4. A disadvantage of the high-low method of cost analysis is that:

Select one:

a. it cannot be used when there are a very large number of observations.

b. it uses two extreme data points, which may not be representative of normal conditions.

c. it is too time consuming to apply.

d. it relies totally on the judgment of the person performing the cost analysis.

5. A cost which changes in proportion to changes in volume of activity is called a

Select one:

a. fixed cost.

b. variable cost.

c. controllable cost.

d. opportunity cost.

7. Within the relevant range, the difference between variable costs and fixed costs is:

Select one:

a. variable costs per unit fluctuate and fixed costs per unit remain constant.

b. both total variable costs and total fixed costs fluctuate.

c. both total variable costs and total fixed costs are constant.

d. variable costs per unit are constant and fixed costs per unit fluctuate

10. A lawnmower manufacturer computed a cost per unit of $53 by adding together last month's direct labor, direct materials, and manufacturing overhead and dividing that total by the 10,000 units produced last month. (There were no beginning or ending inventories.) If 9,000 units are going to be manufactured this month, we would expect that the:

Select one:

a. cost per unit will decrease.

b. cost per unit will remain the same.

c. direction of change in unit costs cannot be determined.

d. cost per unit will increase.

12. Haan Inc. is a merchandising company. Last month the company's cost of goods sold was $66,000. The company's beginning merchandise inventory was $14,000 and its ending merchandise inventory was $16,000. What was the total amount of the company's merchandise purchases for the month?

Select one:

a. $96,000

b. $68,000

c. $66,000

d. $64,000

13. The cost of goods sold in a retail store totaled $325,000. Fixed selling and administrative expenses totaled $115,000 and variable selling and administrative expenses were $210,000. If the store's contribution margin totaled $590,000, then sales must have been:

Select one:

a. $915,000

b. $650,000

c. $1,030,000

d. $1,125,000

18. At a sales level of $300,000, James Company's gross margin is $15,000 less than its contribution margin, its net operating income is $50,000, and its selling and administrative expenses total $120,000. At this sales level, its contribution margin would be:

Select one:

a. $185,000

b. $170,000

c. $250,000

d. $155,000

20. Gabrisch Inc. is a merchandising company. Last month the company's merchandise purchases totaled $90,000. The company's beginning merchandise inventory was $13,000 and its ending merchandise inventory was $22,000. What was the company's cost of goods sold for the month?

Select one:

a. $90,000

b. $81,000

c. $125,000

d. $99,000

23. Which of the following is true regarding the contribution margin ratio of a single product company?

Select one:

a. As fixed expenses decrease, the contribution margin ratio increases.

b. The contribution margin ratio increases as the number of units sold increases.

c. The contribution margin ratio multiplied by the variable expense per unit equals the contribution margin per unit.

d. If sales increase, the dollar increase in net operating income can be computed by multiplying the contribution margin ratio by the dollar increase in sales.

24. If a company increases advertising by $500,000, this will cause net operating income to increase if the resulting increase in sales dollars is greater than:

Select one:

a. $500,000 divided by the percentage increase in advertising.

b. $500,000 divided by the degree of operating leverage.

c. $500,000 divided by the contribution margin ratio.

d. $500,000.

25. This is a cost which does not differ between alternatives and it is not focused on the future. This cost is also not considered in the decision-making process as each decision involves choosing between alternatives to be implemented in the future. What cost is this?

Select one:

a. relevant cost.

b. opportunity cost.

c. irrelevant cost.

d. sunk cost.

26. Once the break-even point is reached:

Select one:

a. variable expenses will remain constant in total.

b. the contribution margin ratio begins to decrease.

c. net operating income will increase by the unit contribution margin for each additional item sold.

d. the total contribution margin changes from negative to positive.

29. If company A has a higher degree of operating leverage than company B, then:

Select one:

a. company A's profits are more sensitive to percentage changes in sales.

b. company A is more profitable.

c. company A is less risky.

d. company A has higher variable expenses.

31. Isaza Corporation produces and sells two products. In the most recent month, Product U82U had sales of $28,000 and variable expenses of $13,440. Product P89W had sales of $18,000 and variable expenses of $7,260. And the fixed expenses of the entire company were $24,650. If the sales mix were to shift toward Product U82U with total sales remaining constant, the overall break-even point for the entire company:

Select one:

a. would decrease.

b. would not change.

c. would increase.

d. could increase or decrease.

33. Goyal Inc. has an operating leverage of 12.5. If the company's sales increase by 6%, its net operating income should increase by about:

Select one:

a. 12.5%

b. 75.0%

c. 208.3%

d. 6.0%

36. Knell Corporation sells a product for $230 per unit. The product's current sales are 33,000 units and its break-even sales are 26,400 units. The margin of safety as a percentage of sales is closest to:

Select one:

a. 80%

b. 25%

c. 75%

d. 20%

37. Aybar International Corporation's only product sells for $210.00 per unit and its variable expense is $75.60. The company's monthly fixed expense is $766,080 per month. The unit sales to attain the company's monthly target profit of $28,000 is closest to:

Select one:

a. 10,504

b. 5,908

c. 6,731

d. 3,781