Indicate whether the statement is true or false. 1. In the equation to determine the number of units that must be sold to earn a target income, targeted income is subtracted from fixed expense in the numerator. a. True b. False 2. If fixed costs increase, the break-even point decreases. a. True b. False 3. Managerial accounting information is not important for not-for-profit organizations. a. True b. False 4. To find the number of units to sell to cam a targeted income, it is acceptable to simply adjust the break-even units equation by adding target income to the variable cost. a. True b. False 5. The process of choosing among competing alternatives is decision making. a. True b. False 6. Common fixed expenses are the fixed costs that are traceable to the segments and would be avoided if the segment did not exist. a. True b. False 7. Management accounting information is only used by manufacturing organizations, a. True b. False 8. Managerial accounting has its emphasis on the future. a. True b. False 9. It is possible to calculate the break-even point for individual products in a multiple product firm by separating the common and direct fixed expenses. a. True b. False 10. Managerial Accounting is designed primarily for internal users. a. True b. False 11. Variable expense per unit consists only of direct materials, direct labor, and variable overhead. a. True b. False 12. The purpose of the Certificate in Public Accounting is to provide minimal professional qualification for external auditors. a. True b. False 13. To determine the number of units that must be sold to earn a target operating income, one can use the equation for operating income and replace the operating income term with the target operating income. a. True b. False 14. The break-even point in sales dollars is equal to the break-even units multiplied by cost. a. True b. False 15. If variable expenses decrease and the price increases, the break-even point decreases. a. True b. False Given the following numbers from Webster Company, match the correct value with its appropriate term. Webster Company sells a product for $20. Unit cost information is as follows: Direct materials Direct labor Variable overhead Fixed overhead Webster normally produces 50,000 units and the fixed overhead rate is based on this amount. Fixed selling and administrative expense is $87,000. a. S6 b. 30% c. S14 d. 70% e. $290,000 f. 14,500 16. Variable cost per unit 17. Contribution margin per unit 18. break-even point (in units) 19. Variable cost ratio 20. Contribution margin ratio 21. break-even point in dollars) 111 Match each item with the correct statement below. a. break-even point b. Common fixed expenses c. Contribution margin d. Direct fixed expenses e. Margin of safety f. Operating leverage g. Degree of operating leverage h. Sales mix 22. Fixed costs that are directly traceable to a given segment and, consequently, disappear if the segment is eliminated. 23. The relative combination of products (or services) being sold by an organization. 24. Sales revenue minus total variable cost or price minus unit variable cost. 25. The use of fixed costs to extract higher percentage changes in profits as sales activity changes. | | ||
