Question 1

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 2

If the volume of sales is $7,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 45.8%.

Accepted Answer

A) True 
 B)False

Question 3

If a business had a capacity of $10,000,000 of sales, actual sales of $6,000,000, break-even sales of $4,200,000, fixed costs of $1,800,000, and variable costs of 60% of sales, what is the margin of safety expressed as a percentage of sales?

Accepted Answer

?Margin of Safety = ...

Question 4

Costs that remain constant in total dollar amount as the level of activity changes are called

Accepted Answer

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

Question 5

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 6

Match the following terms with their definitions.
-A specific activity range over which the cost changes are of interest

Accepted Answer

A)  Relevant range
B)  Break-even point
C)  Contribution margin
D)  Fixed costs
E)  Variable costsF) A) and C)
G) C) and E)

Question 7

Contribution margin is

Accepted Answer

A)   the excess of sales revenue over variable cost
B)   another term for volume in the "cost-volume-profit" analysis
C)   profit
D)   the same as sales revenueE) A) and C)
F) All of the above

Question 8

Match the following terms with their definitions.
-Where a business's revenues exactly equal costs

Accepted Answer

A)  Relevant range
B)  Break-even point
C)  Contribution margin
D)  Fixed costs
E)  Variable costsF) D) and E)
G) B) and C)

Question 9

Bryce Co. sales are $914,000, variable costs are $498,130, and operating income is $196,000. What is the contribution margin ratio?

Accepted Answer

A)   52.2%
B)   28.4%
C)   54.5%
D)   45.5%E) B) and C)
F) A) and D)

Question 10

Match the following terms (a-e)  with their definitions.
-Graphically shows costs, sales, and operating profit or loss at various levels of units sold

Accepted Answer

A)  Profit-volume chart
B)  Cost-volume-profit chart
C)  Sales mix
D)  Operating leverage
E)  Margin of safetyF) A) and B)
G) None of the above

Question 11

Which of the following describes the behavior of a variable cost per unit?

Accepted Answer

A)   varies in increasing proportion with changes in the activity level
B)   varies in decreasing proportion with changes in the activity level
C)   remains constant with changes in the activity level
D)   varies in direct proportion with the activity levelE) A) and D)
F) All of the above

Question 12

If sales are $820,000, variable costs are 55% of sales, and operating income is $260,000, what is the contribution margin ratio?

Accepted Answer

A)   45%
B)   55%
C)   62%
D)   32%E) A) and B)
F) All of the above

Question 13

If fixed costs are $450,000, the unit selling price is $75, and the unit variable costs are $50, what are the old and new break-even sales in units (rounded to a whole number)  if the unit selling price increases by $10?

Accepted Answer

A)   6,000 units and 5,294 units
B)   18,000 units and 6,000 units
C)   18,000 units and 12,857 units
D)   9,000 units and 15,000 unitsE) B) and C)
F) A) and B)

Question 14

Forde Co. has an operating leverage of 4. Sales are expected to increase by 12% next year. Operating income is

Accepted Answer

A)   unaffected
B)   expected to increase by 3%
C)   expected to increase by 48%
D)   expected to increase by 4%E) C) and D)
F) A) and B)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

The relative distribution of sales among the various products sold by a business is the

Accepted Answer

A)   business's basket of goods
B)   contribution margin mix
C)   sales mix
D)   product portfolioE) All of the above
F) C) and D)

Question 17

The relevant activity base for a cost depends on which base is most closely associated with the cost and the decision-making needs of management.

Accepted Answer

A) True 
 B)False

Question 18

If fixed costs are $450,000 and the unit contribution margin is $50, the sales necessary to earn an operating income of $50,000 are 10,000 units.

Accepted Answer

A) True 
 B)False

Question 19

The difference between the current sales revenue and the sales at the break-even point is called the

Accepted Answer

A)   contribution margin
B)   margin of safety
C)   price factor
D)   operating leverageE) A) and C)
F) A) and B)

Question 20

Variable costs are costs that vary on a per-unit basis with changes in the activity level.

Accepted Answer

A) True 
 B)False

Exam 21: Cost-Volume-Profit Analysis

If fixed costs are $450,000 and the unit contribution margin is $50, the sales necessary to earn an operating income of $50,000 are 10,000 units.

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

Bryce Co. sales are $914,000, variable costs are $498,130, and operating income is $196,000. What is the contribution margin ratio?

Correct AnswerverifiedShow Answer

The difference between the current sales revenue and the sales at the break-even point is called the

Correct AnswerverifiedShow Answer

Which of the following describes the behavior of a variable cost per unit?

Correct AnswerverifiedShow Answer

If the volume of sales is $7,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 45.8%.

Correct AnswerverifiedShow Answer

Forde Co. has an operating leverage of 4. Sales are expected to increase by 12% next year. Operating income is

Correct AnswerverifiedShow Answer

Match the following terms with their definitions. -Where a business's revenues exactly equal costs

Correct AnswerverifiedShow Answer

The relative distribution of sales among the various products sold by a business is the

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 a business had a capacity of $10,000,000 of sales, actual sales of $6,000,000, break-even sales of $4,200,000, fixed costs of $1,800,000, and variable costs of 60% of sales, what is the margin of safety expressed as a percentage of sales?

Correct Answerverified?Margin of Safety = ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Costs that remain constant in total dollar amount as the level of activity changes are called

Correct AnswerverifiedShow Answer

Match the following terms with their definitions. -A specific activity range over which the cost changes are of interest

Correct AnswerverifiedShow Answer

Contribution margin is

Correct AnswerverifiedShow Answer

The relevant activity base for a cost depends on which base is most closely associated with the cost and the decision-making needs of management.

Correct AnswerverifiedShow Answer

Variable costs are costs that vary on a per-unit basis with changes in the activity level.

Correct AnswerverifiedShow Answer

If sales are $820,000, variable costs are 55% of sales, and operating income is $260,000, what is the contribution margin ratio?

Correct AnswerverifiedShow Answer

If fixed costs are $450,000, the unit selling price is $75, and the unit variable costs are $50, what are the old and new break-even sales in units (rounded to a whole number) if the unit selling price increases by $10?

Correct AnswerverifiedShow Answer

Match the following terms (a-e) with their definitions. -Graphically shows costs, sales, and operating profit or loss at various levels of units sold

Correct AnswerverifiedShow Answer

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?Margin of Safety = ...
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