ACG 2071 Final Exam
ACG 2071
Managerial Accounting Final : Download Here
1. If the
contribution margin is less than zero
A. the selling price is less than the variable
cost per unit.
B. the fixed costs should be increaseD.
C. the company should sell more units.
D. None of the above answers is correct.
2. The
incremental profit generated by the sale of one additional unit is equal to the
A. contribution margin.
B. selling price.
C. margin of safety.
D. incremental cost.
True
because fixed costs stay the same.
3. In the
graph of CVP, the breakeven point is the
A. point where the variable costs line crosses
the fixed costs line.
B. point where the sales revenue line crosses the
total costs line.
C. point where the variable costs line crosses
the sales line.
D. point where the variable cost line, the fixed
cost line, and the sales line all meet.
4. H55
Company sells two products, beer and wine. Beer has a 10 percent profit margin
and wine has a 12 percent profit margin. Beer has a 27 percent contribution
margin and wine has a 25 percent contribution margin. If customers want to buy
only one product and beer sells for $4, while wine sells for $5, which product
should H55 push to customers?
A. Beer
B. Wine
C. The product that has the higher sales price
D. It should sell an equal quantity of both.
E. Selling
either results in the same additional income for the company.
5. What
most likely occurs when variable costs per unit increase?
A. The breakeven point will decrease
B. The selling price will decrease
C. The fixed cost per unit increase
D. Breakeven sales will increase
6.
Cost-volume-profit analysis assumes all EXCEPT
A. all costs are variable or fixeD.
B. units manufactured equal units solD.
C. total variable costs remain the same over the
relevant range.
D. total fixed costs remain the same over the
relevant range.
7. The contribution income statement
A. reports gross margin.
B. is allowed for external reporting to
shareholders.
C. categorizes costs as either product or perioD.
D. can be used to predict future profits at
different levels of activity.
8. The
breakeven point is the activity level where
A. revenues equal fixed costs.
B. revenues equal variable costs.
C. contribution margin equals variable costs.
D. revenues equal the sum of variable and fixed
costs.
9. Which
concept answers the following question: ‘If budgeted revenues are above
breakeven and decline, how far can they fall before the breakeven point is
reached?’
A. Contribution margin
B. Relevant range of operations
C. Margin of safety
D. Sales mix
10. If the
contribution margin is greater than zero
A. the selling price is less than the fixed cost
per unit.
B. the selling price is greater than the fixed
cost per unit.
C. the selling price is less than the variable
cost per unit.
D. the total of the variable and fixed costs is
less than the contribution margin.
11.The
incremental profit generated by the sale of one additional unit is equal to the
A. selling price.
B. margin of safety.
C. incremental cost.
D. contribution margin.
12. Which
one of the following is not one of the assumptions on which cost-volume-profit
analysis is based?
A. Fixed costs remain constant over a wide range
of volume.
B. A company sells only one product.
C. Variable costs per unit of production remain
constant as production volume changes.
D. Selling price per unit remains constant as
production volume changes.
13. The
break-even point is the point where
A. total sales revenue equals total expenses.
B. total contribution margin equals total fixed
expenses.
C. both A and B are true.
D. neither A nor B is true.
14. A
business's normal operating range, which excludes extremely high and low
volumes that are not likely to be encountered, is the
A. Margin of safety.
B. Contribution margin.
C. Break-even point.
D. Relevant range
15. When
graphing cost-volume-profit data on a CVP graph
A. Units are plotted on the horizontal axis;
costs on the vertical axis
B. Units are plotted on the vertical axis; costs
on the horizontal axis
C. Both units and costs are plotted on the
horizontal axis.
D. Both units and cost are plotted on the
vertical axis
16.
Gessel’s break even point in units is about
A. 2,500 units
B. 350 units
C. 250 units
D. not enough information provided
17. Total
costs to produce 200 units is approximately
A. $2,000
B. $3,000
C. $4,000
D. $1,300
18. If the contribution margin is less than zero
A. the selling price is less than the variable
cost per unit.
B. the fixed costs should be increaseD.
C. the company should sell more units.
D. None of the above answers is correct.
The company
will definitely experience a loss at this level. Fixed costs are still to be
covereD.
19. The incremental profit generated by the sale
of one additional unit is equal to the
A. contribution margin.
B. selling price.
C. margin of safety.
D. incremental cost.
20. Todd
Company sells two products, Fred and Barney. Fred has a 40 percent contribution
margin and Barney has a 20 percent contribution margin. If customers plan to
spend a total of $50, what should Todd Company do?
A. It
should sell more Barney units.
B. It
should sell more Fred units.
C. It
should sell an equal number of each.
D. No
recommendation can be made from the data given
21. In a multi-product environment, which one of
the following is not an assumption used in CVP analysis?
A. The selling price is constant throughout the
entire relevant range.
B. Costs are linear throughout the relevant
range.
C. The sales mix is constant.
D. The number of units produced and sold are the
same.
E. Unit variable cost and unit fixed cost are
constant throughout the relevant range.
22. Which
of the following is NOT an assumption generally made in CVP analysis?
A. The behavior of revenues and costs is linear
throughout the relevant range
B. All costs can be accurately divided into
fixed and variable categories
C. In
a multiproduct firm, the sales mix does not change
D. The operating leverage of the company cannot
be greater than 1
23.
Maintaining low fixed costs and high variable costs rather than high fixed
costs and low variable costs
A. is
a more conservative cost structure
B. is
an equally risky cost structure
C. is
a more risky cost structure
D. results in a higher contribution margin
24. When
other factors remain constant, a decrease in sales price
A. increases the number of units needed to earn
profits.
B .
decreases the number of units needed to earn profits.
C. has no effect on the number of units needed
to earn profits.
D. causes management to make irrational
decisions.
25. A firm
will break even when
A. Revenues = variable costs – fixed costs
B. Its sales exceed its fixed costs.
C .Revenues
= variable costs + fixed cost
D. Either b or c
26. The
systematic examination of the relationships among selling prices, volume of
sales and production, costs, and profits is termed
A. contribution
margin analysis
B. gross
profit analysis
C. cost
behavior analysis
D. cost-volume-profit
analysis
27. In
cost-volume-profit analysis, all costs are classified into which two
categories?
A. fixed costs and variable costs
B. sunk costs and fixed costs
C. opportunity costs and sunk costs
D. product and period costs
28.
Contribution margin and contribution margin ratio are (respectively):
A. also
called variable costs and the variable costs ratio
B. the excess of sales revenue over variable cost
and contribution margin divided by sales.
C. also
called fixed costs and the fixed costs ratio.
D. the
same as sales revenue and the same as the profit-volume ratio
29.
Cost-volume-profit analysis cannot be used if which of the following occurs?
A. Per
unit sales prices change and the variable costs change
B. The
total fixed costs change
C. The
per unit variable costs change and the fixed costs change
D. Costs cannot be properly classified into fixed
and variable costs
30. What is cost behavior?
A. The way management chooses to estimate its
costs
B. The
method used to allocate costs to products
C. How
a cost is used in setting selling prices
D. The
manner in which a cost changes as the related activity changes
31. Which
of the following would have no effect on the break-even point in units?
A. Sales volume increases
B. Sales price increases
C. Fixed costs increases
D. Variable cost per unit decreases
32. Why must a company determine what its
relevant range is?
A. It directly impacts the indirect cost
allocated to a product or service.
B. It is a relevant cost.
C. GAAP requires companies to report this
information.
D. Cost behavior outside of the relevant range is
generally distorted
33. Mayes Company sells two products, Haley and
Nat. Nat has a 40% contribution margin and a 16% profit margin. Haley has a 48%
contribution margin and a 8% profit margin. If customers plan to buy $100 of
products, what should Mayes do?
A. It should emphasize Haley
B. It should emphasize Nat
C. It should emphasize both products, since they
are equally profitable
D. No recommendation can be made from the data
given
34. Which item appears on a variable costing
income statement but not on a full costing income statement?
A. Operating expenses
B. Sales
C. Contribution margin
D. Gross profit
35. Which is not part of a CVP graph?
A. Total cost line C. Revenue line
B. Fixed cost line D. Variable cost line
36. Which
of the following would have no effect on the break-even point in units?
A. Sales price is reduceD.
B. Sales price increases
C. Fixed costs increases
D. Variable cost per unit decreases
E.None of these.
37. The
full costing income statement focuses on
A. cost function.
B. cost behavior.
C. contribution margin.
D. variable costing.
38. Which of the following statements is true
when making decisions using CVP analysis?
A. As long as the contribution margin is a
positive number, net income will be positive.
B. As long as variable costs are more than
fixed costs, net income will be negative.
C. As long as the contribution margin is
greater than fixed costs, net income will be positive.
D. As long as the sales price per unit is
greater than fixed costs per unit, net income will be positive.
39. During 2005, 6,000 units were produced and
solD. Which of the following statements
is true when comparing net income under GAAP versus net income using variable
costing?
A. Net
income will be higher using GAAP compared to using variable costing.
B. Net
income will be lower using GAAP compared to using variable costing.
C. Net income will be the same under both
costing methods.
D. It depends on the level of sales volume.
40. Which one of the following is true
concerning a CVP income statement?
A. Costs and expenses are classified by product
versus perioD.
B. It is prepared for both internal and
external use.
C. It shows gross margin.
D. Costs are classified based on behavior.
41. Why is
identification of a relevant range important fro CVP?
A. It is required under GAAP.
B. Cost behavior outside of the relevant range
is not linear, which distorts CVP analysis.
C. It directly impacts the number of units of
a product a customer buys.
D. It is a cost that is incurred by a company
that must be accounted for.
42. Carver
Company’s management established its target net income for the year. What did
Carver do?
A. It estimated its break-even income level
for the year.
B. It calculated its contribution margin.
C. It allocated its costs to cost objects.
D. It established its desired annual income
for its product lines.
43.What is
a relevant range of activity?
A. The geographical locations in which the
company operates
B. The activity level at which profits are
maximized
C. The levels of activity over which the
company expects to operate
D. The level of activity in which all costs
are constant
44. McCargo
Company sells two products, Gumbo and Jumbo. Gumbo has a 55% contribution
margin, sells for $10, and has a 20% profit margin. Jumbo has a 45%
contribution margin, has a 20% profit margin, and sells for $12 Given these
margin percentages, and assuming customers will buy only one product, what
should McCargo Company do?
A. It
should emphasize Gumbo
B. It
should emphasize Jumbo
C. It
should emphasize both products, since they are equally profitable
D. No recommendation can be made from the
data given
45. Which
one of the following is the format of a CVP income statement?
A. Sales – Variable costs = Fixed costs
B. Sales – Fixed costs – Variable costs –
Operating expenses = Net income
C. Sales – Cost of goods sold – Operating
expenses = Net income
D. Sales – Variable costs – Fixed costs =
Operating income
46 When calculating the break-even point in a
multi-product environment, which of the following pieces of information would
not be relevant?
A. Contribution
margin per unit for each type of product
B. Each
product’s percentage of total sales
C. Total fixed costs
D. Fixed costs per unit
47. Max, InC.
was evaluating its margin of safety.
Which one of the following is true?
A. The margin of safety ignores fixed costs.
B. The higher the margin of safety, the lower
the operating leverage.
C. The higher the margin of safety, the lower
the amount of sales revenue.
D. The higher the margin of safety, the more
cushion the company has.
48. In CVP analysis, what does the term
"cost" mean?
A. It includes all fixed and variable costs of
products, but excludes period costs.
B. It includes all costs which are part of
cost of goods sold, plus variable operating expenses.
C. It includes all manufacturing costs and
operating expenses.
D. It includes only manufacturing costs.
49. Which
one of the following describes the break-even point?
A. It is the point where total sales equals
total variable plus total fixed costs.
B. It is the point where the contribution
margin equals zero.
C. It
is the point where total variable costs equal total fixed costs.
D. It is the point where total sales equals
total fixed costs.
50. Which one of the following is an assumption
of CVP analysis?
A. Sales in
units remains constant.
B. All
costs are variable costs.
C. The change in beginning and ending inventories
is reflected in the analysis.
D. The
behavior of costs and revenues are linear within the relevant range.
51.In CVP
analysis, what does the term "cost" mean?
A. It
includes all fixed and variable costs of products.
B. It
includes all costs which are part of cost of goods solD.
C. It includes manufacturing costs plus selling
and administrative expenses.
D. It
includes all manufacturing costs.
52. A CVP
graph appears below for Watson InC.
0 10 20
30 40 50
60
How much is
Watson’s break even point in units?
A. 25 units
B. 35 units
-answer
C. 4,500 units
D. 3,000 units
E.
not enough information
53. H55 Company sells two products, beer and
wine. Beer has a 10 percent profit margin and wine has a 12 percent profit
margin. Beer sells for $2 and wine sells for $1. Beer has a 25 percent
contribution margin and wine has a 50 percent contribution margin. If customers
plan to buy only one product, which product should H55 push to customers?
A. Beer
B. Wine
C. The product that has the higher sales price
D. It should sell an equal quantity of both.
E. Selling either results in the same
additional income for the company.
54. Which is true as it relates to fixed costs?
A. Total fixed cost increases as production/sales
increase
B. Fixed cost per unit declines as
production/sales increases.
C. Fixed cost per unit increases as
production/sales increases.
D. Total fixed cost declines as production/sales
increase
55. Why is
determination of a relevant range important with CVP?
A. Cost behavior outside of the relevant range
is generally distorteD.
B. It directly impacts the direct cost
allocated to a product or service.
C. It is a relevant cost.
D. GAAP requires companies to report this
information.
56. Which
statement describes a fixed cost?
A. It varies
in total at every level of activity.
B. The unit
cost varies directly to the activity level.
C. Its unit
cost varies inversely to the level of activity.
D. It
remains the same per unit regardless of activity level.
57. Which one of the following would most likely
be considered a mixed cost?
A. Cost of using a copy machine
B. Direct labor
C. Supervisory salaries
D. Direct materials
58. Which
of the following would have no effect on the break-even point in units?
A. Sales price increases
B. Fixed costs decreases
C. Sales volume decreases
D. Variable cost per unit increases
