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Acct 004-n7337 Chapter 5 Exam

When using the high-low method, after the variable cost is computed, you must use the high point to calculate the estimated fixed costs.

a.            True

 b.           False


Question 2


When a cost volume profit chart is created, the amount of fixed costs can be found at the line starting at zero and going outward.

a.            True

 b.           False


Question 3

 A product sells for $200 per unit, and its variable costs per unit are $130. The fixed costs are $420,000. What is the break-even point in dollar sales?

a.            $ 2,100.

 b.           $ 6,000.

 c.            $ 420,000.

 d.           $ 646,154.

 e.           $1,200,000.



Question 4

When a companys total contribution margin is $200,000 at the break-even point, its fixed costs are equal to $200,000.

a.            True

 b.           False


Question 5

 Hartman Co. has fixed costs of $36,000 and a contribution margin ratio of 24%. If expected sales are $200,000, what is the margin of safety as a percent of sales?

a.            6%.

 b.           25%.

 c.            33%.

 d.           50%.

 e.           75%.



Question 6

 Which of the following is true about mixed costs?

a.            Mixed costs include both fixed and variable components.

 b.           Mixed costs cause problems in cost-volume-profit calculations and so they must be split out between the fixed and variable components.

 c.            One way to split out mixed costs (into variable and fixed components) is by using the high-low method.

 d.           All of the above.

 e.           None of the above.


Question 7

 If the cost of utilities is $1,280 for 32,000 units of power used and is $840 for 18,000 units of power used, utilities are a variable cost.

a.            True

 b.           False


Question 8

 If the variable costs of a product equal $55 and the selling price is $100, then the contribution margin for the product is $45.

a.            True

 b.           False


Question 9

 Which of the following is true with regard to fixed costs?

a.            A fixed cost remains unchanged in amount even when the volume of activity varies from period to period.

 b.           On a per-unit basis, fixed costs have an inverse relationship.

 c.            Fixed costs are used in calculating the break even point.

 d.           All of the above.

 e.           None of the above.


Question 10

 The difference between sales price per unit and variable cost per unit is the:

a.            Gross profit from sales.

b.            Gross margin per unit.

c.             Fixed cost per unit.

d.            Margin of safety per unit.

e.            Contribution margin per unit.

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