Ch 18V Concept Overview Videos

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Question #1

Units produced 1,000
Direct materials $6
Direct labor $10
Fixed overhead $6,000
Variable overhead $6
Fixed selling and administrative $2,000
Variable selling and administrative $2
________________________________________

The total product cost per unit under variable costing is:

A $24

B $22

C $28

D $30

Question #2

The total product cost per unit under absorption costing is:

A $24

B $22

C $30

D $28

Question #3

Company A operates at a sales level of 1,200 units with a contribution margin of $30 per unit. Its pretax income is $12,000. What is the company’s degree of operating leverage?

A 1.2

B 4

C 0.3

D 3.0

Question #4

Operating leverage is the relative size of _____ costs in the total cost structure.

A variable

B margin

C fixed

Question #5

Which of the following is NOT a reason we can make assumptions in CVP analysis?

A Financial analysts at the company are trained to be precise in their analysis of CVP numbers.

B Summing costs can offset individual deviations.

C CVP analysis yields estimates.

D CVP is applied to a relevant range of operations.

Question #6

The total contribution margin will ____ fixed costs in a break-even multiple product income statement.

A equal

B be less than

C be greater than

Question #7

Hat Company sells two types of hats: knit hats with a selling price of $15 and variable costs of $5, and hard hats with a selling price of $25 and variable costs of $10. Knit hats comprise 80% of all sales. If fixed costs are $22,000, how many knit hats and hard hats must be sold for the Hat Company to break even?

A 1,600 knit units; 400 hard units

B 2,200 knit units; 1,467 hard units

C 1,467 knit units; 2,200 hard units

D 400 knit units; 1,600 hard units

Question #8

A company sells three products: Product A, Product B, and Product C. Usually it sells 5,000 units of Product A; 6,000 units of Product B; and 8,000 units of Product C. What is the sales mix for Products A, B and C, respectively?

A 50%, 60%, 80%

B 5%, 6%, 8%

C 26.3%, 31.6%, 42.1%

Question #9

Companies can use _____ analysis to predict income based on various changes in fixed or variable costs, selling price and volume.

A income

B sales

C margin of safety

D CVP

Question #10

Compute the after-tax income based on the following information.

Sales $100,000
Variable costs 30,000
Fixed costs 5,000
Income tax rate 20%

A $70,000

B $52,000

C $13,000

D $65,000

Question #11

CompuTop Company sells toy laptop computers for $30 each. If the variable cost for each laptop is $20 and fixed costs total $25,000, how many laptops must CompuTop sell to generate a target income of $66,667?

A 9,167

B 22,500

C 7500

D 2500

Question #12

CompuTop Company sells toy laptop computers for $30 each. If the variable cost for each laptop is $20 and fixed costs total $25,000, how much sales in dollars must it sell to generate a target income of $66,667?

A $225,225

B $275,276

C $9,167

D $7,500

Question #13

After-tax income for Square Company is $10,000. Square Company pays 20% in taxes. Square Company’s pretax income is

A $12,500

B $10,500

C $15,500

D $12,000

Question #14

Remote Company has expected sales of 55,000 units and break-even sales of 50,000 units. If fixed costs are $75,000, what is the margin of safety?

A 15%

B 91%

C 9%

D 10%

Question #15

If the selling price per unit can be increased, what will be the effect on the break-even point?

A The break-even point will decrease.

B The break-even point will be unchanged.

C The break-even point will increase.

Question #16

Revenue $ 100,000
Variable Costs 20,000
Fixed Costs 5,000
________________________________________

What is the net income (pretax)?

A $95,000

B $80,000

C $75,000

D $80,000

Question #17

Delta Company sells mini-flash drives. The selling price is $10 each and the variable costs are $8. If fixed costs are $3,000, how much in sales dollars must Delta have to break even?

A $30,000

B $24,000

C $1,500

D $15,000

Question #18

Delta Company sells mini-flash drives. The selling price is $10 each and the variable costs are $8. If fixed costs are $3,000, how many drives must Delta sell to break even?

A 3,000

B 1,500

C 21,000

Question #19

Jelly Company has a product that sells for $150 per unit and has variable costs of $60 per unit. What is the contribution margin per unit?

A $90

B $50

C $60

Question #20

A contribution margin income statement follows this format:

A Contribution margin minus fixed costs equals sales

B Contribution margin minus variable costs equals pretax income

C Variable costs minus fixed costs equals contribution margin

D Sales minus variable costs equals contribution margin

Question #21

Contribution margin is computed as:

A variable cost per unit minus total fixed costs

B selling price per unit minus variable cost per unit

C net income minus fixed costs

D total fixed costs minus selling price per unit

Question #22

Regression is a statistical method for identifying _____ behavior.

A sales

B volume

C expense

D cost

Question #23

A scatter diagram is a graph of unit volume and cost data where _____ are plotted on the horizontal axis and _____ are plotted on the vertical axis.

A costs, volume

B volume, units

C costs, units

D units, costs

Question #24

A goal of classifying costs is to develop a _____ equation.

A cost

B profit

C volume

D sales

Question #25

A cost that increases as volume increases, but not at a constant rate is called a _____ cost.

A curvilinear

B fixed

C step-wise

D variable

E mixed

Question #26

A cost that remains fixed over limited ranges of volumes but changes by a lump sum when volume changes occur outside these limited ranges is called a _____ cost.

A fixed

B variable

C step-wise

D mixed

Question #27

A cost that behaves like a combination of fixed and variable costs is called a _____ cost.

A variable

B step-wise

C mixed

D fixed

Question #28

A cost that changes in proportion to changes in the activity output volume is called a _____ cost.

A step-wise

B mixed

C variable

D fixed

Question #29

A cost that does not change with changes in volume of activity is called a _____ cost.

A fixed

B step-wise

C variable

D mixed

Question #30

Cost-volume-profit analysis is used to predict how changes in _____ levels affect profit.

A production and sales

B costs and sales

C sales and production

D fixed and variable

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Ch 18V Concept Overview Videos

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