ACC201C Chapter21 Quiz Score 95%

Question-1

As the level of volume of activity increases, the variable cost per unit remains constant.

True

False

 

Question-2

Mullis Corp. manufactures DVDs that sell for $5.00. Fixed costs are $28,000 and variable costs are $3.60 per unit. Mullis can buy a newer production machine that will increase fixed costs by $8,000 per year, but will decrease variable costs by $0.40 per unit. What effect would the purchase of the new machine have on Mullis' break-even point in units?

9,850 unit decrease.

5,714 unit increase.

4,444 unit increase.

No effect.

4,444 unit decrease.

 

Question-3

If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is:

$250,000.

$60,000.

$24,000.

$190,000.

$440,000.

 

Question-4

A product sells for $200 per unit, and its variable costs per unit are $130. The fixed costs are $420,000. If the firm wants to earn $35,000 pretax income, how many units must be sold?

6,000.

6,500.

5,500.

5,000.

500.

 

Question-5

The contribution margin ratio:

Is the percent of each sales dollar that remains to cover the variable and fixed costs.

Cannot be used in conjunction with other analytical tools.

Is the same as the unit contribution margin.

Is the percent of each sales dollar that remains after deducting the total unit variable cost.

Is the percent of each sales dollar that remains after deducting the total unit fixed cost.

 

Question-6

Use the following information to determine the margin of safety in dollars:

Unit sales

50,000 Units

Dollar sales

$500,000

Fixed costs

$204,000

Variable costs

$187,500

$173,600.

$326,400.

$88,500.

$108,500.

$500,000.

 

 

Question-7

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

Margin of safety.

Contribution range.

Break-even point.

Relevant range.

High-low point.

 

 

Question-8

A firm sells two products, Regular and Ultra. For every unit of Regular the firm sells, two units of Ultra are sold. The firm's total fixed costs are $1,612,000. Selling prices and cost information for both products follow. What is the firm's break-even point in units of Regular and Ultra?



Product

Unit
Sales
Price

Variable
Cost
Per Unit

Regular

$20

$8

Ultra

24

4

10,333 of A and 20,667 of B.

31,000 of A and 31,000 of B.

36,167 of A and 72,333 of B.

31,000 of A and 62,000 of B.

62,000 of A and 31,000 of B.

 

Question-9

A cost that includes both fixed and variable cost components is called a:

Composite cost.

Differential cost.

Curvilinear cost.

Mixed cost.

Step-variable cost.

 

Question-10

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

True

False

 

Question-11

Top of Form

The ratio (proportion) of the sales volumes for the various products sold by a company is called the:

Inventory cost ratio.

Production ratio.

Current product mix.

Sales mix.

Relevant mix.

 

Question-12

The Goldfarb Company manufactures and sells toasters. Each toaster sells for $23.75 and the variable cost per unit is $16.25. Goldfarb's total fixed costs are $25,000, and budgeted sales are 8,000 units. What is the contribution margin per unit?

$1.25.

$23.75.

$16.25.

$7.50.

$60,000.

 

Question-13

A company has fixed costs of $270,000, a unit contribution margin of $14, and a contribution margin ratio of 55%. If the firm wants to earn a target $60,000 pretax income, what amount of sales must the company make (rounded to the nearest whole dollar)?

109,090.

381,818.

600,000.

330,000.

490,909.

 

Question-14

The difference between sales price per unit and variable cost per unit is the:

Gross profit from sales.

Margin of safety per unit.

Gross margin per unit.

Contribution margin per unit.

Fixed cost per unit.

 

Question-15

Cost-volume-profit analysis requires management to classify all costs as either fixed or variable with respect to production or sales volume within the relevant range of operations.

True

False

 

Question-16

At Midland 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:

$80.

$40.

$60.

$20.

$100.

 

Question-17

During its most recent fiscal year, Dover, Inc. had total sales of $3,200,000. Contribution margin amounted to $1,500,000 and pretax income was $400,000. What amount should have been reported as variable costs in the company's contribution margin income statement for the year in question?

$1,300,000.

$1,700,000.

$2,800,000.

$1,900,000.

$1,100,000.

 

 

Question-18

The budgeted income statement presented below is for Burkett Corporation for the coming fiscal year. Compute the number of units that must be sold in order to achieve a target pretax income of $130,000.

Sales (50,000 units)

 

$1,000,000

Costs:

 

 

             Direct materials

$270,000

 

             Direct labor

240,000

 

             Fixed factory overhead

100,000

 

             Variable factory overhead

150,000

 

             Fixed marketing costs

110,000

 

             Variable marketing costs

50,000

920,000

Pretax income

 

$80,000

 

 

Question-19

Flannigan Company manufactures and sells a single product that sells for $450 per unit; variable costs are $300. Annual fixed costs are $870,000. Current sales volume is $4,200,000. Compute the break-even point in dollars.

$2,612,612.

$1,304,348.

$4,202,899.

$2,640,000.

$1,740,000.

 

Question-20

Use the following information to determine the contribution margin ratio:

Unit sales

50,000 Units

Unit selling price

$14.50

Unit variable cost

$7.50

Fixed costs

$204,000

24.5%.

48.3%.

6.9%.

51.7%.

34.1%.