1 If your variable cost per unit INCREASED, then your

A selling price per unit would decrease.

B break-even units would decrease.

C selling price per unit would increase.

D break-even units would increase.

2 Which of the following explains the key difference between a traditional income statement and a contribution margin income statement?

A Only the traditional income statement can correctly compute net income.

B Only the contribution margin income statement can correctly compute net income.

C Only the traditional income statement shows whether enough sales revenue is available to cover fixed costs.

D Only the contribution margin income statement shows whether enough sales revenue is available to cover fixed costs.

3 A factory sells Red Cars, Silver Cars and White Cars. At split-off all cars are painted White, but after split-off another few layers of paint are put on the Red Cars and Silver Cars. Thus, White Cars are sold at split-off, but Red Cars and Silver Cars are processed further. If Red Cars, Silver Cars, and White Cars all have different sales prices, then which method would you recommend that the company use to allocate joint costs to these joint products? (Hint: The details you are provided with can be best used to justify using which method?)

A Physical Units Method

B Weighted Average Method

C Sales-Value-at-Split-Off Method

D Net Realizable Value Method

4 As volume increases, what happens to your total variable cost?

A it increases within the relevant range

B it decreases within the relevant range

C it stays constant within the relevant range

D it stays constant between relevant ranges

5 Which of the following would you NOT find on a Contribution Margin Income Statement?

A Sales Revenue

B Cost of Goods Sold

C Variable Cost

D Net Income

6 When are fixed costs going to be constant?

A In total between relevant ranges

B In total within the relevant range

C Per unit between relevant ranges

D Per unit within the relevant range

7 Which of the following is FALSE about allocating overhead using activity-based costing overhead rates?

A You need to know the budgeted overhead amount for each activity pool to compute the predetermined overhead rate for that activity.

B You need to know the budgeted cost driver amount for each activity to compute the predetermined overhead rate for that activity.

C You need to know the actual overhead amount for each activity pool to allocate overhead to that activity.

D You need to know the actual cost driver amount for each activity to allocate overhead to that activity.

8 The Maintenance Department fixes machinery in a factory. The Janitorial Department cleans the factory. The Assembly Department puts together the products made in the factory. The Painting Department paints the products made in the factory. If the Maintenance Department performs almost no work on behalf of the Janitorial Department, and the Janitorial Department performs almost no work on behalf of the Maintenance Department, then which method would you recommend that the company use to allocate support department costs to the producing departments?

A Direct Method

B Sequential Method

C Reciprocal Method

D none of the above

9 If your selling price per unit DECREASED, then your

A contribution margin per unit increased.

B break-even sales increased.

C break-even units did not change.

D break-even sales decreased.