Multiple choice questions:
Question 1
A cost that remains constant over a limited range of volume, but increases by a lump sum when volume increases beyond a maximum amount, is a(n):
Question 1 options:
Step-wise cost.
Fixed cost.
Curvilinear cost.
Incremental cost.
Opportunity cost.
Question 2
Curvilinear costs always increase:
With decreases in volume.
In constant proportion to changes in production levels.
When management performs break-even analysis.
When volume increases, but not at a constant rate.
On a per unit basis when volume of activity goes down.
Question 3
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:
Question 3 options:
Target income analysis.
Cost-volume-profit analysis.
Least-squares regression of costs.
Variance analysis.
Process costing.
Question 4
A company's normal operating range, which excludes extremely high and low volumes that are not likely to occur, is called the:
Question 4 options:
Margin of safety.
Contribution range.
Break-even point.
Relevant range.
High-low point.
Question 5
A target income refers to:
Question 5 options:
Income at the break-even point.
Income from the most recent period.
Income planned for a future period.
Income only in a multiproduct environment.
Income at the minimum contribution margin.
Question 6
If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is:
Question 6 options:
$60,000.
$250,000.
$190,000.
$440,000.
$24,000.
Question 7
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?
Question 7 options:
6,500.
6,000.
500.
5,000.
5,500.
Question 8
The budgeted income statement presented below is for Griffith Corporation for the coming fiscal year. If Griffith Corporation is able to achieve the budgeted level of sales, its margin of safety in dollars would be:
Question 8 options:
$172,420.
$150,000.
$262,500.
$275,862.
$310,115.
Question 9
The least-squares regression method is:
Question 9 options:
A graphical method to identify cost behavior.
An algebraic method to identify cost behavior.
A statistical method to identify cost behavior.
The only identify cost estimation method allowed by GAAP.
A cost estimation method that only uses the two extreme values.
Question 10
A method that estimates cost behavior by connecting the costs linked to the highest and lowest volume is called the:
Question 10 options:
Scatter method.
High-low method.
Least-squares method.
Break-even method.
Step-wise method.
Question 11
A product sells for $30 per unit and has variable costs of $18 per unit. The fixed costs are $720,000. If the variable costs per unit were to decrease to $15 per unit and fixed costs increase to $900,000, and the selling price does not change, break-even point in units would:
Question 11 options:
Increase by 20,000.
Equal 6,000.
Increase by 6,000.
Decrease by 20,000.
Not change.
Question 12
A company manufactures and sells a product for $120 per unit. The company's fixed costs are $68,760, and its variable costs are $90 per unit. The company's break-even point in dollars is:
Question 12 options:
$91,680.
$68,760.
$2,292.
$275,040.
$206,280.
Question 13
Lee Company manufactures and sells widgets for $2.00 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?
Question 13 options:
5,250.
6,176.
35,000.
52,500.
61,760.
Question 14
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:
Question 14 options:
$20.
$40.
$60.
$80.
$100.
Question 15
Assume that sales are predicted to be $3,750, the expected contribution margin is $1,500, and a net loss of $250 is anticipated. The break-even point in sales dollars is:
Question 15 options:
$1,750.
$2,500.
$4,000.
$4,250.
$4,375.
Question 16
During a recent fiscal year, Dawson Company reported pretax income of $125,000, a contribution margin ratio of 25% and total contribution margin of $400,000. Total variable costs must have been:
Question 16 options:
$1,100,000.
$1,200,000.
$500,000.
$1,600,000.
$2,100,000.
Question 17
The ratio of the sales volume for the various products sold by a company is called the:
Question 17 options:
Current product mix.
Relevant mix.
Sales mix.
Inventory cost ratio.
Production ratio.