___ 1.Which of the following costs are variable? Cost 10,000 Units 30,000 Units 1. $100,000 $300,000 2. 40,000 240,000 3. 90,000 90,000 4. 50,000 150,000 A) 1 and 2 B) 1 and 4 C) only 1 D) only 2 ___ 2. In applying the high-low method, which months are relevant? Month Miles Total Cost January 80,000 $ 96,000 February 50,000 80,000 March 70,000 94,000 April 90,000 130,000 A) January and February B) January and April C) February and April D) February and March ___ 3. At the break-even point of 2,000 units, variable costs are $55,000, and fixed costs are $34,000. How much is the selling price per unit? A) $44.50 B) $10.50 C) $17.00 D) Not enough information ___ 4. Homer Industries produces flash drives for computers, which it sells for $20 each. Each flash Page 2 drive costs $14 of variable costs to make. During April, 1,000 drives were sold. Fixed costs for March were $2 per unit for a total of $1,000 for the month. How much is the contribution margin ratio? A) 20% B) 30% C) 70% D) 80% ___ 5. Yorkie Company has a product with a selling price per unit of $200, the unit variable cost is $110, and the total monthly fixed costs are $300,000. How much is Yorkie's contribution margin ratio? A) 45% B) 55% C) 150% D) 90% ___ 6.Fixed costs are $900,000 and the variable costs are 75% of the unit selling price. What is the break-even point in dollars? A) $2,100,000 B) $2,700,000 C) $3,600,000 D) $1,200,000 ___ 7. The margin of safety ratio is A) expected sales divided by break-even sales. B) expected sales less break-even sales. C) margin of safety in dollars divided by expected sales. D) margin of safety in dollars divided by break-even sales. ___ 8. The degree of operating leverage A) does not provide a reliable measure of a company's earnings volatility. B) cannot be used to compare companies. C) is computed by dividing total contribution margin by net income. D) measures how much of each sales dollar is available to cover fixed expenses. ___ 9. When production exceeds sales, A) ending inventory under variable costing will exceed ending inventory under absorption costing. B) ending inventory under absorption costing will exceed ending inventory under variable costing. C) ending inventory under absorption costing will be equal to ending inventory under variable costing. D) ending inventory under absorption costing may exceed, be equal to, or be less than ending inventory under variable costing. ___ 10. Magnum Manufacturing reported sales of $2,000,000 last year (100,000 units at $20 each), when the break-even point was 80,000 units. Magnum's margin of safety ratio is A) 20%. B) 25%. C) 80%. D) 120%. ___ 11. For Vincent Co., sales is $1,000,000, fixed expenses are $300,000, and the contribution Page 3 margin per unit is $72. What is the break-even point? A) $1,388,889 sales dollars B) $416,667 sales dollars C) 13,889 units D) 4,167 units ___ 12. The sales mix percentages for Robert's Boston and Seattle Divisions are 70% and 30%. The contribution margin ratios are: Boston (40%) and Seattle (30%). Fixed costs are $888,000. What is Robert's break-even point in dollars? A) $310,800 B) $2,400,000 C) $2,537,142 D) $2,690,909 ___ 13. Budgeting in not-for-profit organizations A) is not important because they are not profit-oriented. B) usually starts with budgeting expenditures, rather than receipts. C) is necessary only if some product is produced and sold. D) consists entirely of budgeted contributions. ___ 14. Bradley, Inc.'s direct materials budget shows total cost of direct materials purchases for April $300,000, May $360,000 and June $420,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for June are A) $396,000. B) $384,000. C) $360,000. D) $312,000. ___ 15. Christopher Inc. reported the following information for 2012: October November December Budgeted sales $230,000 $220,000 $270,000 Budgeted purchases $120,000 $128,000 $144,000