• The
difference between budgeted sales revenue and break-even sales revenue is the:
•
contribution margin.
•
contribution-margin ratio.
•
safety margin.
•
target net profit.
•
operating leverage.
• Amounts
spent for charitable contributions are an example of a (n):
•
committed fixed cost.
•
committed variable cost.
•
discretionary fixed cost.
•
discretionary variable cost.
•
engineered cost.
• cost
that has both a fixed and variable component is known as a:
•
step-fixed cost.
•
step-variable cost.
•
semivariable cost.
•
curvilinear cost.
•
discretionary cost.
• The
break-even point is that level of activity where:
•
total revenue equals total cost.
•
variable cost equals fixed cost.
•
total contribution margin equals the sum of variable cost
plus fixed cost.
•
sales revenue equals total variable cost.
•
profit is greater than zero.
• Partner
Industries sells a single product for $50 that has a variable cost of $30.
Fixed costs amount to $5 per unit when anticipated sales targets are met. If
the company sells one unit in excess of its break-even volume, profit will be:
•
$15.
•
$20.
•
$50.
•
an amount that cannot be derived based on the information
presented.
•
an amount other than $15, $20, or $50 and one that can be
derived based on the information presented.
• Which of
the following would produce the largest increase in the contribution margin per
unit?
•
A 7% increase in selling price.
•
A 15% decrease in selling price.
•
A 14% increase in variable cost.
•
A 17% decrease in fixed cost.
•
A 23% increase in the number of units sold.
• The
extent to which an organization uses fixed costs in its cost structure is
measured by:
•
financial leverage.
•
operating leverage.
•
fixed cost leverage.
•
contribution leverage.
•
efficiency leverage.
• Which of
the following is (are) example(s) of a mixed cost?
I. A building that is used for both manufacturing and sales
activities.
II. An employee’s compensation, which consists of a flat
salary plus a commission.
III. Depreciation that relates to five different machines.
IV. Maintenance cost that must be split between sales and
administrative offices.
•
I only.
•
II only.
•
I and III.
•
I, III, and IV.
•
I, II, III, and IV.
• Sophie
Corporation recently produced and sold 100,000 units. Fixed costs at this level
of activity amounted to $50,000; variable costs were $100,000. How much cost
would the company anticipate if during the next period it produced and sold
102,000 units?
•
$150,000.
•
$151,000.
•
$152,000.
•
$153,000.
•
None of the answers is correct.
• The
high-low method and least-squares regression are used by accountants to:
•
evaluate divisional managers for purposes of raises and
promotions.
•
choose among alternative courses of action.
•
maximize output.
•
estimate costs.
•
control operations.
•
1. Narchie
sells a single product for $50. Variable costs are 60% of the selling price,
and the company has fixed costs that amount to $400,000. Current sales total
16,000 units. Narchie:
•
will break-even by selling 8,000 units.
•
will break-even by selling 13,333 units.
•
will break-even by selling 20,000 units.
•
will break-even by selling 1,000,000 units.
•
cannot break-even because it loses money on every unit sold.
• A company
that desires to lower its break-even point should strive to:
•
decrease selling prices.
•
reduce variable costs.
•
increase fixed costs.
•
sell more units.
•
achieve more than one of the answers listed.
• A
forecast of a cost at a particular level of activity is known as:
•
cost estimation.
•
cost prediction.
•
cost behavior.
•
cost analysis.
•
cost approximation.
• Costs
that remain the same over a wide range of activity, but jump to a different
amount outside that range, are known as:
•
step-fixed costs.
•
step-variable costs.
•
semivariable costs.
•
curvilinear costs.
•
mixed costs.
• Elise
Corporation has the following sales mix for its three products: A, 20%; B, 35%;
and C, 45%. Fixed costs total $400,000 and the weighted-average contribution
margin is $100. How many units of product A must be sold to break-even?
•
800.
•
4,000.
•
20,000.
•
None of the answers is correct.
•
Cannot be determined based on the information presented.
• Which of
the following occurs if a company experiences an increase in its fixed costs?
•
Net income would increase.
•
The break-even point would increase.
•
The contribution margin would increase.
•
The contribution margin would decrease.
•
More than one of the answers would occur.
• All other
things being equal, a company that sells multiple products should attempt to
structure its sales mix so the greatest portion of the mix is composed of those
products with the highest:
•
selling price.
•
variable cost.
•
contribution margin.
•
fixed cost.
•
gross margin.
• The
relationship between cost and activity is known as:
•
cost estimation.
•
cost prediction.
•
cost behavior.
•
cost analysis.
•
cost approximation.
• Santa Fe
Production sells a single product to wholesalers. The company’s budget for the
upcoming year revealed anticipated unit sales of 31,600, a selling price of
$20, variable cost per unit of $8, and total fixed costs of $360,000. If Santa
Fe’s unit sales are 300 units more than anticipated, its break-even point will:
•
increase by $12 per unit sold.
•
decrease by $12 per unit sold.
•
increase by $8 per unit sold.
•
decrease by $8 per unit sold.
•
not change.
