Question 1

Which of the following conditions would cause the break-even point to increase?

Accepted Answer

A)  Total fixed costs decrease
B)  Unit selling price increases
C)  Unit variable cost decreases
D)  Unit variable cost increasesE) All of the above
F) A) and B)

Question 2

Which ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

Accepted Answer

A)  Margin of safety ratio
B)  Contribution margin ratio
C)  Costs and expenses ratio
D)  Profit ratioE) A) and B)
F) A) and C)

Question 3

If direct materials cost per unit decreases,the break-even point will increase.

Accepted Answer

A) True 
 B)False

Question 4

Cost behavior refers to the methods used to estimate costs for use in managerial decision making.

Accepted Answer

A) True 
 B)False

Question 5

Rouney Co.has budgeted salary increases to factory supervisors totaling 10%.If selling prices and all other cost relationships are held constant,next year's break-even point will

Accepted Answer

A)  decrease by 10%.
B)  increase by 10%.
C)  cannot be determined from the data given.
D)  increase at a rate greater than 10%.E) A) and B)
F) A) and C)

Question 6

For purposes of analysis,mixed costs are generally

Accepted Answer

A)  classified as fixed costs.
B)  classified as variable costs.
C)  classified as period costs.
D)  separated into their variable and fixed cost components.E) A) and B)
F) A) and C)

Question 7

Currently,Zane Company's unit selling price is $30,the variable cost is $14,and the total fixed costs are $96,000.A proposal is being evaluated to increase the selling price to $34.

Accepted Answer

The answer of Currently,Zane Company's unit selling price is $30,the...

Question 8

Total variable costs change as the level of activity changes.

Accepted Answer

A) True 
 B)False

Question 9

A mixed cost has characteristics of both a variable cost and a fixed cost.

Accepted Answer

A) True 
 B)False

Question 10

Rental charges of $60,000 per year plus $2 for each machine hour over 15,000 hours is an example of a fixed cost.

Accepted Answer

A) True 
 B)False

Question 11

If fixed costs are $850,000 and variable costs are 70% of sales,what is the break-even point (in dollars) ?

Accepted Answer

A)  $1,214,286
B)  $1,983,333
C)  $2,833,333
D)  $2,550,000E) B) and D)
F) B) and C)

Question 12

A rental cost of $40,000 plus $0.50 per machine hour of use is an example of a mixed cost.

Accepted Answer

A) True 
 B)False

Question 13

If employees accept a wage contract that decreases the unit contribution margin,the break-even point will decrease.

Accepted Answer

A) True 
 B)False

Question 14

The following cost graphs illustrate various types of cost behaviors.  
For each of the following costs,identify the cost graph that best describes its cost behavior as the number of units produced and sold increases.

Accepted Answer

The answer of The following cost graphs illustrate various types...

Question 15

In cost-volume-profit analysis,all costs are classified into the following two categories:

Accepted Answer

A)  mixed costs and variable costs.
B)  sunk costs and fixed costs.
C)  discretionary costs and sunk costs.
D)  variable costs and fixed costs.E) A) and B)
F) A) and C)

Question 16

If a business sells two products,it is NOT possible to estimate the break-even point.

Accepted Answer

A) True 
 B)False

Question 17

Break-even analysis is one type of cost-volume-profit analysis.

Accepted Answer

A) True 
 B)False

Question 18

The contribution margin ratio is

Accepted Answer

A)  the same as the variable cost ratio.
B)  the same as profit.
C)  the portion of equity contributed by the stockholders.
D)  the same as the profit-volume ratio.E) A) and D)
F) None of the above

Question 19

Which of the following describes the behavior of the fixed cost per unit?

Accepted Answer

A)  Decreases with increasing production
B)  Decreases with decreasing production
C)  Remains constant with changes in production
D)  Increases with increasing productionE) None of the above
F) A) and C)

Question 20

Fixed costs are costs that vary in total dollar amount as the level of activity changes.

Accepted Answer

A) True 
 B)False

Exam 11: Cost Behavior and Cost-Volume-Profit Analysis

Cost behavior refers to the methods used to estimate costs for use in managerial decision making.

Correct AnswerverifiedShow Answer

Rental charges of $60,000 per year plus $2 for each machine hour over 15,000 hours is an example of a fixed cost.

Correct AnswerverifiedShow Answer

Total variable costs change as the level of activity changes.

Correct AnswerverifiedShow Answer

Currently,Zane Company's unit selling price is $30,the variable cost is $14,and the total fixed costs are $96,000.A proposal is being evaluated to increase the selling price to $34.

Correct AnswerverifiedShow Answer

If employees accept a wage contract that decreases the unit contribution margin,the break-even point will decrease.

Correct AnswerverifiedShow Answer

In cost-volume-profit analysis,all costs are classified into the following two categories:

Correct AnswerverifiedShow Answer

Which of the following conditions would cause the break-even point to increase?

Correct AnswerverifiedShow Answer

The following cost graphs illustrate various types of cost behaviors. For each of the following costs,identify the cost graph that best describes its cost behavior as the number of units produced and sold increases.

Correct AnswerverifiedShow Answer

If fixed costs are $850,000 and variable costs are 70% of sales,what is the break-even point (in dollars) ?

Correct AnswerverifiedShow Answer

Break-even analysis is one type of cost-volume-profit analysis.

Correct AnswerverifiedShow Answer

If a business sells two products,it is NOT possible to estimate the break-even point.

Correct AnswerverifiedShow Answer

Which ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

Correct AnswerverifiedShow Answer

A rental cost of $40,000 plus $0.50 per machine hour of use is an example of a mixed cost.

Correct AnswerverifiedShow Answer

If direct materials cost per unit decreases,the break-even point will increase.

Correct AnswerverifiedShow Answer

The contribution margin ratio is

Correct AnswerverifiedShow Answer

A mixed cost has characteristics of both a variable cost and a fixed cost.

Correct AnswerverifiedShow Answer

Fixed costs are costs that vary in total dollar amount as the level of activity changes.

Correct AnswerverifiedShow Answer

Which of the following describes the behavior of the fixed cost per unit?

Correct AnswerverifiedShow Answer

Rouney Co.has budgeted salary increases to factory supervisors totaling 10%.If selling prices and all other cost relationships are held constant,next year's break-even point will

Correct AnswerverifiedShow Answer

For purposes of analysis,mixed costs are generally

Correct AnswerverifiedShow Answer

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