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CVP, Curvilinear costs, break even, operating range, target

Question 1
The relevant range of operations excludes extremely high and low levels of production that are not likely to occur.
True
False

Question 2
Curvilinear costs are also known as nonlinear costs.
True
False

Question 3
The margin of safety is the excess of:
Break-even sales over expected sales.
Expected sales over variable costs.
Expected sales over fixed costs.
Fixed costs over expected sales.
Expected sales over breakeven sales.

Question 4
Curvilinear costs always increase:
With decreases in volume.
In constant proportion to changes in production levels.
When management performs break-even analysis.
When volume increases, but not at a constant rate.
On a per unit basis when volume of activity goes down.

Question 5
A cost that remains the same in total even when volume of activity varies is a:
Fixed cost.
Curvilinear cost.
Variable cost.
Step-wise variable cost.
Standard cost.

Question 6
A company's normal operating range, which excludes extremely high and low volumes that are not likely to occur, is called the:
Margin of safety.
Contribution range.
Break-even point.
Relevant range.
High-low point.

Question 7
Brown Company's contribution margin ratio is 24%. Total fixed costs are $84,000. What is Brown's break-even point in sales dollars?
$20,160.
$110,526.
$350,000.
$240,000.
$84,000.

Question 8
A target income refers to:
Income at the break-even point.
Income from the most recent period.
Income planned for a future period.
Income only in a multiproduct environment.
Income at the minimum contribution margin.

Question 9
Lee Company manufactures and sells widgets for $2.00 per unit. Its variable cost per unit is $1.70. Lee's total fixed costs are $10,500. How many widgets must Lee Company sell to break even?
5,250.
6,176.
35,000.
52,500.
61,760.

Question 10
A product sells for $200 per unit, and its variable costs per unit are $130. The fixed costs are $420,000. What is the break-even point in dollar sales?
$ 2,100.
$ 6,000.
$ 420,000.
$ 646,154.
$1,200,000.

Question 11
Management of a company is evaluating two potential orders. Due to limited capacity only one of these orders can be accepted. Incremental fixed costs are the same for either option. Based on the information in the table below which of the following statements is true?

Option B has the highest contribution margin per unit.
Option A has the highest total contribution margin.
Option B has the lowest contribution margin ratio.
Option B has the highest total contribution margin.
Option A has the highest amount per dollar of sales to contribute to contribution margin and profit.

Question 12
The Haskins Company manufactures and sells radios. Each radio sells for $23.75 and the variable cost per unit is $16.25. Haskin's total fixed costs are $25,000, and budgeted sales are 8,000 units. What is the contribution margin per unit?
$7.50.
$16.25.
$23.75.
$60,000.
$1.25

Question 13
The break-even point is the sales level at which a company neither earns a profit nor incurs a loss.
True
False

Question 14
When graphing cost-volume-profit data on a CVP chart:
Units are plotted on the horizontal axis; costs on the vertical axis.
Units are plotted on the vertical axis; costs on the horizontal axis.
Both units and costs are plotted on the horizontal axis.
Both units and cost are plotted on the vertical axis.
Data points always represent expected future points.

Question 15
Which one of the following statements is not true?
Total fixed costs remain the same regardless of volume.
Total variable costs change with volume.
Total variable costs decrease as the volume increases.
Fixed costs per unit increase as the volume decreases.
Variable costs per unit remain the same regardless of the volume.

Question 16
During the past year a company had total fixed costs of $70,000. Its product sold for $9 per unit. Variable costs during this time equaled $5 per unit. Next year the company is anticipating a 4% increase in total fixed costs and a $1 per unit decrease in variable costs, but would like to maintain its current selling price per unit. How many units must the company sell next year to earn $1,000,000? (Round answer to complete units.)
119,200.
200,000.
214,560.
268,200.
18,200.

Question 17
Cost-volume-profit analysis is frequently based on the assumption that the production level is the same as the sales level.
True
False

Question 18
A cost that can be separated into fixed and variable components is called a:
Mixed cost.
Step-variable cost.
Composite cost.
Curvilinear cost.
Differential cost.

Question 19
The sales level at which a company neither earns a profit nor incurs a loss is the:
Relevant range.
Margin of safety.
Step-wise variable level.
Break-even point.
Contribution margin.

Question 20
Ginger Company's product has a contribution margin per unit of $11.25 and a contribution margin ratio of 22.5%. What is the selling price of the product?
$ 5.
$20.
$30.
$40.
$50.

Solution Preview

Question 1
The relevant range of operations excludes extremely high and low levels of production that are not likely to occur.
True
False

True

Question 2
Curvilinear costs are also known as nonlinear costs.
True
False

True

Question 3
The margin of safety is the excess of:
Break-even sales over expected sales.
Expected sales over variable costs.
Expected sales over fixed costs.
Fixed costs over expected sales.
Expected sales over breakeven sales.

Expected sales over breakeven sales.

Question 4
Curvilinear costs always increase:
With decreases in volume.
In constant proportion to changes in production levels.
When management performs break-even analysis.
When volume increases, but not at a constant rate.
On a per unit basis when volume of activity goes down.

When volume increases, but not at a constant rate.

Question 5
A cost that remains the same in total even when volume of activity varies is a:
Fixed cost.
Curvilinear cost.
Variable cost.
Step-wise variable cost.
Standard cost.

Fixed cost.

Question 6
A company's normal operating range, which excludes extremely high and low volumes that are not likely to occur, is called the:
Margin of safety.
Contribution range.
Break-even point.
Relevant range.
High-low point.

Relevant range.

Question 7
Brown Company's contribution margin ratio is 24%. Total fixed costs are $84,000. What is Brown's break-even point in sales dollars?
$20,160. ...

$2.19