Question 1

The degree of operating leverage can be measured by ________.

Accepted Answer

A)  dividing the contribution margin by operating income
B)  dividing the fixed costs by the sales price per unit
C)  multiplying the contribution margin to sales revenue
D)  dividing the fixed costs by contribution marginE) B) and C)
F) All of the above

Question 2

If a company reduces its fixed costs,the operating income will increase by the same amount as the cost reduction.

Accepted Answer

A) True 
 B)False

Question 3

McFadden,Inc.has collected the following data.(There are no beginning inventories. )

What is the ending balance in Finished Goods Inventory using variable costing if 500 units are sold?

Accepted Answer

A)  $6,400
B)  $7,400
C)  $3,400
D)  $4,000E) A) and D)
F) C) and D)

Question 4

The fixed manufacturing overhead is considered a product cost in variable costing and a period cost in absorption costing.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is considered a period cost in absorption costing?

Accepted Answer

A)  variable manufacturing overhead costs
B)  fixed selling and administrative costs
C)  fixed manufacturing overhead costs
D)  semi-variable manufacturing overhead costsE) A) and D)
F) A) and C)

Question 6

Answer the following absorption costing questions:

Accepted Answer

The answer of Answer the following absorption costing questions:
 ...

Question 7

Sensitivity analysis allows managers to see how various business strategies will affect profit levels.

Accepted Answer

A) True 
 B)False

Question 8

Costs that have both variable and fixed components are called ________.

Accepted Answer

A)  fixed costs
B)  variable costs
C)  mixed costs
D)  contribution costsE) B) and D)
F) A) and B)

Question 9

Danby,Inc.has the following cost data:
  
Calculate the unit product cost using absorption costing when production is 200 units,400 units,and 800 units.

Accepted Answer

Absorption costing for 200 uni...

Question 10

Contribution margin is the amount that contributes to covering variable costs.

Accepted Answer

A) True 
 B)False

Question 11

Groovelex,Inc.has collected the following data for the current year:

What is the unit product cost using absorption costing? (Round your answer to the nearest cent. )

Accepted Answer

A)  $98.14
B)  $52.00
C)  $72.71
D)  $49.71E) B) and C)
F) A) and D)

Question 12

A cost-volume-profit (CVP)graph shows how changes in the level of sales will affect profits.

Accepted Answer

A) True 
 B)False

Question 13

Hoppy Cat Toy Company has estimated the following amounts for its next fiscal year:

If the company spends an additional $34,000 on advertising,sales volume would increase by 2,900 units.What effect will this decision have on the operating income?

Accepted Answer

A)  Operating income will decrease by $72,500.
B)  Operating income will increase by $9,500.
C)  Operating income will increase by $116,000.
D)  Operating income will increase by $43,500.E) None of the above
F) C) and D)

Question 14

Volplex,Inc.produces paper and office supplies and uses the just-in-time inventory system.Currently,the company is using variable costing.Which of the following is true of the effect of costing systems on the financial results of Volplex?

Accepted Answer

A)  Its operating income will be significantly higher if the company uses absorption costing instead of variable costing.
B)  Its operating income will be significantly lower if the company uses absorption costing instead of variable costing.
C)  Its operating income will vary a little if the company uses absorption costing instead of variable costing.
D)  Its operating income will be negative if the company uses absorption costing instead of variable costing.E) A) and B)
F) A) and C)

Question 15

Badlands,Inc.reports the following information for the year ended December 31:

The operating income calculated using variable costing and absorption costing amounted to $10,000 and $13,300,respectively.There were no beginning inventories.Determine the total number of units produced during the year.

Accepted Answer

A)  590 units
B)  722 units
C)  26 units
D)  132 unitsE) None of the above
F) All of the above

Question 16

Crystal Pools,Inc.has provided the following information for the year.

What is the unit product cost using absorption costing?

Accepted Answer

A)  $95
B)  $194
C)  $155
D)  $160E) None of the above
F) All of the above

Question 17

Ito Company has provided the following information:

What is the contribution margin ratio?

Accepted Answer

A)  18%
B)  38%
C)  48%
D)  63%E) B) and D)
F) All of the above

Question 18

Answer the following variable costing questions:

Accepted Answer

The answer of Answer the following variable costing questions:
 ...

Question 19

The sales level at which operating income is zero is called the breakeven point.

Accepted Answer

A) True 
 B)False

Question 20

In its first year of business,Greenlam,Inc.produced 600 units and sold 400 units.If Greenlam uses variable costing,________.

Accepted Answer

A)  its operating income for the period will be higher than under absorption costing
B)  its operating income for the period will be lower than under absorption costing
C)  its value of ending Finished Goods Inventory reported in the balance sheet will be higher than under absorption costing
D)  its operating income will be the same as under absorption costingE) None of the above
F) All of the above

Exam 21: Cost-Volume-Profit Analysis

Groovelex,Inc.has collected the following data for the current year: What is the unit product cost using absorption costing? (Round your answer to the nearest cent. )

Correct AnswerverifiedShow Answer

The sales level at which operating income is zero is called the breakeven point.

Correct AnswerverifiedShow Answer

Answer the following absorption costing questions:

Correct AnswerverifiedShow Answer

Badlands,Inc.reports the following information for the year ended December 31: The operating income calculated using variable costing and absorption costing amounted to $10,000 and $13,300,respectively.There were no beginning inventories.Determine the total number of units produced during the year.

Correct AnswerverifiedShow Answer

Ito Company has provided the following information: What is the contribution margin ratio?

Correct AnswerverifiedShow Answer

The fixed manufacturing overhead is considered a product cost in variable costing and a period cost in absorption costing.

Correct AnswerverifiedShow Answer

Costs that have both variable and fixed components are called ________.

Correct AnswerverifiedShow Answer

Answer the following variable costing questions:

Correct AnswerverifiedShow Answer

Which of the following is considered a period cost in absorption costing?

Correct AnswerverifiedShow Answer

The degree of operating leverage can be measured by ________.

Correct AnswerverifiedShow Answer

McFadden,Inc.has collected the following data.(There are no beginning inventories. ) What is the ending balance in Finished Goods Inventory using variable costing if 500 units are sold?

Correct AnswerverifiedShow Answer

In its first year of business,Greenlam,Inc.produced 600 units and sold 400 units.If Greenlam uses variable costing,________.

Correct AnswerverifiedShow Answer

Contribution margin is the amount that contributes to covering variable costs.

Correct AnswerverifiedShow Answer

Hoppy Cat Toy Company has estimated the following amounts for its next fiscal year: If the company spends an additional $34,000 on advertising,sales volume would increase by 2,900 units.What effect will this decision have on the operating income?

Correct AnswerverifiedShow Answer

Danby,Inc.has the following cost data: Calculate the unit product cost using absorption costing when production is 200 units,400 units,and 800 units.

Correct AnswerverifiedAbsorption costing for 200 uni...View AnswerShow Answer

A cost-volume-profit (CVP)graph shows how changes in the level of sales will affect profits.

Correct AnswerverifiedShow Answer

Crystal Pools,Inc.has provided the following information for the year. What is the unit product cost using absorption costing?

Correct AnswerverifiedShow Answer

Sensitivity analysis allows managers to see how various business strategies will affect profit levels.

Correct AnswerverifiedShow Answer

If a company reduces its fixed costs,the operating income will increase by the same amount as the cost reduction.

Correct AnswerverifiedShow Answer

Volplex,Inc.produces paper and office supplies and uses the just-in-time inventory system.Currently,the company is using variable costing.Which of the following is true of the effect of costing systems on the financial results of Volplex?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Absorption costing for 200 uni...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified