GCu ACC650 quiz 4

• The difference between budgeted sales revenue and break-even sales revenue is the:

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contribution margin.

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contribution-margin ratio.

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safety margin.

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target net profit.

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operating leverage.

• Amounts spent for charitable contributions are an example of a (n):

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committed fixed cost.

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committed variable cost.

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discretionary fixed cost.

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discretionary variable cost.

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engineered cost.

• cost that has both a fixed and variable component is known as a:

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step-fixed cost.

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step-variable cost.

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semivariable cost.

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curvilinear cost.

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discretionary cost.

• The break-even point is that level of activity where:

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total revenue equals total cost.

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variable cost equals fixed cost.

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total contribution margin equals the sum of variable cost plus fixed cost.

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sales revenue equals total variable cost.

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profit is greater than zero.

• Partner Industries sells a single product for $50 that has a variable cost of $30. Fixed costs amount to $5 per unit when anticipated sales targets are met. If the company sells one unit in excess of its break-even volume, profit will be:

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$15.

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$20.

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$50.

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an amount that cannot be derived based on the information presented.

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an amount other than $15, $20, or $50 and one that can be derived based on the information presented.

• Which of the following would produce the largest increase in the contribution margin per unit?

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A 7% increase in selling price.

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A 15% decrease in selling price.

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A 14% increase in variable cost.

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A 17% decrease in fixed cost.

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A 23% increase in the number of units sold.

• The extent to which an organization uses fixed costs in its cost structure is measured by:

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financial leverage.

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operating leverage.

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fixed cost leverage.

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contribution leverage.

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efficiency leverage.

• Which of the following is (are) example(s) of a mixed cost?

I. A building that is used for both manufacturing and sales activities.

II. An employee's compensation, which consists of a flat salary plus a commission.

III. Depreciation that relates to five different machines.

IV. Maintenance cost that must be split between sales and administrative offices.

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I only.

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II only.

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I and III.

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I, III, and IV.

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I, II, III, and IV.

• Sophie Corporation recently produced and sold 100,000 units. Fixed costs at this level of activity amounted to $50,000; variable costs were $100,000. How much cost would the company anticipate if during the next period it produced and sold 102,000 units?

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$150,000.

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$151,000.

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$152,000.

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$153,000.

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None of the answers is correct.

• The high-low method and least-squares regression are used by accountants to:

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evaluate divisional managers for purposes of raises and promotions.

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choose among alternative courses of action.

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maximize output.

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estimate costs.

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control operations.

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1. Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the company has fixed costs that amount to $400,000. Current sales total 16,000 units. Narchie:

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will break-even by selling 8,000 units.

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will break-even by selling 13,333 units.

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will break-even by selling 20,000 units.

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will break-even by selling 1,000,000 units.

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cannot break-even because it loses money on every unit sold.

• A company that desires to lower its break-even point should strive to:

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decrease selling prices.

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reduce variable costs.

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increase fixed costs.

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sell more units.

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achieve more than one of the answers listed.

• A forecast of a cost at a particular level of activity is known as:

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cost estimation.

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cost prediction.

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cost behavior.

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cost analysis.

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cost approximation.

• Costs that remain the same over a wide range of activity, but jump to a different amount outside that range, are known as:

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step-fixed costs.

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step-variable costs.

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semivariable costs.

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curvilinear costs.

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mixed costs.

• Elise Corporation has the following sales mix for its three products: A, 20%; B, 35%; and C, 45%. Fixed costs total $400,000 and the weighted-average contribution margin is $100. How many units of product A must be sold to break-even?

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800.

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4,000.

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20,000.

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None of the answers is correct.

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Cannot be determined based on the information presented.

• Which of the following occurs if a company experiences an increase in its fixed costs?

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Net income would increase.

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The break-even point would increase.

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The contribution margin would increase.

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The contribution margin would decrease.

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More than one of the answers would occur.

• All other things being equal, a company that sells multiple products should attempt to structure its sales mix so the greatest portion of the mix is composed of those products with the highest:

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selling price.

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variable cost.

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contribution margin.

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fixed cost.

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gross margin.

• The relationship between cost and activity is known as:

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cost estimation.

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cost prediction.

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cost behavior.

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cost analysis.

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cost approximation.

• Santa Fe Production sells a single product to wholesalers. The company's budget for the upcoming year revealed anticipated unit sales of 31,600, a selling price of $20, variable cost per unit of $8, and total fixed costs of $360,000. If Santa Fe’s unit sales are 300 units more than anticipated, its break-even point will:

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increase by $12 per unit sold.

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decrease by $12 per unit sold.

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increase by $8 per unit sold.

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decrease by $8 per unit sold.

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not change.