Question1

Variable costs,as activity increases, will:

Question 1 options:

	increase in total.
	increase in total and remain constant per unit.
	increase per unit.
	remain constant per unit.

Question 2

A cost thatincreases in total, but not proportionately with increases in the activitylevel, is a(n):

Question 2 options:

	fixed cost.
	variable cost.
	mixed cost.
	variable cost with an unusual behavior pattern.

Question 3

The assumptionsthat underlie basic CVP analysis include all of the following except:

Question 3 options:

	the behavior of both costs and revenues is linear throughout the relevant range.
	All of three of the other choices are assumptions.
	all costs can be classified as variable or fixed with reasonable accuracy.
	when more than one product is sold, total sales will be in a constant sales mix.

Question 4

Jameson Companydesires net income of $1,100,000 when it has $2,500,000 of fixed costs andvariable costs of 60% of sales. Required sales equals:

Question 4 options:

	$9,000,000.
	$6,000,000.
	$6,250,000.
	$2,750,000.

Question5

A company'sbreak-even point can be decreased by decreasing:

Question 5 options:

	the selling price.
	variable costs per unit.
	the contribution margin ratio.
	the contribution margin.

Question 6

Sutton Companyproduced 98,000 units in 46,000 direct labor hours. Production for the periodwas estimated at 100,000 units and 50,000 direct labor hours. A flexible budgetwould compare budgeted costs and actual costs, respectively, at:

Question 6 options:

	50,000 hours and 46,000 hours.
	49,000 hours and 46,000 hours.
	46,000 hours and 46,000 hours.
	49,000 hours and 50,000 hours.

Question 7

A flexiblebudget:

Question 7 options:

	is, in essence, a series of static budgets at different levels of activity.
	can be prepared for each of the types of budgets included in a master budget.
	increases budget allowances both directly and proportionately for variable costs as production increases.
	All three of the other choices are correct.

Question 8

Theinitial budget prepared in the master budget is the:

Question 8 options:

	budgeted income statement.
	budgeted balance sheet.
	production budget.
	sales budget.

Question 9

Which of thefollowing is true with regard to budgeting vs. long-range planning?

Question 9 options:

	Budgeting is oriented more toward short-term goals; long-range planning toward long-term goals.
	Both tend to be very detailed.
	They are the same in all significant aspects.
	The maximum length for both usually is a year, with shorter periods of time also common.

Question 10

Which of thefollowing is false with regard to budgetary planning?

Question 10 options:

	Budgets may be used by manufacturing companies, merchandising companies, service enterprises, and not-for-profit organizations.
	The starting point for the budgets of a not-for-profit organization is generally receipts, rather than expenditures.
	A merchandising company uses a purchases budget instead of a production budget.
	For a service enterprise, the critical factor in budgeting is coordinating professional staff needs with anticipated services.

Question 11

Which of thefollowing is true with regard to budgetary planning?

Question 11 options:

	The cash budget is often considered to be the most important output in preparing financial budgets.
	Generally accepted accounting principles require the budgets be prepared at least annually.
	The likelihood of a realistic budget is greater when the budget is developed from top management down to lower management.
	The human behavior aspects of budgeting, while they should not be ignored, are generally of little real significance.

Question 12

A staticbudget is:

Question 12 options:

	applicable to cost budgets but not to a sales budget.
	appropriate in evaluating a manager's effectiveness in controlling variable costs.
	modified or adjusted for changes in activity during the year.
	appropriate in evaluating a manager's effectiveness in controlling fixed costs.

Question13

The potentialbenefit that may be obtained by following an alternative course of action istermed a(n):

Question 13 options:

	opportunity cost.
	sunk cost.
	incremental cost.
	avoidable cost.

Question 14

An order at aspecial price that is accepted will increase income if the revenue receivedexceeds the:

Question 14 options:

	variable manufacturing costs associated with the order.
	variable manufacturing, selling, and administrative costs associated with the order.
	fixed and variable costs associated with the order.
	incremental costs associated with the order.

Question 15

MediaUnlimited makes custom office desks. It can sell semi-finished desks for $800.Costs incurred to this point total $500. It can finish the desks at anadditional cost of $200 and increase the selling price to $1,100. MediaUnlimited should:

Question 15 options:

	finish the desks since it will increase profits $100 per desk.
	sell the desks unfinished since finishing the desks will reduce profits.
	finish the desks since it will increase profits $600 per desk.
	finish the desks since it will increase profits $300 per desk.

Question16

Given thefollowing costs for Harper Company, classify each cost as variable, fixed, ormixed.

	Total cost at
	4,000 units	6,000 units
Cost A	$12,300	$16,650
Cost B	17,200	25,800
Cost C	13,000	13,000

Question 16 options:

	Cost A and Cost B are variable; Cost C is fixed.
	Cost A is variable; Cost B is mixed; Cost C is fixed.
	Cost A and Cost B are mixed; Cost C is fixed.
	Cost A is mixed; Cost B is variable; Cost C is fixed.