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ACC650 Managerial Accounting

Week 4 Quiz

• The difference between budgeted sales revenue and break-even sales revenue is the:

•contribution margin.

•contribution-margin ratio.

•safety margin.

•target net profit.

•operating leverage.

• Amounts spent for charitable contributions are an example of a (n):

•committed fixed cost.

•committed variable cost.

•discretionary fixed cost.

•discretionary variable cost.

•engineered cost.

• A cost that has both a fixed and variable component is known as a:

• step-fixed cost.

•step-variable cost.

•semivariable cost.

•curvilinear cost.

•discretionary cost.

• The break-even point is that level of activity where:

•total revenue equals total cost.

•variable cost equals fixed cost.

•total contribution margin equals the sum of variable cost plus fixed cost.

•sales revenue equals total variable cost.

•profit is greater than zero.

• Partner Industries sells a single product for $50 that has a variable cost of $30. Fixed costs amount to $5 per unit when anticipated sales targets are met. If the company sells one unit in excess of its break-even volume, profit will be:

•$15.

•$20.

•$50.

•an amount that cannot be derived based on the information presented.

•an amount other than $15, $20, or $50 and one that can be derived based on the information presented.

• Which of the following would produce the largest increase in the contribution margin per unit?

•A 7% increase in selling price.

•A 15% decrease in selling price.

•A 14% increase in variable cost.

•A 17% decrease in fixed cost.

•A 23% increase in the number of units sold.

• The extent to which an organization uses fixed costs in its cost structure is measured by:

•financial leverage

•operating leverage.

•fixed cost leverage.

•contribution leverage.

•efficiency leverage.

• Which of the following is (are) example(s) of a mixed cost?

I. A building that is used for both manufacturing and sales activities.

II. An employee’s compensation, which consists of a flat salary plus a commission.

III. Depreciation that relates to five different machines.

IV. Maintenance cost that must be split between sales and administrative offices.

•I only.

•II only.

•I and III.

•I, III, and IV.

•I, II, III, and IV.

• Sophie Corporation recently produced and sold 100,000 units. Fixed costs at this level of activity amounted to $50,000; variable costs were $100,000. How much cost would the company anticipate if during the next period it produced and sold 102,000 units?

•$150,000.

•$151,000.

•$152,000.

•$153,000.

•None of the answers is correct.

• The high-low method and least-squares regression are used by accountants to:

•evaluate divisional managers for purposes of raises and promotions.

•choose among alternative courses of action.

•maximize output.

•estimate costs.

•control operations.

•

1. Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the company has fixed costs that amount to $400,000. Current sales total 16,000 units. Narchie:

•will break-even by selling 8,000 units.

•will break-even by selling 13,333 units.

•will break-even by selling 20,000 units.

•will break-even by selling 1,000,000 units.

•cannot break-even because it loses money on every unit sold

• A company that desires to lower its break-even point should strive to:

•decrease selling prices.

•reduce variable costs.

•increase fixed costs.

•sell more units.

•achieve more than one of the answers listed.

• A forecast of a cost at a particular level of activity is known as:

•cost estimation.

•cost prediction.

•cost behavior.

•cost analysis.

•cost approximation.

• Costs that remain the same over a wide range of activity, but jump to a different amount outside that range, are known as:

•step-fixed costs.

•step-variable costs.

•semivariable costs.

•curvilinear costs.

•mixed costs.

• Elise Corporation has the following sales mix for its three products: A, 20%; B, 35%; and C, 45%. Fixed costs total $400,000 and the weighted-average contribution margin is $100. How many units of product A must be sold to break-even?

•800.

•4,000.

•20,000.

•None of the answers is correct.

•Cannot be determined based on the information presented.

• Flower Depot, Inc. sells a single product for $10. Variable costs are $4 per unit and fixed costs total $120,000 at a volume level of 10,000 units. What dollar sales level would Flower Depot have to achieve to earn a target profit of $240,000?

•$400,000.

•$500,000

•$600,000.

•$750,000.

•$900,000.

• Which of the following occurs if a company experiences an increase in its fixed costs?

•Net income would increase.

•The break-even point would increase.

•The contribution margin would increase.

•The contribution margin would decrease.

•More than one of the answers would occur.

• All other things being equal, a company that sells multiple products should attempt to structure its sales mix so the greatest portion of the mix is composed of those products with the highest:

•selling price.

•variable cost.

•contribution margin.

•fixed cost.

•gross margin.

• The relationship between cost and activity is known as:

•cost estimation.

•cost prediction.

•cost behavior.

•cost analysis.

•cost approximation.

• Santa Fe Production sells a single product to wholesalers. The company’s budget for the upcoming year revealed anticipated unit sales of 31,600, a selling price of $20, variable cost per unit of $8, and total fixed costs of $360,000. If Santa Fe’s unit sales are 300 units more than anticipated, its break-even point will:

•increase by $12 per unit sold.

•decrease by $12 per unit sold.

•increase by $8 per unit sold.

•decrease by $8 per unit sold.

•not change.

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