Practice Question 1 Total production cost is generally a mixed cost. True False Practice

Question 2 On a cost behavior graph, the horizontal line indicates the _____________ costs and the sloped line indicates the ________________ cost. horizontal, fixed. vertical, mixed. vertical, fixed. fixed, variable.

Practice Question 3 Regarding fixed costs, which of the following are correct? Fixed costs are generally the same in total dollars, regardless of production. All of the answer choices are correct. Fixed costs per unit decrease as more units are produced. Fixed costs per unit increase as fewer units are produced.

Practice Question 4 Rices Hardware has sales of 21,000 units at $40 each with a contribution margin of 45%. Fixed costs are $200,000. What are the variable costs? $378,000 $462,000 $262,000 $840,000

Practice Question 5 Rices Hardware has breakeven sales at 15,000 units at $30 each with a contribution margin of 75%. What are the fixed costs? $450,000 $15,000 $112,500 $337,500

Practice Question 6 Regarding fixed costs, which of the following are correct? All of these answer choices are correct. Fixed costs per unit decrease as more units are produced. Fixed costs per unit increase as fewer units are produced. Fixed costs are generally the same in total dollars, regardless of production.

Practice Question 7 Which of the following may be classified as a step cost? Semivariable costs. Fixed costs. Mixed costs. Variable costs.

Practice Question 8 While a company could use machinery 8,760 hours (24 hours 365 days), the relevant range may only be 4,000 hours (16 hours per day 5 days per week 50 weeks per year) per year due to maintenance and other factors. True False

Practice Question 9 Which of the following is not a cost estimation method covered in this chapter? Multi-simulation. High-low method. Account analysis. Regression analysis.

Practice Question 10 In utilizing the high-low method of calculation, the calculations are generally correct if the estimated fixed costs are equal at various activity levels within the relevant range. the estimated mixed costs are equal at various activity levels within the relevant range. the estimated total costs are equal at various activity levels within the relevant range. the estimated fixed costs are different at various activity levels within the relevant range.

Practice Question 11 Which of the following is the correct regression analysis equation for calculating total cost? Total cost = variable cost per unit activity level in units. Total cost = variable cost + (fixed cost per unit activity level in units). Total cost = mixed cost activity level in units. Total cost = fixed cost + (variable cost per unit activity level in units).

Practice Question 12 In utilizing the high-low method of calculation, the calculations are generally correct if the estimated fixed costs are different. the estimated total costs are equal. the estimated fixed costs are equal. the estimated mixed costs are equal.

Practice Question 13 Using the following production/cost data, estimate variable cost per unit using the high/low method. Month Production Cost May 2,000 $20,000 April 2,500 $21,000 June 3,000 $28,000 July 1,750 $18,000 $10.00. $8.00. $8.40. $9.41.

Practice Question 14 Breakeven units are generally calculated since breakeven dollars are too difficult to calculate. True False

Practice Question 15 On a graph of revenue, variable, and fixed costs, which of the following can be determined? Net loss. Breakeven units and dollars. All of the above. Net income.

Practice Question 16 Which of the following is not an assumption of C-V-P? Fixed costs remain fixed. The mix changes. Variable costs per unit do not change over the activity levels. Costs can be accurately divided into fixed and variable.

Practice Question 17 Raz Music Service wants to earn a profit of $60,000 this year, has fixed costs of $30,000 and has a contribution margin ratio of 40%. What is the required break-even dollar amount of sales? $150,000 $114,000 $115,000 $225,000

Practice Question 18 At Garrison Corporation, the selling price per unit is $800 and the variable cost per unit is $500. Fixed costs are $900,000 per year. In this case, the break-even point is: 1,800 units. 5,625 units. 3,000 units. 1,125 units.

Practice Question 19 Assume a company sells a product for $40 per unit. The variable cost per unit is $25 and the fixed costs are $45,000. The amount of sales dollars needed to earn a profit of $75,000 is: $320,000. $192,000. $345,000. $512,000.

Practice Question 20 The weighted average contribution calculation considers the number of units sold in both the numerator and the denominator of the equation. True False

Practice Question 21 Model S sells for $30 and has a variable cost of $6. Model T sells for $50 and has a variable cost of $30. What is the variable contribution margin ratio for each model, respectively? 20%, 60% 24%, 20% 60%, 20% 80%, 40%

Practice Question 22 Missle Company sells these two products: Black White Sales price $30 $40 Variable costs per unit 18 22 Time to produce 1 unit 0.1 hours 0.2 hours Missle is going to increase its capacity by 2,000 labor hours. To maximize profit, what should Missle use the additional hours to produce? Production of White will cause higher profit ($12,000 greater than Black). Additional capacity should always be divided equally among all products to maximize profit. Production of Black will cause higher profit ($6,000 greater than White). Production of Black will cause higher profit ($60,000 greater than White).

Practice Question 23 Model RX sold 15 units at $40 and that have a variable cost of $20. Model DY sold 30 units at $40 and has a variable cost of $15. What is the weighted average contribution margin? $23.33 $22.50 $25.00 $40.00

Practice Question 24 Consider the sales and variable cost information for the three departments at Exeter Drug in March: Drugs Cosmetics Housewares Sales $90,000 $50,000 $40,000 Variable cost 40,000 15,000 25,000 Contribution margin $50,000 $35,000 $15,000 Based on this information, estimate the increase in profit for a $20,000 increase in sales (assuming the sales mix stays the same). $3,600 $4,500 $8,889 $11,111

Practice Question 25 Design X sold 25 units at $30 and has a variable cost of $25. Design Y sold 60 units at $45 and has a variable cost of $15. What is the weighted average contribution margin? $37.50 $35.00 $22.65 $20.00

Practice Question 26 A firm with more fixed costs is considered to be more risky and has a higher operating leverage than a firm with more variable costs. True False

Practice Question 27 Firms with relatively low levels of fixed cost typically have high operating leverage. True False

Practice Question 28 You have the following information from Gamma Company and Sigma Corporation: Gamma Co. Sigma Corporation Sales $12,000 $12,000 Variable costs 5,000 7,000 Contribution margin 7,000 5,000 Fixed costs 4,000 2,000 Profit $3,000 $3,000 If the sales of both business entities increase by $2,000, which company benefits the most? Gamma Co. benefits the most in percentage increase in profit and Sigma Corp. benefits the most in dollars. Gamma Co. benefits the most in dollars and Sigma Corp. benefits the most in percentage increase in profit. Gamma Co. benefits the most in dollars and percentage increase in profit. Sigma Corp. benefits the most in dollars and percentage increase in profit.

Practice Question 29 If a firm has relatively high operating leverage, it has: Relatively low operating costs. Relatively high fixed costs. Relatively high operating costs. Relatively high variable costs.

Practice Question 30 When there is a constraint on how many units can be produced, the focus shifts from contribution margin per unit to contribution margin per unit of the constraint. True False

Practice Question 31 Product A has a contribution margin per unit of $25 and requires 1 hour of machine time. Product B has a contribution margin per unit of $30 and requires 2 hours of machine time. How much of each product should be produced given there are 100 hours of available machine time and the demand for both products is unlimited? 75 units of Product A and 10 units of Product B 50 units of Product A and 25 units of Product B 100 units of Product A 50 units of Product B

Practice Question 32 Product A has a contribution margin per unit of $500 and required 2 hours of machine time. Product B has a contribution margin per unit of $1,000 and requires 5 hours of machine time. How much of each product should be produced given there are 100 hours of available machine time? 20 units of B. 50 units of A and 25 units of B. 50 units of A. 25 units of B.