34 Questions
| Attempts: 360

Questions and Answers

- 1.Which of the following statements is TRUE with respect to total variable costs?
- A.
They will remain the same as production levels change within the relevant range

- B.
They will decrease as production increases within the relevant range

- C.
They will decrease as production decreases within the relevant range

- D.
They will increase as production decreases within the relevant range

- 2.Which of the following equations represents the total mixed cost?
- A.
Y=vx+f

- B.
Y=vx

- C.
Y=f

- D.
Y=v+f

- 3.YouCall offers a calling plan that charges $2.00 per month plus $0.05 per minute of call time. Under this plan, what is the monthly cost if you talk for a total of 100 minutes?
- A.
$7.00

- B.
$5.00

- C.
$3.00

- D.
$2.00

- 4.The following graph indicates which type of total cost behavior? y=2x+5
- A.
Fixed

- B.
Mixed

- C.
Step

- D.
Variable

- 5.Total costs for Watson & Company at 100,000 units are $350,000, while total fixed costs are $150,000. The total variable costs at a level of 200,000 units would be:
- A.
$700,000

- B.
$175,000

- C.
$400,000

- D.
$300,000

- 6.Harbor Manufacturing is trying to predict the cost associated with producing its anchors. At a production level of 4,000 anchors, Harbor Manufacturing’s average cost per anchor is $50.00. If $20,000 of the costs are fixed, and the plant manager uses the cost equation to predict total costs, her forecast for 5,000 anchors will be:
- A.
$50,000

- B.
$245,000

- C.
$250,000

- D.
$200,000

- 7.Using account analysis, what type of cost is the rental space at $2,000 per month?
- A.
Fixed

- B.
Mixed

- C.
Step

- D.
Variable

- 8.Ricco was reviewing the water bill for his carwash business and determined that the highest bill, $6,000, occurred in July when 2,000 cars were washed and the lowest bill, $4,500, occurred in February when 1,000 cars were washed. An estimate the fixed portion of the water bill would be
- A.
$3,000

- B.
$5,000

- C.
$5,250

- D.
$1,500

- 9.Below is information about the units produced and manufacturing costs for Snow Enterprises for the past six months. Month Number of units produced Total manufacturing costs January 7,940 $5,900 February 7,500 $5,460 March 6,400 $5,000 April 6,600 $5,500 May 4,740 $5,100 June 7,800 $5,840 Using the high-low method, what is the monthly fixed manufacturing cost?
- A.
$800

- B.
$11,000

- C.
$3,915

- D.
$1,985

- 10.Traditional income statements organize costs by:
- A.
Function

- B.
Behavior

- C.
Discretionary vs. committed

- D.
No particular manner. Costs are listed in any order.

- 11.The contribution margin is equal to:
- A.
Sales minus cost of goods sold

- B.
Sales minus variable expenses

- C.
Sales minus fixed expenses

- D.
Sales minus operating expenses

- 12.Toby’s Farm Store buys portable generators for $500 and sells them for $800. He pays a sales commission of 5% of sales revenue to his sales staff. Toby pays $2,000 a month rent for his store, and also pays $1,800 a month to his staff in addition to the commissions. Toby sold 200 generators in June. If Toby prepares a contribution margin income statement for the month of June, what would be his contribution margin?
- A.
$268,000

- B.
$160,000

- C.
$52,000

- D.
$108,000

- 13.Which of the following statements is FALSE?
- A.
The main criticism of the high-low method is that it uses only two data points.

- B.
Of the methods discussed in the text and in class of determining the variable and fixed components of a mixed cost, regression analysis is the most accurate

- C.
The high-low method only utilizes the data at the highest and lowest cost levels

- D.
The scatter-plot method is useful in identifying outliers

- 14.Which of the following would be considered a committed fixed cost
- A.
Research and development

- B.
Depreciation

- C.
Office holiday party

- D.
Advertising

- 15.To compute the unit contribution margin, __________ should be subtracted from the sales price per unit.
- A.
Only variable period costs

- B.
Only variable inventoriable product costs

- C.
All variable costs

- D.
All fixed costs

- 16.Managers can quickly forecast the total contribution margin by multiplying the projected:
- A.
Sales revenue by the contribution margin ratio

- B.
Sales units by the contribution ratio

- C.
Sales revenue by the unit contribution margin

- D.
Sales units by the variable cost ratio

- 17.Anthony Office Supplies sells refills on printer ink cartridges for $16 per refill. Variable costs are $4 per refill. Fixed costs are $2,000 per month. What is the contribution margin ratio for the printer ink cartridge refills?
- A.
133%

- B.
12%

- C.
25%

- D.
75%

- 18.If the sale price per unit is $38, variable expenses per unit are $21, and total fixed expenses are $56,950, what will the breakeven sales in units be?
- A.
1,499

- B.
968,150

- C.
2,712

- D.
3,350

- 19.If the sale price per unit is $64, total fixed expenses are $90,000, and the breakeven sales in dollars is $360,000, what will the variable expense per unit be?
- A.
$80.00

- B.
$16.00

- C.
$192.00

- D.
$48.00

- 20.Healthy Greetings Corporation produces and sells fruit baskets for special events. The unit selling price is $60, unit variable costs are $45, and total fixed costs are $2,670. What are breakeven sales in dollars?
- A.
$8,010

- B.
$1,526

- C.
$178

- D.
$10,680

- 21.Which of the following statements is TRUE if the fixed costs increase while the sales price per unit and variable costs per unit remain constant?
- A.
The contribution margin increases and the breakeven point decreases

- B.
The contribution margin decreases and the breakeven point decreases

- C.
The contribution margin stays the same and the breakeven point decreases

- D.
The contribution margin stays the same and the breakeven point increases

- 22.Which of the following will decrease the breakeven point in units assuming no other changes in the cost-volume-profit relationship?
- A.
An increase int he sale price per unit

- B.
A decrease in the sale price per unit

- C.
An increase in total fixed costs

- D.
An increase in the variable costs per unit

- 23.Julia's Catering has a monthly target operating income of $6,000. Variable expenses are 40% of sales and monthly fixed expenses are $3,600. What is the monthly margin of safety in dollars if the business achieves its operating income goal?
- A.
$10,000

- B.
$22,000

- C.
$16,000

- D.
$4,000

- 24.The higher the operating leverage factor, the:
- A.
Greater the impact of volume on operating income

- B.
Lesser the impact of volume on operating income

- C.
More likely operating income is to stay constant

- D.
Greater the chance that none of the above occur

- 25.Southwest Electric Co-op has variable expenses of 20% of sales and monthly fixed expenses of $150,000. The monthly target operating income is $50,000. What is Southwest Electric Co-op’s operating leverage factor at the target level of operating income?
- A.
1.33

- B.
2.00

- C.
4.00

- D.
0.25

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