Question 1

Degree of operating leverage (DOL) is defined as total contribution margin in dollars divided by pretax income.

Accepted Answer

A) True 
 B)False

Question 2

Torville Company's contribution margin income statement is presented below. Sales for the current period consisted of 5,000 units. Determine the company's break-even point in dollars.

Accepted Answer

Per unit costs:
Sales price = ...

Question 3

A cost that changes in proportion to changes in volume of activity is a(n) :

Accepted Answer

A)   Differential cost.
B)   Fixed cost.
C)   Incremental cost.
D)   Variable cost.
E)   Product cost.F) A) and D)
G) None of the above

Question 4

When graphing cost-volume-profit data on a CVP chart:

Accepted Answer

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.
E)   Data points always represent expected future points.F) A) and E)
G) B) and D)

Question 5

There are at least three different methods to separate costs into fixed and variable. These methods are the ______________, ______________, and _______________ methods.

Accepted Answer

Scatter Diagram, Hig...

Question 6

The contribution margin per unit expressed as a percentage of the product's selling price is the:

Accepted Answer

A)   Volume variance.
B)   Margin of safety.
C)   Contribution margin ratio.
D)   Break-even point.
E)   Rate of return on sales.F) C) and D)
G) A) and B)

Question 7

The contribution margin per unit is the price at which a unit must be sold in order for the company to break even.

Accepted Answer

A) True 
 B)False

Question 8

What is a scatter diagram? How is a scatter diagram used to estimate cost behavior?

Accepted Answer

A scatter diagram displays past cost dat...

Question 9

In Davis Corporation's most recent fiscal year, the company reported pretax earnings of $215,000. Fixed costs totaled $325,800, the unit selling price of the firm's only product was $60, and the variable costs per unit were 40% of the selling price. Based on this information, the firm's break-even point in units was:

Accepted Answer

A)   13,575 units.
B)   15,023 units.
C)   13,750 units.
D)   9,050 units.
E)   8,750 units.F) C) and E)
G) A) and B)

Question 10

A firm produces and sells a product with a contribution margin of $32 per unit. The firm is presently selling 90,000 units and earning $240,000 in after-tax income. Taxes are $80,000 at a 25% tax rate. If the firm desires to increase its after-tax income to $300,000, how many more units must it sell?

Accepted Answer

Target increase in pretax inco...

Exam 22: Cost-Volume-Profit Analysis

Correct Answer
verified

The contribution margin per unit expressed as a percentage of the product's selling price is the:

Correct Answer
verified

Correct Answer
verified
Target increase in pretax inco...
View Answer

Torville Company's contribution margin income statement is presented below. Sales for the current period consisted of 5,000 units. Determine the company's break-even point in dollars.

Correct Answer
verified
Per unit costs:
Sales price = ...
View Answer

There are at least three different methods to separate costs into fixed and variable. These methods are the , , and ___ methods.

Correct Answer
verified
Scatter Diagram, Hig...
View Answer

The contribution margin per unit is the price at which a unit must be sold in order for the company to break even.

Correct Answer
verified

When graphing cost-volume-profit data on a CVP chart:

Correct Answer
verified

What is a scatter diagram? How is a scatter diagram used to estimate cost behavior?

Correct Answer
verified
A scatter diagram displays past cost dat...
View Answer

A cost that changes in proportion to changes in volume of activity is a(n) :

Correct Answer
verified

Degree of operating leverage (DOL) is defined as total contribution margin in dollars divided by pretax income.

Correct Answer
verified

Exam 22: Cost-Volume-Profit Analysis

Correct AnswerverifiedShow Answer

The contribution margin per unit expressed as a percentage of the product's selling price is the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedTarget increase in pretax inco...View AnswerShow Answer

Torville Company's contribution margin income statement is presented below. Sales for the current period consisted of 5,000 units. Determine the company's break-even point in dollars.

Correct AnswerverifiedPer unit costs:Sales price = ...View AnswerShow Answer

There are at least three different methods to separate costs into fixed and variable. These methods are the ______________, ______________, and _______________ methods.

Correct AnswerverifiedScatter Diagram, Hig...View AnswerShow Answer

The contribution margin per unit is the price at which a unit must be sold in order for the company to break even.

Correct AnswerverifiedShow Answer

When graphing cost-volume-profit data on a CVP chart:

Correct AnswerverifiedShow Answer

What is a scatter diagram? How is a scatter diagram used to estimate cost behavior?

Correct AnswerverifiedA scatter diagram displays past cost dat...View AnswerShow Answer

A cost that changes in proportion to changes in volume of activity is a(n) :

Correct AnswerverifiedShow Answer

Degree of operating leverage (DOL) is defined as total contribution margin in dollars divided by pretax income.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Target increase in pretax inco...
View Answer

Correct Answer
verified
Per unit costs:
Sales price = ...
View Answer

There are at least three different methods to separate costs into fixed and variable. These methods are the , , and ___ methods.

Correct Answer
verified
Scatter Diagram, Hig...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A scatter diagram displays past cost dat...
View Answer

Correct Answer
verified

Correct Answer
verified