Question 1

Discuss how CVP analysis can be useful in planning.

Accepted Answer

CVP analysis is useful in determining th...

Question 2

Break-even analysis cannot be applied in a multiproduct situation.

Accepted Answer

A) True 
 B)False

Question 3

There are only two methods to derive an estimated line of cost behavior: the high-low method and the scatter diagram.

Accepted Answer

A) True 
 B)False

Question 4

Which one of the following statements is not true?

Accepted Answer

A)  Total fixed costs remain the same regardless of volume.
B)  Total variable costs change with volume.
C)  Total variable costs decrease as the volume increases.
D)  Fixed costs per unit increase as the volume decreases.
E)  Variable costs per unit remain the same regardless of the volume.

Question 5

A visual inspection of a scatter diagram may be used to identify the approximate relation between past cost and volume.

Accepted Answer

A) True 
 B)False

Question 6

The ratio of the sales volume for the various products sold by a company is called the:

Accepted Answer

A)  Current product mix.
B)  Relevant mix.
C)  Sales mix.
D)  Inventory cost ratio.
E)  Production ratio.

Question 7

A CVP graph presents data on:

Accepted Answer

A)  Profit and loss on a unit basis.
B)  Profit, loss, and break-even on a total basis.
C)  Profit, loss, and break-even on a unit basis.
D)  Only profit and loss on a total basis.
E)  Profit and loss on a budget and actual basis.

Question 8

Least-squares regression is a statistical method for deriving an estimated line of cost behavior.

Accepted Answer

A) True 
 B)False

Question 9

An important tool in predicting the volume of activity, the costs to be incurred, the sales to be earned, and the profit to be received is:

Accepted Answer

A)  Target income analysis.
B)  Cost-volume-profit analysis.
C)  Least-squares regression of costs.
D)  Variance analysis.
E)  Process costing.

Question 10

To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and unit sales price.

Accepted Answer

A) True 
 B)False

Question 11

When graphing cost-volume-profit data on a CVP chart:

Accepted Answer

A)  Units are plotted on the horizontal axis; costs on the vertical axis.
B)  Units are plotted on the vertical axis; costs on the horizontal axis.
C)  Both units and costs are plotted on the horizontal axis.
D)  Both units and cost are plotted on the vertical axis.
E)  Data points always represent expected future points.

Question 12

Cost-volume-profit analysis provides approximate, but not precise, answers to questions about the relations among costs, volume, and profits.

Accepted Answer

A) True 
 B)False

Question 13

A cost that remains the same in total even when volume of activity varies is a:

Accepted Answer

A)  Fixed cost
B)  Curvilinear cost
C)  Variable cost
D)  Step-wise variable cost
E)  Standard cost

Question 14

When using the high-low method for estimating cost behavior, the slope, or variable cost per sales dollar, is calculated by ___________________________________.

Accepted Answer

change in ...

Question 15

At Flint Company's break-even point of 9,000 units, fixed costs are $180,000, and variable costs are $540,000 in total.The unit sales price is:

Accepted Answer

A)  $20
B)  $40
C)  $60
D)  $80
E)  $100

Question 16

Wilson Co.is preparing next period's forecasts.Total fixed costs are expected to be $300,000 and the contribution margin ratio is expected to be 30%.The applicable income tax rate is 25%.
a.Calculate the company's break-even point in dollar sales.
b.If sales are $1,800,000 above the break-even point, what will income be pretax income and after-tax income?

Accepted Answer

None...

Question 17

Schmidt Inc, manufactures inexpensive cameras that sell for $50.Fixed costs are $720,000 and variable costs are $30.00 per unit.Schmidt can buy a newer production machine that will increase fixed costs by $14,400 per year but will increase variable costs by 10% per unit.What are the original and the new break-even points in this situation?

Accepted Answer

A)  Original $43,200; New $36,720.
B)  Original $36,000; New $36,720.
C)  Original $36,000; New $42,353.
D)  Original $36,000; New $43,200.
E)  Original $24,000; New $41,506.

Question 18

Lee Company manufactures and sells widgets for $2 per unit.Its variable cost per unit is $1.70.Lee's total fixed costs are $10,500.How many widgets must Lee Company sell to break even?

Accepted Answer

A)  5,250
B)  6,176
C)  35,000
D)  52,500
E)  61,760

Question 19

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.

Question 20

Degree of operating leverage (DOL)is defined as total contribution margin in dollars divided by pretax income.

Accepted Answer

A) True 
 B)False

Exam 5: Cost Behavior and Cost-Volume-Profit Analysis

At Flint Company's break-even point of 9,000 units, fixed costs are $180,000, and variable costs are $540,000 in total.The unit sales price is:

Correct Answer
verified

Break-even analysis cannot be applied in a multiproduct situation.

Correct Answer
verified

Cost-volume-profit analysis provides approximate, but not precise, answers to questions about the relations among costs, volume, and profits.

Correct Answer
verified

Correct Answer
verified
None...
View Answer

A cost that remains the same in total even when volume of activity varies is a:

Correct Answer
verified

There are only two methods to derive an estimated line of cost behavior: the high-low method and the scatter diagram.

Correct Answer
verified

A CVP graph presents data on:

Correct Answer
verified

Least-squares regression is a statistical method for deriving an estimated line of cost behavior.

Correct Answer
verified

When using the high-low method for estimating cost behavior, the slope, or variable cost per sales dollar, is calculated by ___________________________________.

Correct Answer
verified
change in ...
View Answer

A visual inspection of a scatter diagram may be used to identify the approximate relation between past cost and volume.

Correct Answer
verified

Correct Answer
verified

Which one of the following statements is not true?

Correct Answer
verified

The ratio of the sales volume for the various products sold by a company is called the:

Correct Answer
verified

When graphing cost-volume-profit data on a CVP chart:

Correct Answer
verified

An important tool in predicting the volume of activity, the costs to be incurred, the sales to be earned, and the profit to be received is:

Correct Answer
verified

To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and unit sales price.

Correct Answer
verified

Curvilinear costs always increase:

Correct Answer
verified

Lee Company manufactures and sells widgets for $2 per unit.Its variable cost per unit is $1.70.Lee's total fixed costs are $10,500.How many widgets must Lee Company sell to break even?

Correct Answer
verified

Degree of operating leverage (DOL)is defined as total contribution margin in dollars divided by pretax income.

Correct Answer
verified

Discuss how CVP analysis can be useful in planning.

Correct Answer
verified
CVP analysis is useful in determining th...
View Answer

Exam 5: Cost Behavior and Cost-Volume-Profit Analysis

At Flint Company's break-even point of 9,000 units, fixed costs are $180,000, and variable costs are $540,000 in total.The unit sales price is:

Correct AnswerverifiedShow Answer

Break-even analysis cannot be applied in a multiproduct situation.

Correct AnswerverifiedShow Answer

Cost-volume-profit analysis provides approximate, but not precise, answers to questions about the relations among costs, volume, and profits.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNone...View AnswerShow Answer

A cost that remains the same in total even when volume of activity varies is a:

Correct AnswerverifiedShow Answer

There are only two methods to derive an estimated line of cost behavior: the high-low method and the scatter diagram.

Correct AnswerverifiedShow Answer

A CVP graph presents data on:

Correct AnswerverifiedShow Answer

Least-squares regression is a statistical method for deriving an estimated line of cost behavior.

Correct AnswerverifiedShow Answer

When using the high-low method for estimating cost behavior, the slope, or variable cost per sales dollar, is calculated by ___________________________________.

Correct Answerverifiedchange in ...View AnswerShow Answer

A visual inspection of a scatter diagram may be used to identify the approximate relation between past cost and volume.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following statements is not true?

Correct AnswerverifiedShow Answer

The ratio of the sales volume for the various products sold by a company is called the:

Correct AnswerverifiedShow Answer

When graphing cost-volume-profit data on a CVP chart:

Correct AnswerverifiedShow Answer

An important tool in predicting the volume of activity, the costs to be incurred, the sales to be earned, and the profit to be received is:

Correct AnswerverifiedShow Answer

To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and unit sales price.

Correct AnswerverifiedShow Answer

Curvilinear costs always increase:

Correct AnswerverifiedShow Answer

Lee Company manufactures and sells widgets for $2 per unit.Its variable cost per unit is $1.70.Lee's total fixed costs are $10,500.How many widgets must Lee Company sell to break even?

Correct AnswerverifiedShow Answer

Degree of operating leverage (DOL)is defined as total contribution margin in dollars divided by pretax income.

Correct AnswerverifiedShow Answer

Discuss how CVP analysis can be useful in planning.

Correct AnswerverifiedCVP analysis is useful in determining th...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
None...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
change in ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
CVP analysis is useful in determining th...
View Answer