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Acct 004-n7337 Chapter 5 Exam

If the contribution margin is $49,000 and the total sales are $166,000, total variable costs must equal $117,000.

a.            True

b.            False


Question 32

 The margin of safety can be expressed in units of product, in dollars, or as a percent of sales.

a.            True

b.            False

 

Question 33

 Janet sells a product for $18.99. The variable costs are $14.38. Janets break-even units are 59,000. What is the amount of fixed costs?

a.            $ 59,000

b.            $ 271,990

c.             $ 848,420

d.            $1,120,410

e.            None of the above

 

Question 34

 With fixed costs of $46,100, and a contribution ratio of 55%, how much revenue is required to achieve a desired profit of $49,070?

a.            $173,036

b.            $95,170

c.             $ 83,818

d.            $89,218

e.            None of the above

 

Question 35

 

A company currently sells for $100 a product that has a variable cost per unit of $48. Fixed costs are $910,000 and not expected to change in the next period. If the company desires to reduce its break even point by 1,250 units, by how much must they reduce variable costs?

a.            $4.00

b.            $5.00

c.             $3.75

d.            $5.25

 e.           Cannot be determined

 

 

Question 36

 Scatter diagrams require estimates and judgments in analyzing cost behavior.

a.            True

b.            False

 

Question 37

 Data to be used in applying the high-low method shows the highest cost of $69,000 and the lowest cost of $52,000. The data shows $148,000 as the highest level of sales and $97,000 as the lowest level. What is the variable cost per sales dollar?

a.            $0.33

b.            $0.47

c.             $0.54

d.            $3.00

e.            None of the above

 

 

Question 38

 

A cost that changes in proportion to changes in volume of activity is a(n):

a.            Differential cost.

b.            Fixed cost.

c.             Incremental cost.

d.            Variable cost.

e.            Product cost.

 

Question 39

 The margin of safety is the amount that sales can drop before the company incurs a loss.

a.            True

b.            False

 

Question 40

 The relevant range of operations includes extremely high and low levels of production that are unlikely to occur.

a.            True

b.            False


 

Question 41

 When using conventional cost-volume-profit analysis, some assumptions about costs and sales prices are made. Which one of the following is one of those assumptions?

a.            The contribution margin per unit will change as volume increases

b.            The variable cost per unit will decrease as volume increases

c.             The sales price per unit will remain constant as volume increases

d.            Fixed costs per unit will remain the same as volume increases

e.            The actual variable cost per unit must vary over the production range


 

Question 42

 If the variable costs to make and sell the unit are $36 and the contribution margin ratio is 25%, then the selling price of a unit is $54.

a.            True

b.            False


 

Question 43

 Use the following information for Harrys Seafood for this question:.

 Month    Units produced    Total costs

 June        2,000                   $40,000

 July         1,200                   $30,000

 August     1,700                   $38,000

 Sept.        1,000                   $25,000

 Using the high-low method for Harrys Seafood, calculate the variable cost per unit:

a.            $15

b.            $20

c.             $24

d.            $28

e.            Not enough information to determine.

 

Question 44

The variable cost for each blidget produced is $23. The contribution margin per unit is $8 per unit. What is the sales price per unit?

a.            $ 8

b.            $19

c.             $31

d.            $39

e.            None of the above

 

Question 45

 

When a company hires a new manager every time it opens a new branch office, the salaries of the branch managers would be classified as a stair-step cost.

a.            True

b.            False


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