38.
Operating income using the contribution margin format income statement is calculated
as:
39.
The contribution margin format income statement:
40.
Which of the following terms do
not
appear on the contribution margin format income
statement?
41.
The contribution margin format income statement is organized by:
42.
A 10% change in a firm’s revenues is likely to result in a change of more than 10% in the
firm’s operating income because:
43.
A firm has revenues of $120,000, a contribution margin ratio of 30%, and fixed expenses
that total $56,000. If revenues increase $20,000, then:
44.
A management decision that would have a long term influence on the operating leverage
of a firm would be:
45.
Selling price per unit
$100
Variable expenses per unit
$40
Fixed expenses per month
$60,000
Operating income at a volume of 4,000 units per month is:
46.
Selling price per unit
$100
Variable expenses per unit
$40
Fixed expenses per month
$60,000
The break-even point volume of units is:
47.
Selling price per unit
$100
Variable expenses per unit
$40
Fixed expenses per month
$60,000
The break-even point in terms of total revenues per month is:
48.
Selling price per unit
$100
Variable expenses per unit
$40
Fixed expenses per month
$60,000
The contribution margin ratio is:
49.
Selling price per unit
$100
Variable expenses per unit
$40
Fixed expenses per month
$60,000
If sales volume were to decrease 10%, from 4,000 units per month to 3,600 units per
month, operating income would:
50.
Selling price per unit
$100
Variable expenses per unit
$40
Fixed expenses per month
$60,000
If the selling price per unit were to drop $2, from $100 to $98, the sales volume were to
increase 500 units to 4,500 units per month, and advertising expense were to increase by
$1,000:
51.
The contribution margin ratio always decreases when the:
52.
If fixed costs were increased by $9,000 and the contribution margin ratio remained at 30
percent, then sales must increase by _________ in order to cover the additional fixed
expenses.
53.
ABU Co. has several products, each with a different contribution margin ratio. If the same
number of units were sold in July as in June, but the sales mix changed:
54.
A firm’s products have an average contribution margin ratio of 40%, which will be
maintained for the next month even though fixed expenses are expected to rise by
$20,000. In order to keep operating income for the month from being affected, revenues
will have to increase by:
55.
Each of a company’s two product lines has a different contribution margin ratio. If the
company’s total sales remain the same but the sales mix shifts toward selling more of the
product with the higher contribution ratio, which of the following is true?
56.
Each of a company’s several product lines has a different contribution margin ratio. Total
sales in 2017 were 20% higher than total sales in 2016. Total contribution margin for 2017
will be:
57.
Which activity of the management planning and control process occurs in each phase of
the cycle?
58.
Management salaries are an example of a ____________ cost behavior pattern.
59.
ABC Company’s sales are $100,000, fixed costs are $50,000, and variable costs are
$30,000. ABC Company’s contribution margin and operating income are __________ and
__________ respectively.
60.
ABC Company’s sales are $100,000, fixed costs are $50,000, and variable costs are
$30,000. ABC Company’s contribution margin ratio is:
61.
If variable costs are 35% of sales and sales increase by $50,000 this month because of a
special promotion, by how much will contribution margin increase?
62.
A firm’s current products have sales of $100,000 and an average contribution margin ratio
of 40%. If the firm add a new product with sales of $40,000 and variable costs of $20,000,
the firm’s new average contribution margin ration will be:
63.
XYZ Company has a variable cost ratio of 40%, fixed expenses of $200,000, and desires to
earn operating income of $100,000. Total sales revenue required to achieve XYZ
Company’s desired operating income is:
64.
Company A has fixed expenses of $100,000 and variable expenses of $50 per unit.
Company B has fixed expenses of $200,000 and variable expenses of $25 per unit. The
volume of unit sales necessary to produce exactly the same operating income for
Company A and Company B is:
Essay Questions
65.
For each of the following costs, identify the cost behavior as variable, mixed, or fixed:
1. Wages of assembly line workers _________________
2. President’s salary _________________
3. Plant utilities _________________
4. Sales force commissions _________________
5. Shipping costs _________________
6. Factory rent _________________
7. Research and development expenses _________________
8. Property taxes _________________
9. Advertising _________________
10. Supplies used in production _________________
66.
XYZ Company incurred the following costs for the month of August when it observed an
activity level of 10,000 units.
Activity level in units
10,000
Variable costs
$30,000
Fixed costs
50,000
Mixed costs
40,000
Total costs
$120,000
During October, the activity level was 16,000 units, and the total costs incurred were
$150,000.
a. Calculate the variable costs, fixed costs, and mixed costs incurred during October.
b. Use the high-low method to calculate the cost formula for mixed costs.
c. If the activity level were expected to be 13,800 units for the month of December, what
amount of total costs would be expected?
(Variable + Fixed))
