1.Woolford's CVP income statement included sales of 3,000 units, a selling price of $50, variable expenses of $30 per unit, and net income of $25,000. Fixed expenses are
a.$35,000.
b.$60,000.
c.$90,000.
d.$150,000.
2.In 2012, Teller Company sold 3,000 units at $300 each. Variable expenses were $210 per unit, and fixed expenses were $180,000. The same selling price, variable expenses, and fixed expenses are expected for 2012. What is Teller's break-even point in units for 2012?
a.2,000
b.4,500
c.6,429
d10,000
3.In 2011, Raleigh sold 1,000 units at $500 each, and earned net income of $50,000. Variable expenses were $300 per unit, and fixed expenses were $150,000. The same selling price is expected for 2012. Raleigh's variable cost per unit will rise by 10% in 2012 due to increasing material costs, so they are tentatively planning to cut fixed costs by $15,000. How many units must Raleigh sell in 2012 to maintain the same income level as 2011?
a.794
b.971
c.1,176
d.1,088
4.Ramirez Corporation sells two types of computer chips. The sales mix is 30% (Q-Chip) and 70% (Q-Chip Plus). Q-Chip has variable costs per unit of $36 and a selling price of $60. Q-Chip Plus has variable costs per unit of $42 and a selling price of $78. Ramirez's fixed costs are $540,000. How many units of Q-Chip would be sold at the break-even point?
a.5,063
b.5,869
c.9,000
d.11,813
5.A company can sell all the units it can produce of either Product A or Product B but not both. Product A has a unit contribution margin of $16 and takes two machine hours to make and Product B has a unit contribution margin of $30 and takes three machine hours to make. If there are 2,000 machine hours available to manufacture a product, income will be
a.$4,000 more if Product A is made.
b.$4,000 less if Product B is made.
c.$4,000 less if Product A is made.
d.the same if either product is made.
6.Outsourcing production will
a.reduce fixed costs and increase variable costs.
b.reduce variable costs and increase fixed costs.
c.have no effect on the relative proportion of fixed and variable costs.
d.make the company more susceptible to economic swings.
7.Which of the following statements is not true?
a.Operating leverage refers to the extent to which a company's net income reacts to a given change in sales.
b.Companies that have higher fixed costs relative to variable costs have higher operating leverage.
c.When a company's sales revenue is increasing, high operating leverage is good because it means that profits will increase rapidly.
d.When a company's sales revenue is decreasing, high operating leverage is good because it means that profits will decrease at a slower pace than revenues decrease.
8.Miller Manufacturing's degree of operating leverage is 1.5. Warren Corporation's degree of operating leverage is 4.5. Warren's earnings would go up (or down) by _as much as Miller's with an equal increase (or decrease) in sales.
a.1/3
b.2 times
c.3times
d.6 times
9.Nielson Corp. sells its product for $6,600 per unit. Variable costs per unit are: manufacturing, $3,600, and selling and administrative, $75. Fixed costs are: $18,000 manufacturing overhead, and $24,000 selling and administrative. There was no beginning inventory at 1/1/11. Production was 20 units per year in 2011-2013. Sales was 20 units in 2011, 16 units in 2012, and 24 units in 2013.
Income under absorption costing for 2013 is
a.$19,800.
b.$23,400
c.$24,600
d.$28,200.
10.Nielson Corp. sells its product for $6,600 per unit. Variable costs per unit are: manufacturing, $3,600, and selling and administrative, $75. Fixed costs are: $18,000 manufacturing overhead, and $24,000 selling and administrative. There was no beginning inventory at 1/1/11. Production was 20 units per year in 2011-2013. Sales was 20 units in 2011, 16 units in 2012, and 24 units in 2013.
Income under variable costing for 2013 is
a$19,800.
b.$23,400.
c.$24,600.
d.$28,200.
11.Accounting generally has the responsibility for
a.setting company goals.
b.expressing the budget in financial terms.
c.enforcing the budget.
d.administration of the budget.
12.Which is the last step in developing the master budget?
a.Preparing the budgeted balance sheet
b.Preparing the cost of goods manufactured budget
c.Preparing the budgeted income statement
d.Preparing the cash budge