Managerial Accounting Questions

1. A newly opened bed-and-breakfast projects the following:
Monthly fixed costs $6000
Variable cost per occupied room per night $20
Revenue per occupied room per night $75
If there are 12 rooms available, what percentage of rooms would have to be occupied, on average, to break even?

2. The relationship d = 5000 - 25p describes what happens to demand (d) as price (p) varies. Price can vary between $10 and $50. How many units can be sold when the price is $10?

True/False. Write T if the statement is true and F if the statement is false.

3. Enterprise Resource Planning (ERP) system is a data-oriented decision support system that utilizes specific management science solution procedures to solve individual problems such as cost-volume analysis.
a) True b) False

4. The break-even point is the volume that equates total revenue with total cost and profit is zero.
a) True b) False

5. Fixed costs depend on the number of items produced.
a) True b) False

6. Profit is the difference between total revenue and total cost.
a) True b) False

7. Data are pieces of information from the problem environment.
a) True b) False

8. The quantitative method is a general approach to decision making.
a) True b) False

Multiple-Choice: Choose the one alternative that best completes the statement or answers the question.

9. ________ involves determining the functional relationship between variables, parameters, and equations.
a) Problem Observation
b) Model construction
c) Model Implementation
d) Problem definition
e) Model solution

10. A decrease in fixed costs with everything else remaining constant
a) increases the break-even point.
b) decreases the break-even point.
c) keeps the break-even point at the same level.
d) does not affect the level of the break-even point.

11. Decision analysis is a ________ technique.
a) linear mathematical programming
b) probabilistic
c) non-linear programming
d) simulation
e) network

12. Linear mathematical programming techniques assume that all parameters in the models are
a) known with certainty.
b) predictable.
c) unknown.
d) unpredictable.

13. Which of the following statements is false?
a) Decision models designate decision variables.
b) Decision models selectively describe the managerial situation.
c) Decision models designate performance measures that reflect objectives.
d) Decision models consider all factors from the real world.

14. The indicator that results in total revenues being equal to total cost is called the
a) break-even point.
b) marginal cost.
c) profit mix.
d) marginal volume.

15. The steps of the scientific method are
a) observation, problem definition, model construction, model solution, implementation.
b) observation, implementation, problem definition, model construction, model solution.
c) model construction, problem definition, observation, model solution, implementation.
d) problem definition, model construction, observation, model solution, implementation.

16. A difficult aspect of using spreadsheets to solve management science problems is
a) obtaining the solution to standard management science problems.
b) data entry.
c) setting up a spreadsheet with complex models and formulas.
d) performing sensitivity analysis.

17. An increase in price with everything else remaining constant
a) raises the break-even point.
b) does not affect the level of the break-even point.
c) decreases the break-even point.
d) keeps the break-even point at the same level.

18. The components of break-even analysis are
a) volume, cost, and profit.
b) volume and profit.
c) cost and profit.
d) volume and cost.

Short Answer: Write the word or phrase that best completes the statement or answers the question.

19. ________ depend on the number of items produced.

20. The ________ is the volume that equates total revenue with total cost and profit is zero.