Question
Q:
- Assuming no other changes, operating income will be the same under both the variable and absorption costing methods when the number of units manufactured equals the number of units sold.
1. False
2. True - A firm operated at 8 of capacity for the past year, during which fixed costs were $210,000, variable costs were 7 of sales, and sales were $1,000,000. Operating profit was:
1. $210,000
2. $90,000
3. $490,000
4. $590,000 - If sales are $820,000, variable costs are 58% of sales, and operating income is $260,000, what is the contribution margin ratio?
1. 62%
2. 32%
3. 53.1%
4. 42% - Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?
1. Direct labor
2. Units of production depreciation on factory equipment
3. Salary of a factory supervisor
4. Direct materials - Zipee Inc.'s unit selling price is $90, the unit variable costs are $40.50, fixed costs are $170,000, and current sales are 12,000 units. How much will operating income change if sales increase by 5,000 units?
1. $175,000 increase
2. $125,000 decrease
3. $75,000 increase
4. $247,500 increase - Bear Corporation sells product G for $150 per unit, the variable cost per unit is $105, the fixed costs are $720,000, and Bear is in the 25% corporate tax bracket. What are the sales (dollars) required to earn a net income (after tax) of $40,000?
1. $2,400,000
2. $2,933,400
3. $2,577,777
4. $2,533,350 - Rusty Co. sells two products, X and Y. Last year Rusty sold 5,000 units of X’s and 35,000 units of Y’s. Related data are:
Unit Selling Price
Unit Variable
Unit contribution
Product
Price
Cost
Margin
X
$110
$70
$40
Y
70
50
$20
What was Rusty Co.’s weighted average unit contribution margin?
1. $40
2. $20
3. $22.50
4. $60 - Variable costs are costs that remain constant in total dollar amount as the level of activity changes.
1. True
2. False - Costs that vary in total in direct proportion to changes in an activity level are called:
1. variable costs
2. sunk costs
3. fixed costs
4. differential costs - A cost that has characteristics of both a variable cost and a fixed cost is called a:
1. sunk cost
2. variable/fixed cost
3. discretionary cost
4. mixed cost - Which of the following describes the behavior of the fixed cost per unit?
1. Increases with increasing production
2. Decreases with increasing production
3. Remains constant with changes in production
4. Decreases with decreasing production - The range of activity over which changes in cost are of interest to management is called the relevant range.
1. False
2. True - If fixed costs increased and variable costs per unit decreased, the break-even point would:
1. remain the same
2. increase, decrease, or remain the same, depending upon the amounts of increase in fixed cost and decrease in variable cost
3. decrease
4. increase - Given the following cost and activity observations for Smithson Company’s utilities, use the high-low method to calculate Smithson’s fixed costs per month. Round variable cost per unit to two decimal places in your calculations.
Cost
Machine Hours
January
$52,200
20,000
February
75,000
29,000
March
57,000
22,000
April
64,000
24,500
1. $50,000
2. $12,500
3. $1,630
4. $5,000 - If fixed costs are $49,600, the unit selling price is $52, and the variable costs are $24, what is the break-even sales (dollars)?
1. $132,000
2. $92,114
3. $52,800
4. $124,000 - 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 (units) if the unit selling price increases by $10?
1. 9,000 units and 15,000 units
2. 6,000 units and 5,294 units
3. 18,000 units and 12,858 units
4. 18,000 units and 6,000 units - If the volume of sales is $6,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 25%.
1. True
2. False - In cost-volume-profit analysis, all costs are classified into the following two categories:
1. variable costs and fixed costs
2. discretionary costs and sunk costs
3. sunk costs and fixed costs
4. mixed costs and variable costs - The reliability of cost-volume-profit analysis does NOT depend on the assumption that costs can be accurately divided into fixed and variable components.
1. True
2. False - The fixed cost per unit varies with changes in the level of activity.
1. False
2. True
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Chapter 4 Quiz #1
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- Posted on Dec 04, 2010 at 2:58:43PM
A:
Preview: ... were 70% of sales, and sales were $1,000,000. Operating profit was: Â 1. $210,000 Â 2. $90,000 3. $490,000 Â 4. $590,000 Â
If sales are $820,000, variable costs are 58% of sales, and operating income is $260,000, what is the contribution margin ratio? Â 1. 62% Â 2. 32% Â 3. 53.1% Â 4. 42%
Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?  1. Direct labor  2. Units of production depreciation on factory equipment  3. Salary of a factory supervisor 4. Direct materials
Zipee Inc.'s unit selling price is $90, the unit variable costs are $40.50, fixed costs are $170,000, and current sales are 12,000 units. How much will operating income change if sales increase by 5,000 units?  1. $175,000 increase  2. $125,000 decrease  3. $75,000 increase  4. $247,500 increase  Â
Bear Corporation sells product G for $150 ...
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