Assignment

Question 1. If a company is operating at the break-even point: its contribution margin will be equal to its variable expenses.

its margin of safety will be equal to zero.

its fixed expenses will be equal to its variable expenses.

its selling price will be equal to its variable expense per unit.

Question 2. At the break-even point:

sales would be equal to contribution margin.

contribution margin would be equal to fixed expenses.

contribution margin would be equal to net operating income.

sales would be equal to fixed expenses.

Question 3. Break-even analysis assumes that:

Total revenue is constant.

Unit variable expense is constant.

Unit fixed expense is constant.

Selling prices must fall in order to generate more revenue.

Question 4. Target profit analysis is used to answer which of the following questions?

What sales volume is needed to cover all expenses?

What sales volume is needed to cover fixed expenses?

What sales volume is needed to earn a specific amount of net operating income?

What sales volume is needed to avoid a loss?

Question 5. Which of the following is an assumption underlying standard CVP analysis?

In multiproduct companies, the sales mix is constant.

In manufacturing companies, inventories always change.

The price of a product or service is expected to change as volume changes.

Fixed expenses will change as volume increases.

Question 6. Sorin Inc., a company that produces and sells a single product, has provided its contribution format income statement for January.

If the company sells 4,600 units, its total contribution margin should be closest to:

$54,600

$59,800

$69,400

$13,362

Question 7. Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November.

If the company sells 5,300 units, its net operating income should be closest to:

$24,600

$2,200

$22,874

$15,400

Question 8. The Bronco Birdfeed Company reported the following information:

How much will the sale of one additional case add to Bronco's net operating income?

$250.00

$100.00

$150.00

$12.50

Question 9. Creswell Corporation's fixed monthly expenses are $29,000 and its contribution margin ratio is 56%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $95,000?

$12,800

$24,200

$53,200

$66,000

Question 10. Borich Corporation produces and sells a single product. Data concerning that product appear below:

The break-even in monthly unit sales is closest to:

2,055

4,030

4,194

3,426

Question 11. Data concerning Follick Corporation's single product appear below:

The break-even in monthly dollar sales is closest to:

$1,148,400

$638,851

$321,552

$446,600

Question 12. The contribution margin ratio of Mountain Corporation's only product is 52%. The company's monthly fixed expense is $296,400 and the company's monthly target profit is $7,000. The dollar sales to attain that target profit is closest to:

$570,000

$157,768

$583,462

$154,128

Question 13. Which of the following costs at a manufacturing company would be treated as a product cost under the variable costing method?

direct material cost

property taxes on the factory building

sales manager's salary

all of these

Question 14. The principal difference between variable costing and absorption costing centers on:

whether variable manufacturing costs should be included as product costs.

whether fixed manufacturing costs should be included as product costs.

whether fixed manufacturing costs and fixed selling and administrative costs should be included as product costs.

none of these.

Question 15. A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

What is the total period cost for the month under the variable costing approach?

$138,600

$134,400

$46,200

$184,800.