A) $326,400. B) $108,500. C) $500,000. D) $173,600. E) $88,500.
94) Use the following information to determine the break-even point in units (rounded to the nearest
whole unit):
Unit sales 50,000 Units
Unit selling price $ 14.50
Unit variable cost $ 7.50
Fixed costs $ 186,00
0
A) 46,667 B) 8,455 C) 12,828 D) 24,800 E) 26,571
43
95) Use the following information to determine the contribution margin ratio:
Unit sales 50,000 Units
Unit selling price $ 14.50
Unit variable cost $ 7.50
Fixed costs $ 204,00
0
A) 24.5%. B) 48.3%. C) 34.1%. D) 6.9%. E) 51.7%.
96) The budgeted income statement presented below is for Burkett Corporation for the coming fiscal
year. Compute the number of units that must be sold in order to achieve a target pretax income of
$130,000.
Sales (50,000 units) $ 1,000,00
0
Costs:
Direct materials $ 270,00
0
Direct labor 240,00
0
Fixed factory overhead 100,00
Fixed factory overhead
100,00
0
150,00
0
Variable factory overhead
Fixed marketing costs
Variable marketing costs
110,00
0
50,000
920,000
Pretax income
$ 80,000
A) 81,250. B) 50,000. C) 58,621. D) 53,165. E) 36,207.
97) The budgeted income statement presented below is for Burkett Corporation for the coming fiscal
year. If Burkett Corporation is able to achieve the budgeted level of sales, its margin of safety in
dollars would be:
Sales (50,000 units) $ 1,000,00
0
Costs:
Direct materials $ 270,00
0
Direct labor 240,00
0
Fixed factory overhead 100,00
0
Variable factory overhead 150,00
0
Fixed marketing costs 110,00
0
Variable marketing costs 45 50,000 920,000
Variable marketing costs
920,000
Pretax income
$ 80,000
A) $275,862. B) $262,500. C) $150,000. D) $172,420. E) $310,115.
98) In cost-volume-profit analysis, the unit contribution margin is:
A) The same as the contribution margin ratio.
B) Sales price per unit less unit total cost per unit.
C) Sales price per unit less total variable cost per unit.
D) Sales price per unit less cost of goods sold per unit.
E) Sales price per unit less unit fixed cost per unit.
99) The contribution margin ratio:
A) Cannot be used in conjunction with other analytical tools.
B) Is the same as the unit contribution margin.
C) Is the percent of each sales dollar that remains after deducting the total unit variable cost.
D) Is the percent of each sales dollar that remains to cover the variable and fixed costs.
E) Is the percent of each sales dollar that remains after deducting the total unit fixed cost.
100) Total contribution margin in dollars divided by pretax income is the:
A) Contribution margin ratio.
B) Degree of operating leverage.
C) Margin of safety.
D) Sales mix.
E) Break-even point in units.
101) Which of the following is the correct interpretation of a degree of operating leverage of 5?
A) Operating leverage of 5 means that the company would need to increase sales by 5 times in
order to hit its break-even point.
B) Operating leverage of 5 means that if sales increase by 5% the firm will hit its break-even
point.
C) Operating leverage of 5 means that sales can decrease by 5% before the firm’s current level of
sales will hit the break-even point.
D) Operating leverage of 5 means that if sales increase by 5%, there will be a 25% increase in
the firm’s pretax profit.
E) Operating leverage of 5 measures the degree of debt employed by the firm’s debt structure.
102) A statistical method for identifying cost behavior is the:
A) High-low method.
B) Scatter diagram method.
C) Least-squares regression method.
D) CVP charting method.
E) Composite method.
103) The least-squares regression method is:
A) A graphical method to identify cost behavior.
B) A statistical method to identify cost behavior.
C) An algebraic method to identify cost behavior.
D) The only identify cost estimation method allowed by GAAP.
E) A cost estimation method that only uses the two extreme values.
104) A graph used to analyze past cost behaviors by displaying costs and unit data for each period as
points on the diagram is called a:
A) Step-wise diagram.
B) Scatter diagram.
C) Composite diagram.
D) Least-squares diagram.
E) Break-even diagram.
105) A line on a scatter diagram that is intended to reflect the past relation between cost and unit volume
is the:
A) Break-even line.
B) Margin of safety line.
C) Contribution margin line.
D) Standard cost line.
E) Estimated line of cost behavior.
106) A method that estimates cost behavior by using just the highest and lowest volume levels is called
the:
A) High-low method.
B) Least-squares method.
C) Scatter method.
D) Break-even method.
E) Step-wise method.
107) The following information is available for a company’s utility cost for operating its machines over the
last four months.
Month Machine hours Utility cost
52
Month
Machine hours
Utility cost
January
900
$ 5,450
February
1,800
$ 6,900
March
2,400
$ 8,100
April
600
$ 3,600
Using the high-low method, the estimated variable cost per unit for utilities is:
A) $6.17. B) $4.22. C) $6.00. D) $3.38. E) $2.50.
108) The following information is available for a company’s utility cost for operating its machines over the
last four months.
Month
Machine hours
Utility cost
January
900
$ 5,450
February
1,800
$ 6,900
March
53 2,400
$ 8,100
March 2,400 $ 8,100
April 600 $ 3,600
Using the high-low method, the estimated total fixed cost for utilities is:
A) $6,000. B) $1,500. C) $2,100. D) $3,600. E) $3,300.
Month
Units sold
Cost of sales
January
400
$
February
800
$
March
1,600
$
April
2,400
$
109) The following information is available for a company’s cost of sales over the last five months.
31,00
0
37,00
0
49,00
0
61,00
0
Using the high-low method, the estimated variable cost of sales per unit sold is:
A) $34.23. B) $25.42. C) $30.62. D) $77.50. E) $15.00.
Month
Units sold
Cost of sales
January
400
$
February
800
$
March
1,600
$
April
2,400
$
110) The following information is available for a company’s cost of sales over the last five months.
31,00
0
37,00
0
49,00
0
61,00
0
Using the high-low method, the estimated total fixed cost is:
A) $100,000. B) $13,692. C) $25,000. D) $50,000. E) $30,000.
111) The sales level at which a company neither earns a profit nor incurs a loss is the:
A) Relevant range.
B) Break-even point.
C) Margin of safety.
D) Contribution margin.
E) Step-wise variable level.
112) A company’s product sells at $12 per unit and has a $5 per unit variable cost. The company’s total
fixed costs are $98,000. The contribution margin per unit is:
A) $5.00. B) $17.00. C) $7.00. D) $8.17. E) $12.00.
113) A company’s product sells at $12 per unit and has a $5 per unit variable cost. The company’s total
fixed costs are $98,000. The break-even point in units is:
A) 7,000. B) 14,000. C) 5,158. D) 19,600. E) 8,167.
114) Maroon Company’s contribution margin ratio is 24%. Total fixed costs are $84,000. What is
Maroon’s break-even point in sales dollars?
A) $84,000. B) $20,160. C) $240,000. D) $350,000. E) $110,526.
115) Fuschia Company’s contribution margin per unit is $12. Total fixed costs are $84,000. What is
Fuschia’s break-even point in units?
A) 5,760. B) 7,000. C) 26,520. D) 70,000. E) 57,600.