Chapter 19(4): Cost Behavior and Cost-Volume-Profit Analysis
110.
Zeke Company sells 25,000 units at $21 per unit. Variable costs are $10 per unit, and fixed costs are $75,000.
The
contribution margin ratio and the unit contribution margin are
a.
47% and $11 per unit
b.
53% and $7 per unit
c.
47% and $8 per unit
d.
52% and $11 per unit
111.
If the contribution margin ratio for France Company is 45%, sales were $425,000, and fixed costs were
$100,000,
what was the income from operations?
a. $233,750
b. $91,250
c. $191,250
d. $133,750
112.
If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break–
even
sales (units)?
a.
3,425 units
b.
2,381 units
c.
2,000 units
d.
4,808 units
113.
If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales
dollars?
a. $1,250,000
b. $450,000
c. $1,875,000
d. $300,000
114.
If fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, what is the
amount
of sales required to realize an operating income of $200,000?
a.
9,231 units
b.
12,000 units
c.
10,769 units
d.
5,833 units
115.
If fixed costs are $300,000, the unit selling price is $31, and the unit variable costs are $22, what is the break-
even
sale (units) if fixed costs are reduced by $30,000?
a.
30,000 units
b.
8,710 units
c.
12,273 units
d.
20,000 units
116.
If fixed costs are $500,000, the unit selling price is $55, and the unit variable costs are $30, what is the break-
even
sale (units) if fixed costs are increased by $80,000?
a.
10,545 units
b.
19,333 units
c.
23,200 units
d.
25,000 units
117.
Reynold’s Grocery has fixed costs of $350,000, the unit selling price is $29, and the unit variable costs are
$20.
What is the break-even sale (units) if the variable costs are decreased by $4?
a.
26,923 units
b.
12,069 units
c.
21,875 units
d.
38,889 units
118.
If fixed costs are $450,000, the unit selling price is $75, and the unit variable costs are $50, what are the old
and
new break-even sales (units) if the unit selling price increases by $10?
a.
6,000 units and 5,294 units
b.
18,000 units and 6,000 units
c.
18,000 units and 12,857 units
d.
9,000 units and 15,000 units
119.
If fixed costs are $400,000 and the unit contribution margin is $20, what amount of units must be sold in order
to
have a zero profit?
a.
25,000 units
b.
10,000 units
c.
400,000 units
d.
20,000 units
120.
Johnson’s Plumbing’s fixed costs are $700,000 and the unit contribution margin is $17. What amount of units
must
be sold in order to realize an operating income of $100,000?
a. 5,000
b. 41,176
c. 47,059
d. 58,882
121.
If fixed costs are $500,000 and the unit contribution margin is $20, what is the break-even point in units if
fixed
costs are reduced by $80,000?
a. 25,000
b. 29,000
c. 4,000
d. 21,000
122.
If fixed costs are $600,000 and the unit contribution margin is $40, what is the break-even point if fixed costs
are
increased by $90,000?
a. 17,250
b. 15,000
c. 8,333
d. 9,667
123.
If fixed costs are $561,000 and the unit contribution margin is $8.00, what is the break-even point in units if
variable
costs are decreased by $0.50 a unit?
a. 66,000
b. 70,125
c. 74,800
d. 60,000
124.
If variable costs per unit increased because of an increase in hourly wage rates, the break-even point would
a.
decrease
b.
increase
c.
remain the same
d.
increase or decrease, depending upon the percentage increase in wage rates
125.
If variable costs per unit decreased because of a decrease in utility rates, the break-even point would
a.
decrease
b.
increase
c.
remain the same
d.
increase or decrease, depending upon the percentage increase in utility rates
126.
If fixed costs increased and variable costs per unit decreased, the break-even point would
a.
increase
b.
decrease
c.
remain the same
d.
cannot be determined from the data provided
127.
Which of the following conditions would cause the break-even point to decrease?
a.
total fixed costs increase
b.
unit selling price decreases
c.
unit variable cost decreases
d.
unit variable cost increases
128.
Which of the following conditions would cause the break-even point to increase?
a.
total fixed costs decrease
b.
unit selling price increases
c.
unit variable cost decreases
d.
unit variable cost increases
129.
Which of the following conditions would cause the break-even point to increase?
a.
Total fixed costs increase
b.
Unit selling price increases
c.
Unit variable cost decreases
d.
Total fixed costs decrease
130.
Charlotte Co. has budgeted salary increases to factory supervisors totaling 9%. If selling prices and all other
cost
relationships are held constant, next year’s break-even point
a.
will decrease by 9%
b.
will increase by 9%
c.
cannot be determined from the data given
d.
will increase at a rate greater than 9%
131.
Flying Cloud Co. has the following operating data for its manufacturing operations:
Unit selling price
$250
Unit variable cost
100
Total fixed costs
$840,000
The company has decided to increase the wages of hourly workers which will increase the unit variable cost by
10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs
by
4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be
a.
increased by 640 units
b.
increased by 400 units
c.
decreased by 640 units
d.
increased by 800 units
132.
If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars)?
a. $2,125,000
b. $340,000
c. $3,400,000
d. $1,416,666
133.
O’Boyle Co.’s fixed costs are $256,000, the unit selling price is $36, and the unit variable costs are $20, what is
the
break-even sale (units)?
a.
12,800 units
b.
4,571 units
c.
16,000 units
d.
7,111 units
134.
Piper Technology’s fixed costs are $1,500,000, the unit selling price is $250, and the unit variable costs are
$130,
what is the amount of sales required to realize an operating income of $200,000?
a.
14,167 units
b.
12,500 units
c.
16,000 units
d.
11,538 units
135.
Payton Industries has fixed costs of $490,000, the unit selling price is $35, and the unit variable costs are $20.
What
is the break-even sale (units) if fixed costs are reduced by $40,000?
a.
32,667 units
b.
14,000 units
c.
30,000 units
d.
24,500 units
136.
Connor Company’s fixed costs are $400,000, the unit selling price is $25, and the unit variable costs are $15.
What
is the break-even sale (units) if the variable costs are increased by $2?
a.
50,000 units
b.
30,770 units
c.
40,000 units
d.
26,667 units
137.
Jacob Inc. has fixed costs of $240,000, the unit selling price is $32, and the unit variable costs are $20. What are
the
old and new break-even sales (units) if the unit selling price increases by $4?
a.
7,500 units and 6,667 units
b.
20,000 units and 30,000 units
c.
20,000 units and 15,000 units
d.
12,000 units and 15,000 units
138.
When Isaiah Company has fixed costs of $120,000 and the contribution margin is $30, the break-even point is
a.
16,000 units
b.
8,000 units
c.
6,000 units
d.
4,000 units
139.
If Kaden Company’s fixed costs are $46,800, the unit selling price is $42, and the unit variable costs are $24.
What
is the break-even sale (units)?
a. 2,400
b. 1,950
c. 1,114
d. 2,600
140.
If fixed costs are $46,800, the unit selling price is $42, and the unit variable costs are $24, what is the break-
even
sale (units) if the variable costs are decreased by $2?
a. 2,127
b. 1,114
c. 2,340
d. 1,950
141.
The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents
a.
the maximum possible operating loss
b.
the maximum possible operating income
c.
the total fixed costs
d.
the break-even point
142.
The point where the profit line intersects the horizontal axis on the profit-volume chart represents
a.
the maximum possible operating loss
b.
the maximum possible operating income
c.
the total fixed costs
d.
the break-even point
143.
With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume,
and
can immediately see the effects of each change on the break-even point and profit. This is called
a.
“what if” or sensitivity analysis
b.
vary the data analysis
c.
computer aided analysis
d.
data gathering
144.
Which of the following is not an assumption underlying cost-volume-profit analysis?
a.
The break-even point will be passed during the period.
b.
Total sales and total costs can be represented by straight lines.
c.
Costs can be accurately divided into fixed and variable components.
d.
The sales mix is constant.
145.
In a cost-volume-profit chart, the
a.
total cost line begins at zero
b.
slope of the total cost line is dependent on the fixed cost per unit
c.
total cost line begins at the total fixed cost value on the vertical axis
d.
total cost line normally ends at the highest sales value
146.
The relative distribution of sales among the various products sold by a business is the
a.
business’s basket of goods
b.
contribution margin mix
c.
sales mix
d.
product portfolio
147.
When a business sells more than one product at varying selling prices, the business’s break-even point can
be
determined as long as the number of products does not exceed
a.
two
b.
three
c.
fifteen
d.
there is no limit
Carter Co. sells two products, Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of
Bins.
Related data are:
Product
Unit Selling
Price
Unit Variable
Cost
Unit Contribution
Margin
Arks
$120
$80
$40
Bins
80
60
20
148.
What was Carter Co.’s sales mix last year?
a.
20% Arks, 80% Bins
b.
12% Arks, 28% Bins
c.
70% Arks, 30% Bins
d.
40% Arks, 20% Bins
149.
What was Carter Co.’s unit selling price of E, with E representing one overall “enterprise” product?
a. $200
b. $100
c. $80
d. $88
150.
What was Carter Co.’s variable cost of E?
a. $140
b. $70
c. $64
d. $60
151.
What was Carter Co.’s unit contribution margin of E?
a. $24
b. $60
c. $92
d. $20
152.
Assuming that last year’s fixed costs totaled $960,000, what was Carter Co.’s break-even point in units?
a.
40,000 units
b.
12,000 units
c.
35,000 units
d.
28,000 units
153.
If a business had sales of $4,000,000 and a margin of safety of 25%, the break-even point was
a. $5,000,000
b. $3,000,000
c. $12,000,000
d. $1,000,000
154.
Forde Co. has an operating leverage of 4. Sales are expected to increase by 12% next year. Operating income is
a.
unaffected
b.
expected to increase by 3%
c.
expected to increase by 48%
d.
expected to increase by 4 %
155.
If sales are $400,000, variable costs are 80% of sales, and operating income is $40,000, what is the
operating
leverage?
a. 0.0
b. 7.5
c. 2.0
d. 1.3
156.
The difference between the current sales revenue and the sales at the break-even point is called the
a.
contribution margin
b.
margin of safety
c.
price factor
d.
operating leverage
157.
Cost-volume-profit analysis cannot be used if which of the following occurs?
a.
Costs cannot be properly classified into fixed and variable costs.
b.
The total fixed costs change.
c.
The per-unit variable costs change.
d.
Per-unit sales prices change.
158.
Assume that Corn Co. sold 8,000 units of Product A and 2,000 units of Product B during the past year. The
unit
contribution margins for Products A and B are $30 and $60, respectively. Corn has fixed costs of
$378,000. The
break-even point in units is
a.
8,000 units
b.
6,300 units
c.
12,600 units
d.
10,500 units
159.
Harley Company has sales of $500,000, variable costs are 75% of sales, and operating income is $40,000. What
is
Harley’s operating leverage?
a. 0.0
b. 1.2
c. 1.3
d. 3.1
160.
The Rocky Company reports the following data:
Sales
$800,000
Variable costs
300,000
Fixed costs
120,000
Rocky Company’s operating leverage is
a. 6.7
b. 2.7
c. 1.0
d. 1.3
Rusty Co. sells two products, X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related
data
are:
Unit Selling Price
Unit Contribution
Price
Margin
$110.00
$40.00
70.00
20.00
161.
What was Rusty Co.’s weighted average unit selling price?
a. $180.00
b. $75.00
c. $100.00
d. $110.00
162.
What was Rusty Co.’s sales mix last year?
a. 58% X, 42% Y
b. 60% X, 40% Y
c. 30% X, 70% Y
d. 12.5% X, 87.5% Y
163.
What was Rusty Co.’s unit variable cost of E?
a. $52.50
b. $70.00
c. $120.00
d. $50.00
164.
What was Rusty Co.’s weighted average unit contribution margin?
a. $60.00
b. $20.00
c. $40.00
d. $22.50