in a scatter diagram may be used to identify the approximate relation between past cost and volume.

Correct AnswerverifiedTrue

Break-even analysis is a special case of cost-volume-profit analysis.

Correct AnswerverifiedShow Answer

On a typical cost-volume-profit graph,unit sales are shown on the horizontal axis and both dollars of sales and dollars of costs are represented on the vertical axis.

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 AnswerverifiedB

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

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 break-even point in units is:

Correct AnswerverifiedShow Answer

A cost-volume-profit chart is also known as a(n)

Correct AnswerverifiedShow Answer

Correct Answer
verified
(a) 11ea7277_edfe_451f_9608_0520d8ea47be_TB2411_00 11ea7277_edfe_4520_9608_d51b34789ae2_TB2411_00

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Contribution margin ratio = ($...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The unit contribution margin is the sale...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified