Question 1

For Wilder Corporation, sales is $1,600,000 (8,000 units) , fixed expenses are $480,000, and the contribution margin per unit is $80.What is the margin of safety in dollars?

Accepted Answer

A)  $80,000
B)  $400,000
C)  $720,000
D)  $1,120,000

Question 2

Which cost is charged to the product under variable costing?

Accepted Answer

A)  Variable manufacturing overhead
B)  Fixed manufacturing overhead
C)  Variable administrative expenses
D)  Fixed administrative expenses

Question 3

Hinge Manufacturing's cost of goods sold is $420,000 variable and $240,000 fixed.The company's selling and administrative expenses are $300,000 variable and $360,000 fixed.If the company's sales is $1,580,000, what is its contribution margin?

Accepted Answer

A)  $260,000
B)  $860,000
C)  $920,000
D)  $980,000

Question 4

Net income under absorption costing is gross profit less

Accepted Answer

A)  cost of goods sold.
B)  fixed manufacturing overhead and fixed selling and administrative expenses.
C)  fixed manufacturing overhead and variable manufacturing overhead.
D)  variable selling and administrative expenses and fixed selling and administrative expenses.

Question 5

Moonwalker's CVP income statement included sales of 5,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $110,000.Contribution margin is

Accepted Answer

A)  $500,000.
B)  $300,000.
C)  $200,000.
D)  $90,000.

Question 6

Contribution margin is the amount of revenue remaining after deducting

Accepted Answer

A)  cost of goods sold.
B)  fixed costs.
C)  variable costs.
D)  contra-revenue.

Question 7

A company with a higher contribution margin ratio is

Accepted Answer

A)  more sensitive to changes in sales revenue.
B)  less sensitive to changes in sales revenue.
C)  either more or less sensitive to changes in sales revenue, depending on other factors.
D)  likely to have a lower breakeven point.

Question 8

For Pierce Company, sales is $500,000, variable expenses are $340,000, and fixed expenses are $140,000.Pierce's contribution margin ratio is

Accepted Answer

A)  4%.
B)  28%.
C)  32%.
D)  68%.

Question 9

The degree of operating leverage provides a measure of a company's earnings volatility.

Accepted Answer

A) True 
 B)False

Question 10

Curtis Corporation's contribution margin is $25 per unit for Product A and $30 for Product B. Product A requires 2 machine hours and Product B requires 4 machine hours.How much is the contribution margin per unit of limited resource for each product? $\begin{array}{ll}&A&B\
a.&\$ 12.50 & \$ 7.50 \
b.&\$ 12.50 & \$ 8.33 \
c.&\$ 10.00 & \$ 7.50 \
d.&\$ 10.00 & \$ 8.33
\end{array}$

Accepted Answer

The answer of Curtis Corporation's contribution margin is $25 per...

Question 11

Variable costing is the approach used for external reporting under generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 12

Cost structure

Accepted Answer

A)  refers to the relative proportion of fixed versus variable costs that a company incurs.
B)  generally has little impact on profitability.
C)  cannot be significantly changed by companies.
D)  refers to the relative proportion of operating versus nonoperating costs that a company incurs.

Question 13

In a CVP income statement, a selling expense is generally

Accepted Answer

A)  completely a variable cost.
B)  completely a fixed cost.
C)  neither a variable cost nor a fixed cost.
D)  partly a variable cost and partly a fixed cost.

Question 14

Use the following information for questions 
Sprinkle Co. sells its product for $60 per unit. During 2016, it produced 60,000 units and sold 50,000 units (there was no beginning inventory) . Costs per unit are: direct materials $15, direct labor $9, and variable overhead $3. Fixed costs are: $720,000 manufacturing overhead, and $90,000 selling and administrative expenses.
-Cost of goods sold under absorption costing is

Accepted Answer

A)  $1,350,000.
B)  $1,620,000.
C)  $1,950,000.
D)  $1,560,000.

Question 15

Which cost is not charged to the product under variable costing?

Accepted Answer

A)  Direct materials
B)  Direct labor
C)  Variable manufacturing overhead
D)  Fixed manufacturing overhead

Question 16

A cost structure which relies more heavily on fixed costs makes the company

Accepted Answer

A)  more sensitive to changes in sales revenue.
B)  less sensitive to changes in sales revenue.
C)  either more or less sensitive to changes in sales revenue, depending on other factors.
D)  have a lower break-even point.

Question 17

The manufacturing cost per unit for absorption costing is

Accepted Answer

A)  usually, but not always, higher than manufacturing cost per unit for variable costing.
B)  usually, but not always, lower than manufacturing cost per unit for variable costing.
C)  always higher than manufacturing cost per unit for variable costing.
D)  always lower than manufacturing cost per unit for variable costing.

Question 18

When a company is in its early stages of operation, its primary goal is to generate a target net income.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is not true?

Accepted Answer

A)  Operating leverage refers to the extent to which a company's net income reacts to a given change in sales.
B)  Companies that have higher fixed costs relative to variable costs have higher operating leverage.
C)  When a company's sales revenue is increasing, high operating leverage is good because it means that profits will increase rapidly.
D)  When a company's sales revenue is decreasing, high operating leverage is good because it means that profits will decrease at a slower pace than revenues decrease.

Question 20

In a sales mix situation, at any level of units sold, net income will be higher if

Accepted Answer

A)  more higher contribution margin units are sold than lower contribution margin units.
B)  more lower contribution margin units are sold than higher contribution margin units.
C)  more fixed expenses are incurred.
D)  weighted-average unit contribution margin decreases.

Exam 6: Reporting and Analyzing Inventory

For Pierce Company, sales is $500,000, variable expenses are $340,000, and fixed expenses are $140,000.Pierce's contribution margin ratio is

Correct Answer
verified

Which cost is charged to the product under variable costing?

Correct Answer
verified

Cost structure

Correct Answer
verified

In a sales mix situation, at any level of units sold, net income will be higher if

Correct Answer
verified

In a CVP income statement, a selling expense is generally

Correct Answer
verified

The manufacturing cost per unit for absorption costing is

Correct Answer
verified

For Wilder Corporation, sales is $1,600,000 (8,000 units) , fixed expenses are $480,000, and the contribution margin per unit is $80.What is the margin of safety in dollars?

Correct Answer
verified

Contribution margin is the amount of revenue remaining after deducting

Correct Answer
verified

Which cost is not charged to the product under variable costing?

Correct Answer
verified

Which of the following statements is not true?

Correct Answer
verified

A cost structure which relies more heavily on fixed costs makes the company

Correct Answer
verified

Variable costing is the approach used for external reporting under generally accepted accounting principles.

Correct Answer
verified

Moonwalker's CVP income statement included sales of 5,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $110,000.Contribution margin is

Correct Answer
verified

A company with a higher contribution margin ratio is

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The degree of operating leverage provides a measure of a company's earnings volatility.

Correct Answer
verified

When a company is in its early stages of operation, its primary goal is to generate a target net income.

Correct Answer
verified

Net income under absorption costing is gross profit less

Correct Answer
verified

Hinge Manufacturing's cost of goods sold is $420,000 variable and $240,000 fixed.The company's selling and administrative expenses are $300,000 variable and $360,000 fixed.If the company's sales is $1,580,000, what is its contribution margin?

Correct Answer
verified

Exam 6: Reporting and Analyzing Inventory

For Pierce Company, sales is $500,000, variable expenses are $340,000, and fixed expenses are $140,000.Pierce's contribution margin ratio is

Correct AnswerverifiedShow Answer

Which cost is charged to the product under variable costing?

Correct AnswerverifiedShow Answer

Cost structure

Correct AnswerverifiedShow Answer

In a sales mix situation, at any level of units sold, net income will be higher if

Correct AnswerverifiedShow Answer

In a CVP income statement, a selling expense is generally

Correct AnswerverifiedShow Answer

The manufacturing cost per unit for absorption costing is

Correct AnswerverifiedShow Answer

For Wilder Corporation, sales is $1,600,000 (8,000 units) , fixed expenses are $480,000, and the contribution margin per unit is $80.What is the margin of safety in dollars?

Correct AnswerverifiedShow Answer

Contribution margin is the amount of revenue remaining after deducting

Correct AnswerverifiedShow Answer

Which cost is not charged to the product under variable costing?

Correct AnswerverifiedShow Answer

Which of the following statements is not true?

Correct AnswerverifiedShow Answer

A cost structure which relies more heavily on fixed costs makes the company

Correct AnswerverifiedShow Answer

Variable costing is the approach used for external reporting under generally accepted accounting principles.

Correct AnswerverifiedShow Answer

Moonwalker's CVP income statement included sales of 5,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $110,000.Contribution margin is

Correct AnswerverifiedShow Answer

A company with a higher contribution margin ratio is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The degree of operating leverage provides a measure of a company's earnings volatility.

Correct AnswerverifiedShow Answer

When a company is in its early stages of operation, its primary goal is to generate a target net income.

Correct AnswerverifiedShow Answer

Net income under absorption costing is gross profit less

Correct AnswerverifiedShow Answer

Hinge Manufacturing's cost of goods sold is $420,000 variable and $240,000 fixed.The company's selling and administrative expenses are $300,000 variable and $360,000 fixed.If the company's sales is $1,580,000, what is its contribution margin?

Correct AnswerverifiedShow Answer

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