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COST-VOLUME-PROFIT ANALYSIS mcq homework

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Question;71. A shift from low-margin sales to high-margin sales;a. may;increase net income, even though there is a decline in total units sold.;b. will;always increase net income.;c. will;always decrease net income.;d. will;always decrease units sold.;72. A shift from high-margin sales to low-margin sales;a. may;decrease net income, even though there is an increase in total units sold.;b. will;always decrease net income.;c. will;always increase net income.;d. will;always increase units sold.;73. MacCloud;Industries has two divisions?Standard and Premium. Each division has hundreds;of different types of tennis racquets and tennis products. The following;information is available;Standard Division Premium Division Total;Sales $400,000 $600,000 $1,000,000;Variable costs 280,000 360,000;Contribution;margin $120,000 $240,000;Total fixed costs $320,000;What;is the weighted-average contribution margin ratio?;a. 34%;b. 35%;c. 36%;d. 50%;74. MacCloud;Industries has two divisions?Standard and Premium. Each division has hundreds;of different types of tennis racquets and tennis products. The following;information is available;Standard Division Premium Division Total;Sales $400,000 $600,000 $1,000,000;Variable costs 280,000 360,000;Contribution;margin $120,000 $240,000;Total fixed costs $320,000;What;is the break-even point in dollars?;a. $115,200;b. $888,889;c. $914,286;d. $941,117;75. The sales mix percentages for Novotna?s Boston;and Seattle Divisions are 70% and 30%. The contribution margin ratios are: Boston;(40%) and Seattle (30%). Fixed costs are $1,110,000. What is Novotna?s break-even;point in dollars?;a. $388,500;b. $3,000,000;c. $3,171,428;d. $3,363,636;76. A company can sell all the units it can produce of;either Product A or Product B but not both. Product A has a unit contribution;margin of $16 and takes two machine hours to make and Product B has a unit;contribution margin of $30 and takes three machine hours to make. If there are 3,000;machine hours available to manufacture a product, income will be;a. $6,000;more if Product A is made.;b. $6,000;less if Product B is made.;c. $6,000;less if Product A is made.;d. the;same if either product is made.;77. Brooks Corporation can sell;all the units it can produce of either Plain or Fancy but not both. Plain has a;unit contribution margin of $120 and takes two machine hours to make and Fancy;has a unit contribution margin of $150 and takes three machine hours to make.;There are 2,400 machine hours available to manufacture a product. What should Brooks;do?;a. Make Fancy;which creates $30 more profit per unit than Plain;does.;b. Make Plain;which creates $10 more profit per machine hour than Fancy does.;c. Make Plain;because more units can be made and sold than Fancy.;d. The same total profits exist regardless of;which product is made.;78. What;is the key factor in determining sales mix if a company has limited resources?;a. Contribution margin per unit of limited;resource;b. The amount of fixed costs per unit;c. Total contribution margin;d. The cost of limited resources;79. Greg?s Breads can produce and sell only one of the following two;products;Oven Contribution;Hours;Required Margin Per Unit;Muffins 0.2 $3;Coffee Cakes 0.3 $4;The company has;oven capacity of 1,200 hours. How much will contribution margin be if it;produces only the most profitable product?;a. $12,000;b. $16,000;c. $18,000;d. $24,000;80. Curtis Corporation?s contribution margin is $20 per;unit for Product A and $24 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?;A B;a. $10.00 $6.00;b. $10.00 $6.66;c. $8.00 $6.00;d. $8.00 $6.66;81. Cost structure;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.;82. Outsourcing production will;a. reduce;fixed costs and increase variable costs.;b. reduce;variable costs and increase fixed costs.;c. have;no effect on the relative proportion of fixed and variable costs.;d. make;the company more susceptible to economic swings.;83. Reducing reliance on human workers and;instead investing heavily in computers and online technology will;a. reduce;fixed costs and increase variable costs.;b. reduce;variable costs and increase fixed costs.;c. have;no effect on the relative proportion of fixed and variable costs.;d. make;the company less susceptible to economic swings.;84. Cost;structure refers to the relative proportion of;a. selling;expenses versus administrative expenses.;b. selling;and administrative expenses versus cost of goods sold.;c. contribution;margin versus sales.;d. none;of the above.;85. Mercantile Corporation has sales of $2,000,000;variable costs of $1,100,000, and fixed costs of $750,000. Mercantile?s;degree of operating leverage is;a. 1.22.;b. 1.47.;c. 1.20.;d. 6.00.;Ans: d, LO: 5, Bloom: AP, Difficulty: Medium, Min: 2;AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement;AICPA PC: Problem Solving/Decision Making, IMA: Business Economics;86. Mercantile Corporation has sales of $2,000,000;variable costs of $1,100,000, and fixed costs of $750,000. Mercantile?s;margin of safety ratio is;a..08.;b..17.;c..20.;d..83.;87. Which;of the following statements is not true?;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.;88. Miller;Manufacturing?s degree of operating leverage is 1.5. Warren Corporation?s;degree of operating leverage is 6. Warren?s earnings would go up (or down) by;as much as Miller?s with an equal increase (or decrease) in sales.;a. 1/4;b. 4.5;times;c. 4 times;d. 7.5;times;89. The;margin of safety ratio;a. is;computed as actual sales divided by break-even sales.;b. indicates;what percent decline in sales could be sustained before the company would;operate at a loss.;c. measures;the ratio of fixed costs to variable costs.;d. is;used to determine the break-even point.;90. A cost structure which relies more heavily on fixed costs makes;the company;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.;91. A company with a higher contribution margin ratio is;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.;92. The degree of operating;leverage;a. does notprovide a;reliable measure of a company?s earnings volatility.;b. cannot be used to compare companies.;c. is;computed by dividing total;contribution margin by net income.;d. measures;how much of each sales dollar is available to cover fixed expenses.;a93. Only direct materials, direct labor, and;variable manufacturing overhead costs are considered product costs when using;a. full;costing.;b. absorption;costing.;c. variable;costing.;d. product;costing.;a94. When a company assigns the costs of direct;materials, direct labor, and both variable;and fixed manufacturing overhead to products, that company is using;a. operations;costing.;b. absorption;costing.;c. variable;costing.;d. product;costing.;a95. Companies recognize fixed manufacturing;overhead costs as period costs (expenses) when incurred when using;a. full;costing.;b. absorption;costing.;c. product;costing.;d. variable;costing.;a96. Under absorption costing and variable;costing, how are fixed manufacturing costs treated?;Absorption Variable;a. Product Cost Product Cost;b. Product Cost Period Cost;c. Period Cost Product Cost;d. Period Cost Period Cost;a97. Under absorption costing and variable;costing, how are variable manufacturing costs treated?;Absorption Variable;a. Product Cost Product Cost;b. Product Cost Period Cost;c. Period Cost Product Cost;d. Period Cost Period Cost;a98. Under absorption costing and variable;costing, how are direct labor costs treated?;Absorption Variable;a. Product Cost Product Cost;b. Product Cost Period Cost;c. Period Cost Product Cost;d. Period Cost Period Cost;a99. Fixed selling expenses are period costs;a. under;both absorption and variable costing.;b. under;neither absorption nor variable costing.;c. under;absorption costing, but not under variable costing.;d. under;variable costing, but not under absorption costing.;a100. Which cost is not charged to the product under variable costing?;a. Direct;materials;b. Direct;labor;c. Variable;manufacturing overhead;d. Fixed;manufacturing overhead;a101. Which cost is charged to the product under variable costing?;a. Variable;manufacturing overhead;b. Fixed;manufacturing overhead;c. Variable;administrative expenses;d. Fixed;administrative expenses;a102. Variable costing;a. is;used for external reporting purposes.;b. is;required under GAAP.;c. treats;fixed manufacturing overhead as a period cost.;d. is;also known as full costing.;a103. Sprinkle Co. sells its;product for $20 per unit. During 2013, it produced 60,000 units and sold 50,000;units (there was no beginning inventory). Costs per unit are: direct materials;$5, direct labor $3, and variable overhead $1. Fixed costs are: $240,000;manufacturing overhead, and $30,000 selling and administrative expenses. The;per unit manufacturing cost under absorption costing is;a. $8.;b. $9.;c. $13.;d. $14.;a104. Sprinkle;Co. sells its product for $20 per unit. During 2013, it produced 60,000 units;and sold 50,000 units (there was no beginning inventory). Costs per unit are;direct materials $5, direct labor $3, and variable overhead $1. Fixed costs;are: $240,000 manufacturing overhead, and $30,000 selling and administrative;expenses. The per unit manufacturing cost under variable costing is;a. $8.;b. $9.;c. $13.;d. $14.;a105. Sprinkle;Co. sells its product for $20 per unit. During 2013, it produced 60,000 units;and sold 50,000 units (there was no beginning inventory). Costs per unit are;direct materials $5, direct labor $3, and variable overhead $1. Fixed costs;are: $240,000 manufacturing overhead, and $30,000 selling and administrative;expenses. Cost of goods sold under absorption costing is;a. $450,000.;b. $540,000.;c. $650,000.;d. $520,000.;a106. Sprinkle Co. sells its;product for $20 per unit. During 2013, it produced 60,000 units and sold 50,000;units (there was no beginning inventory). Costs per unit are: direct materials;$5, direct labor $3, and variable overhead $1. Fixed costs are: $240,000;manufacturing overhead, and $30,000 selling and administrative expenses. Ending;inventory under variable costing is;a. $90,000.;b. $130,000.;c. $200,000.;d. $450,000.;a107. Sprinkle;Co. sells its product for $20 per unit. During 2013, it produced 60,000 units;and sold 50,000 units (there was no beginning inventory). Costs per unit are;direct materials $5, direct labor $3, and variable overhead $1. Fixed costs;are: $240,000 manufacturing overhead, and $30,000 selling and administrative;expenses. Under absorption costing, what amount of fixed overhead is;deferred to a future period?;a. $10,000;b. $40,000;c. $50,000;d. $240,000;a108. Net income under absorption costing is gross;profit less;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.;a109. Net income under variable costing is;contribution margin less;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.;a110. The manufacturing cost per unit for;absorption costing is;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.

 

Paper#41741 | Written in 18-Jul-2015

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