acg2071
When the number of units produced is greater than the number of units sold, variable costing net operating income will be ________.
less than absorption costing net operating income
A measure of how sensitive net operating income is to a given percentage change in sales dollars is known as operating
leverage
Using budgeting assumptions when preparing the master budget, Blank______.
makes it easier to answer "what-if" questions
All costs of production other than direct materials and direct labor are shown on the
manufacturing overhead
All costs of production other than direct materials and direct labor are shown on the Blank______ budget.
manufacturing overhead
An integrated business plan that formally lays out the company's goals is called the Blank______ budget.
master
A number of separate, but interdependent, budgets that formally lay out the company's sales, production, and financial goals are contained in the
master budget
A company with adequate cash balances at the beginning and end of the year, Blank______.
may still have cash deficiency issues during the year
The amount of goods to be acquired from suppliers during the period is shown on the Blank______ budget.
merchandise purchases
once the break even point has been reached
net operating income will increase by the amount of the unit contribution margin for each additional unit sold
The contribution margin as a percentage of sales is referred to as the contribution margin or CM
ratio
U.S. GAAP and IFRS Blank______ publicly traded companies include segmented financial data prepared for external users that use the same methods used in internal segment reports.
require
GAAP and IFRS rules for publicly traded companies Blank______.
require that the same method be used for both internal and external segment reporting create problems in reconciling internal and external reports require segmented financial data be included in annual reports
Because all other parts of the budget depend on it, if the Blank______ budget is inaccurate, the rest of the budget will be inaccurate.
sales
Costs that can be traced directly to a segment Blank______.
should not be allocated to other segments
The contribution margin is equal to sales minus ______.
variable expenses
Company A has a contribution margin ratio of 35%. For each dollar in sales, contribution margin will increase by Blank______.
$0.35
What is Ralph Corporation's margin of safety in dollars?
$1 million Correct
Should be interpreted with care.
Current ratio
Indicates the relative proportions of debt and equity at one point in time on a company's balance sheet
Debt-to-equity ratio
Which of the following is deducted from the total selling and administrative expense budget to determine the cash disbursements for selling and administrative expense budget?
Depreciation expense
Required borrowings on a cash budget is calculated by Blank______.
adding the desired ending cash balance to the amount of the cash deficiency
Master budget schedules ______.
answer several key questions for a company are based on estimates and assumption
Because nonmanufacturing costs are not included as costs of a product, the use of costing ____ can lead to the omission of segment costs.
full
Absorption costing can lead managers to mistakenly believe that fixed manufacturing overhead costs will Blank______ in total as the number of units produced increases.
increase
Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n) _________ of selling a tour package.
indirect cost
The direct labor budget is based directly on the Blank______ budget.
production
The value of the ending inventory is calculated by multiplying the number of units in ending inventory by the ________.
unit product cost
The ending finished goods inventory budget computes the cost of Blank______ units.
unsold
Absorption costing is Blank______.
used by most companies for both internal and external reports required by GAAP and IFR
Segment contribution margin equals segment revenue minus the ______ expenses for the segment.
variable
Absorption costing income statements ignore ________.
variable and fixed cost distinctions
The variable costing income statement separates Blank______.
variable and fixed expenses
SPS Products has two divisions—Catalog Sales and Online Sales. For the last quarter the Catalog Sales segment margin was ($5,000). Online sales were $100,000. Online Sales contribution margin was $60,000, and its segment margin was $40,000. If Catalog Sales are discontinued, it is estimated that online sales will increase by 10%. Discontinuing Catalog Sales should increase company profits by Blank______.
$11,000
t indicates that a company is increasing its financial leverage
Equity multiplier
True or false: Absorption costing and variable costing always result in the same net operating income each year.
False
True or false: Without knowing the future, it is best to have a cost structure with high variable costs.
False
What is usually plotted as a horizontal line on the CVP graph?
Fixed expenses
Financial statement users need to be aware of changes in inventory levels when using
absorption
In order to comply with GAAP and IFRS, the Blank______ costing method must be used for external reporting in the United States.
absorption
Fixed manufacturing overhead costs are included as part of Work in Process inventory under Blank______.
absorption costing only
The cost of unsold units is computed on the Blank______ budget.
ending finished goods inventory
Absorption costing net operating income may not agree with the net operating income calculated for CVP analysis due to the way in which Blank______ is handled in absorption costing.
fixed manufacturing overhead
Micro Manufacturing Company's sales revenue amounted to $4,400,000 during the year. Cost of goods sold as a percentage of sales was 35%. Beginning inventory balance was $360,000 and ending inventory balance was $345,000. The company's inventory turnover was 4.37 for the year. Assuming 365 days a year, what was the company's average sale period for the year?
83.52 days
Computed as 365 days divided by the accounts receivable turnover ratio.
Average collection period
The two general costing approaches used by manufacturing companies to prepare income statements are _____ costing and _____ costing.
Blank 1: absorption Blank 2: variable
After reaching the break-even point, a company's net operating income will increase by the ________ _______ per unit for each additional unit sold.
Blank 1: contribution Blank 2: margin
To calculate the degree of operating leverage, divide __________ ________ by net operating income.
Blank 1: contribution Blank 2: margin
What is the amount of the break-even sales for Grace Food Company?
$1.5 million
Assumptions of Cost volume Analysis
1. selling price is constant. The price of product or service will not change as volume changes 2. costs are linear and can be accurately divided into variable and fixed components the variable costs are constant per unit and the fixed costs are constant in total over the entire relevant range 3. in multiproduct companies the mix of products sold remans constant,
Break-even point is the level of sales at which ______.
total revenue equals total cost
What is represented on the X axis of a cost-volume-profit (CVP) graph?
Unit volume
Companies prepare direct labor budgets to ________.
avoid labor shortages
The annual master budget file includes the Blank______ from last year because it is needed for the schedule of expected cash collections.
balance sheet
To prepare a budgeted balance sheet as of December 31, 20x4, data is needed from the ______ December 31, 20x3.
balance sheet as of
Because it is needed for the schedule of expected cash collections, the annual master budget file includes the
balance sheet from last year
Contribution margin:
becomes profit after fixed expenses are covered.
A budgeted balance sheet is developed using data from the Blank______ of the budget period and data contained in the various schedules.
beginning
For a production budget, the ______ is the beginning inventory for the year.
beginning inventory for the first quarter
Under absorption costing product costs consist of Blank______ costs.
both variable and fixed manufacturing
Assuming sales price remains constant, an increase in the variable cost per unit will ______ the contribution margin per unit.
decrease
A shift in the sales mix from high-margin items to low-margin items can cause total profit to ________.
decrease Correct
Company A produces and sells 10,000 units of its product for $10 per unit. Variable costs are $4 per unit and fixed costs total $30,000. A move to a larger facility would increase rent expense by $8,000, and allow the company to meet its demand for an additional 1,000 units. If the move is made, profits will ______.
decrease by $2,000
Common mistakes made by companies when assigning costs to segments include Blank______.
inappropriately assigning traceable fixed costs arbitrarily allocating common fixed costs omitting costs that should be included
Which of the following costing approaches is best suited for cost-volume-profit analysis?
Variable
The variable expense ratio equals variable expenses divided by Blank______.
sales
The variable expense ratio is the ratio of variable expense to Blank______.
sales
Contribution margin equals ________.
sales minus variable cost
A manager cannot complain that the budget was unrealistic and impossible to meet when a(n)_______ - _______ budget is in place.
self imposed
Recognizing individuals at all levels of the organization as team members whose views and judgments are valued by top management is an advantage of Blank______.
self-imposed budgeting
Budgeted expenses for areas other than manufacturing are shown on the Blank______ budget
selling and administrative
In large organizations, many smaller individual budgets submitted by department heads and other responsible people comprise the Blank______ budget.
selling and administrative
The break-even point calculation is affected by ______.
selling price per unit sales mix costs per unit
Cartier Corporation currently sells its products for $50 per unit. The company's variable costs are $20 per unit. Fixed expenses amount to a total of $5,000 per month. What is the company's contribution margin ratio?
60%
Developing goals and preparing various budgets to achieve those goals is part of Blank______,
planning
Budgets are used for two distinct purposes: Blank______ and Blank______.
planning; control
Decision-making problems that could occur when using absorption costing include inappropriate ______ decisions, and decisions made to ______ products that are, in fact, profitable.
pricing; drop
The first line of the direct labor budget consists of the budgeted units expected to be Blank______ during the period.
produced
In a manufacturing company, the ______ budget is prepared right after the sales budget
production
contribution margin
the amount remaining from sales revenue after variable expenses have been deducted it is the amount available to cover fixed expenses and then provide profits for the period
Discontinuing a profitable segment results in Blank______.
the loss of the segment's revenues a reduction in the overall profits of the company
When calculating the profit impact of discontinuing a segment, consider ______.
the segment's contribution margin the segment's traceable fixed costs
Which of the following statements about the segment margin is not true?
The segment margin is obtained by deducting the common fixed costs that have been allocated to a segment from that segment's contribution margin.
break even point
the level of sales at which profit is zero
Budgetary slack occurs when a manager submits a budget that is Blank______
too easy to attain
Budgetary slack occurs when a manager submits a budget that is Blank______.
too easy to attain
Which of the following is a common mistake made by companies when assigning costs to segments?
They assign the costs of the corporate headquarters buildings to segments because the segments must cover those costs
The most common measure of a company's ability to provide protection to its long-term creditors
Times interest earned ratio
A cost that can be traced directly to a specific segment should be charged directly to that segment and not allocated to other segments.
True
Many of the schedules in a master budget are based on a variety of management estimates and assumptions.
True
The amount of goods for resale to be acquired from suppliers during the period is shown on the
Merchandise puchasing budget
In a manufacturing company, the Blank______ budget shows the number of units that must be manufactured to satisfy sales needs and provide for the desired ending inventory.
production
In a manufacturing company, the budgets for manufacturing costs, including the direct materials budget, the direct labor budget, and the manufacturing overhead budget are all based on the
production
To calculate total sales on the sales budget, multiply budgeted sales in units by Blank______.
sales price per unit
Borrowing money is required whenever ______.
the cash excess is less than the minimum required cash balance there is a cash deficiency
CVP analysis focuses on how profits are affected by ______.
total fixed costs unit variable cost mix of products sold sales volume selling price
Because nonmanufacturing costs are not included as costs of a product, the use of _________ costing can lead to the omission of segment costs.
absorption
CVP analysis allows companies to easily identify the change in profit due to changes in ______.
volume selling price product mix
What are the sales dollars required to attain a target profit of $120,000?
$400,000
Which of the following is not a reason why managers use financial statement analysis?
Estimates stock price appreciation. Correct
For most companies a single, annual cash budget is sufficient.
False
Measures the elapsed time from when inventory is received from suppliers to when cash is received from customers.
Operating cycle
In a manufacturing company, which budget is used as the basis for creating the direct materials budget, the direct labor budget, and the manufacturing overhead budget?
Production
The profit graph is based on the following linear equation
Profit = Unit CM × Q - Fixed Expenses
Which of the following is not a limitation of financial statement analysis?
Providing trends of accounting information Correct
Which of the following is needed to prepare a sales budget?
The budgeted number of units to be sold
Which of the following is not one of the reasons that organizations use budgets?
The budgeting process enables managers to uncover bottlenecks as they occur.
Which of the following statements is correct?
The higher the margin of safety, the lower the risk of incurring a loss.
May provide some assurance that the company can pay its creditors in full and on time.
Working capital
A detailed plan for the future that is usually expressed in formal quantitative terms is ______.
a budget
A company determines that the number of units sold is the cost driver for its variable selling and administrative expense budget. The product of its variable selling and administrative rate and budgeted unit sales will be ________.
total budgeted variable selling and administrative expenses
To prepare a CVP graph, lines must be drawn representing total revenue, Blank______.
total expense, and total fixed expense
On January 1, James Company reported total current assets of $658,000 and total current liabilities of $365,000. During the year, James purchased $2,000 worth of equipment for cash, paid $560 towards salaries, and borrowed $80,000 from its bank to be repaid after 5 years. How much working capital does the company have as of December 31?
$370,440
Assuming the variable costing method is used, what is the total manufacturing costs added to work in process during the month of February?
$52,000
Express Company reported sales of $770,000. Interest expense for the year amounted to $10,800; income tax expense, $33,000; and selling and administrative expense, $14,000. The company reported net income after taxes of $42,000. What was the company's the times interest earned ratio?
7.94
A company's selling price is $90 per unit, variable cost per unit is $28 and total fixed expenses are $320,000. The number of unit sales needed to earn a target profit of $200,800 is Blank______.
8,400
Which of the following is correct?
A common-size income statement expresses each item as a percentage of net sales
Measures how quickly credit sales are converted into cash.
Accounts receivable turnover ratio
Computed by dividing quick assets by current liabilities.
Acid-test ratio
Adams, Inc. has sales of $100,000 with a contribution margin of $60,000 and net income of $20,000. Baron, Inc. has sales of $110,000 with a contribution margin of $44,000 and net income of $22,000. Which of the following statements are correct?
Adams has a higher degree of operating leverage than Baron. Baron's net income grows twice as fast as its sales.
Adams, Inc. has sales of $100,000 with a contribution margin of $60,000 and net income of $20,000. Baron, Inc. has sales of $110,000 with a contribution margin of $44,000 and net income of $22,000. Thus, the degree of operating leverage is ________ for Adams, Inc. and ______ for Baron, Inc.
Blank 1: 3 or three Blank 2: 2 or two
Sweet Dreams sells pillows for $25 each. Variable costs are $15 per pillow. The company is considering improving the quality of materials which will increase variable costs to $19. The company expects the improved materials will increase sales from 1,200 to 1,500 pillows per month. The impact of this change on total contribution margin would be a(n)______ (increase/decrease) of $
Blank 1: decrease Blank 2: 3,000 or 3000
Which of the following is not a benefit of self-imposed budgets?
Lower-level managers are encouraged to create budgetary slack since they are more knowledgeable of day-to-day operations.
A detailed plan for the future that is usually expressed in formal quantitative terms is a(n)
budget
When a manager creates a budget that is too easy to attain, Blank______ occurs.
budgetary slack
A variable costing income statement Blank______.
calculates contribution margin while the absorption costing income statement calculates gross margin focuses on fixed and variable expenses, while an absorption costing income statement focuses on period and product costs
An otherwise profitable segment may appear to be unprofitable if _______fixed costs are allocated to it.
common
A ___________ is a cost that is incurred to support a number of cost objects but cannot be traced to them individually.
common cost
When a segment is eliminated, a Blank______.
common fixed cost will remain unchanged traceable fixed cost will disappear
Budgets ______.
communicate management's plan throughout the organization
Variable costing income statements are based upon a Blank______ format.
contribution
The calculation of contribution margin (CM) ratio is Blank______.
contribution margin ÷ sales
In a budgeted income statement, _________ is subtracted from sales to arrive at gross margin
cost of goods sold
When preparing a segment margin income statement ______.
cost of goods sold consists of only variable manufacturing costs traceable fixed expenses are deducted from contribution margin
When creating an Excel budget and performing what-if analysis, it is generally easiest to Blank______.
create the budget with a budgeting assumption tab
According to the CVP analysis model and assuming all else remains the same, profits would be increased by a(n):
decrease in the unit variable cost.
A company's planned net profit that serves as a benchmark against which subsequent company performance can be measured is shown on the budgeted
income statement
When the units produced are equal to the units sold, the net operating income computed using the variable costing method is ______ the net operating income using the absorption costing method.
is equal to Correct
When the units produced are less than the units sold, the net operating income computed using the variable costing method is ______ the net operating income using the absorption costing method.
is greater than
When the units produced exceed the units sold, the net operating income computed using the variable costing method is ______ the net operating income using the absorption costing method.
is less than
A company with a high ratio of fixed costs:
is more likely to experience greater profits when sales are up than a company with mostly variable costs. is more likely to experience a loss when sales are down than a company with mostly variable costs.
Segment break-even calculations include Blank______ fixed expenses.
only traceable
Arbot Co. manufactures appliances at three manufacturing facilities in the United States. Each location has a plant manager who oversees the manufacturing process for that location. Segmented income statements are prepared for each plant and for each product manufactured in the plant. The salary of each plant manager is a Blank______ for the individual product lines made in the plant.
traceable fixed cost to the plant and a common fixed cost
Only costs that would disappear over time if a segment disappeared should be treated as
traceable fixed costs.
The measure of how sensitive net operating income is to a given percentage change in volume sales is called _______.
operating leverage
Variable costing treats fixed manufacturing overhead as a(n)
period cost
Under absorption costing, fixed overhead is treated like a variable cost because a portion of the total cost is allocated to each unit produced, rather than being expensed as one large sum.
True
The section on the cash budget that summarizes all cash payments that are planned for the budget period is the cash
disembursment
When constructing a CVP graph, the vertical axis represents:
dollars.
he purpose of preparing a direct materials budget is to ________.
estimate the quantity of raw materials to be purchased
The cash budget includes four major sections: receipts, disbursements, the cash excess or deficiency, and
financing
Contribution margin is first used to cover _______ expenses. Once the break-even point has been reached, contribution margin becomes ________
fixed , profit
The difference between absorption costing net operating income and variable costing net operating income can be explained by the way these two methods account for ________.
fixed overhead costs
Variable costing treats Blank______ manufacturing costs as product costs.
only variable
When inventory increases, absorption costing net operating income is higher than variable costing net income due to the fixed manufacturing overhead Blank______.
deferred in the inventory account on the balance shee
Budgets ______.
define goals and objectives that can serve as benchmarks for evaluating subsequent performance coordinate the activities of the entire organization by integrating the plans of its various parts and the budgeting process can uncover potential bottlenecks before they occur encourage managers to think about and plan for the future
The measure of how a percentage change in sales affects profits at any given level of sales is the Blank______.
degree of operating leverage
An example of a traceable fixed cost for General Motors' Corvette Division is the Blank______.
depreciation on equipment used to manufacture Corvettes
In a direct materials budget, the desired ending raw materials inventory for the year is equal to the ________.
desired ending raw materials inventory for the last period
Working hours required to satisfy the production budget are shown on the Blank______ budget.
direct labor
Product costs under absorption costing include Blank______.
direct labor variable manufacturing overhead direct materials fixed manufacturing overhead
The number of working hours required to satisfy the production budget is shown on the
direct labor budget
In a manufacturing company, the Blank______ budget details the raw materials that must be purchased to fulfill the production budget and provide for adequate inventories
direct materials
Marjorie's Mugs sold 300 mugs last year for $20 each. Variable costs were $7 per mug and total fixed costs were $1,700. Marjorie's Mugs' profit was ______.
$2,200
Only costs that would disappear over time if a segment disappeared should be treated as
traceable fxed cost
Using absorption costing for segmented income statements can lead to ______.
under-costing of segments omission of upstream and downstream costs
Once the break-even point has been reached, net operating income will increase by the amount of the _____ for each additional unit sold.
unit contribution margin
Atlas Corporation sells 100 bicycles during a month. The contribution margin per bicycle is $200. The monthly fixed expenses are $8,000. What is the profit from the sale of 100 bicycles?
$12,000
Future Corporation has a single product; the product selling price is $100 and variable costs are $60. The company's fixed expenses are $10,000. What is the company's break-even point in sales dollars?
$25,000
The following is a schedule of the projected unit sales of Western Company, which manufactures casual wear. Each unit sells for $25. The company began the period with a beginning accounts receivable balance of $10,000. Choose the correct answer from the options provided.
$32,500
What is the amount of budgeted sales revenue for the fourth quarter?
$32,500
Perry, Incorporated desires to maintain the ending inventory of raw materials at 40 percent of the next quarter's raw material needs. What is the cost of raw materials to be purchased in the first quarter?
$320,000
Beck Incorporation reported a net income of $450,000 for the year. It declared and paid dividends of $50,000 to its common stockholders. During the year, Beck had an average of 100,000 common shares outstanding. What was the company's earnings per share for the year?
$4.50 per share
Ronald Company reported a net income of $840,000. During the year, 250,000 shares of common stock were outstanding. Total liabilities and stockholders' equity amounted to $18,000,000 and total liabilities amounted to $8,000,000. What will be the book value per share?
$40
For the budget period ending December 31 of the current year, Aaron Corporation estimates its ending balances for cash as $4,000, accounts receivable as $16,000, finished goods inventory as $12,000, and raw materials inventory as $8,000. Invoices relating to raw materials in the amount of $14,000 are expected to be unpaid as of December 31. What is the amount of total current assets that will be reported on the budgeted balance sheet?
$40,000
A company sells 500 sleds per month for $80. Variable costs are $41 per unit and fixed expenses are $3,500 per month. The company thinks that using a new material would increase sales by 70 units per month. If the new material increases variable costs by $4 per unit, the impact on contribution margin would be a Blank______.
$450 increase
Smarton Company is in the process of preparing its budgeted income statement. It has determined its estimated gross margin to be $90,000. The company also expects to incur selling and administrative expenses of $30,000 and interest expense of $12,000. What is Smarton's budgeted net income?
$48,000
If the company eliminates the Western Division and the Eastern Division sales increase by 10% as a result, how much will the company's net operating income decrease?
$83,700
Charles Company reported a net income of $1,000,000 for the year. During the year, the company had an average of 350,000 common shares outstanding. Assume that the company's common stock is selling at $34 per share at the end of the year. What was the company's price-earnings ratio? (Round your first calculation to two decimal points before proceeding.)
11.89 times Correct
Seating Galore sells high-end desk chairs. The variable expense per chair is $85.05 and the chairs sell for $189.00 each. The variable expense ratio for Seating Galore's chairs is
45
Assuming the absorption costing method is used, what is the total manufacturing costs per unit added to work in process during the month of February?
$92,000
Vivian's Violins has sales of $326,000, contribution margin of $184,000 and fixed costs total $85,000. Vivian's Violins net operating income is Blank______.
$99,000
Profit equals:
(P × Q - V × Q) - fixed expenses.
five factors of of cost volume profit analysis helps
1. selling prices 2. sales volume 3. total fixed costs 3. unit variable costs 5. mix of products sold
Cartel Company's financial statements reported total liabilities and stockholders' equity of $1,400,000; total liabilities of $750,000; total current assets of $680,000; and total property, plant, and equipment of $720,000. What was the company's debt-equity ratio?
1.15
Mark Company's balance sheet reported total assets of $754,000, which include: cash, $48,000; accounts receivable, $130,000; land, $200,000; inventory, $220,000; short-term notes receivable, $150,000; and prepaid expenses, $6,000. Total liabilities amounted to $408,000, which include: accounts payable, $230,000; short-term notes payable, $10,000; unearned revenue, $8,000; and long-term liabilities, $160,000. What was the company's acid-test ratio.
1.32
Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and 400,000 bottles, respectively. The management feels that an ending inventory of 10% of the subsequent quarter's sales is appropriate. What are the production needs for the first quarter?
195,000 bottles
At the beginning of the year, Carson Company reported total current assets of $658,000 and total assets of $2,450,000. Carson reported sales of $6,000,000 for the year. At the end of the year, Carson reported total current assets of $790,000 and total assets of $2,800,000. What was the company's the total asset turnover?
2.29
Coastal Company's balance sheet reported total assets of $473,000, which include: cash, $35,000; accounts receivable, $150,000; land, $100,000; inventory, $180,000; and prepaid expenses, $8,000. Total liabilities amounted to $244,000, which include: accounts payable, $130,000; short-term notes payable, $8,000; unearned revenue, $6,000; and long-term liabilities, $100,000. What was the company's the current ratio?
2.59
What is Ralph Corporation's margin of safety in percentage?
20%
Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and 400,000 bottles, respectively. The management feels that an ending inventory of 10% of the subsequent quarter's sales is appropriate. What is the desired ending inventory for the second quarter?
25,000 bottles
James Company reported a net income of $700,000 for the year. During the year, the company declared a dividend of $3.80 per share to the 50,000 common shares outstanding. The dividends were paid by the end of the year. What was the company's dividend payout ratio?
27%
Modern Textiles Company sold $2,500,000 worth of goods during the year, out of which $550,000 were cash sales. Accounts receivable at the beginning of the year amounted to $225,000 and $265,000 at the end of the year. The company's accounts receivable turnover was 7.96. Assuming 365 days a year, what was the company's average collection period for the year?
46 days
Dennis Company reported a net income of $550,000 for the year. During the year, the company had an average of 200,000 common shares outstanding. All the dividends declared were paid by the end of the year, including $3.60 per share on its common stock. At the end of the year, the company's common stock is selling at $62 per share. What was the company's dividend yield ratio?
5.8%
The current sales of Trent, Incorporated, are $400,000, with a contribution margin of $200,000. The company's degree of operating leverage is 2. If the company anticipates a 30% increase in sales, what is the percentage change in net operating income for Trent, Incorporated?
60%
Frames, Inc. picture frames each require $19 of direct materials and $40 of direct labor. Variable manufacturing overhead cost is $9 per frame and variable selling and administrative expense is $13 per frame sold. Total fixed manufacturing overhead cost per month is $15,000 and the company produces 5,000 frames each month. The unit product cost of each frame using variable costing is $
68
A company has a target profit of $204,000. The company's fixed costs are $305,000. The contribution margin per unit is $40. The BREAK-EVEN point in unit sales is Blank______.
7,625
With regards to interpretation, what are the important areas that appear on a CVP graph?
Break-even point, loss area, and profit area
Which of the following budgets shows the company's planned profit and serves as a benchmark against which subsequent company performance can be measured?
Budgeted income statement
Why is CVP analysis more difficult when using absorption costing than when using variable costing?
CVP analysis requires costs to be broken down between variable and fixed which is not done in absorption costing
Which of the following explains why operating budgets generally span a period of one year?
Companies choose a span of one year to correspond to their fiscal years.
Which of the following is a major factor that should be taken into consideration while planning the desired level of inventories?
Costs of carrying inventory.
Taylor Company has current sales of 1,000 units, which generates sales revenue of $190,000, variable costs of $76,000, and fixed expenses of $96,000. The company believes sales will increase by 300 units, if advertising increases by $20,000. What is the change in net operating income after the changes?
Increase of $14,200
When a company produces and sells multiple products ______.
a change in the sales mix will most likely change the break-even point each product most likely has different costs each product most likely has a unique contribution margin
JPL Company has two segments - Retail and Commercial. The Retail segment has a contribution margin ratio of 40% and traceable fixed expenses of $70,000. Commercial has traceable fixed expenses of $50,000 and a contribution margin ratio of 55%. The company also has $30,000 of common fixed expenses. The break-even point in dollar sales for the Retail segment equals Blank______.
$175,000
A company sold 20,000 units of its product for $20 each. Variable cost per unit is $11. Fixed expenses total $150,000. The company's contribution margin is ______.
$180,000
Atlas Corporation sells 100 bicycles during a month at a price of $500 per unit. The variable expenses amount to $300 per bicycle. How much does profit increase if it sells one more bicycle?
$200
Max, Incorporated, has two divisions, South Division and North Division. South Division's sales, contribution margin ratio, and traceable fixed expenses are $500,000, 60%, and $100,000, respectively. What is the segment margin for the South Division?
$200,000
Frank Corporation has a single product. Its selling price is $80 and the variable costs are $30. The company's fixed expenses are $5,000. What is the company's break-even point in unit sales?
100 units
Winter Corporation's current sales are $500,000. The contribution margin is $300,000 and the net operating income is $100,000. What is the company's degree of operating leverage?
3.00
Micro Manufacturing Company's sales revenue amounted to $1,880,000 during the year. Cost of goods sold as a percentage of sales was 30%. Beginning inventory balance was $125,000 and ending inventory balance was $165,000. What was the company's inventory turnover ratio for the year?
3.89
Walton Corporation is currently selling 104 units of its product. The company is deciding the price that it should charge for a bulk order of 40 units. The variable cost per unit is $200. This order will not involve any additional fixed costs and the company's current sales will not be affected. The company targets a profit of $4,000 on the bulk order. What selling price per unit should the company quote for the bulk order?
300
What are the unit sales required to attain a target profit of $120,000?
4,000 units
Cartier Corporation currently sells its products for $50 per unit. The company's variable costs are $20 per unit. Fixed expenses amount to a total of $5,000 per month. What is the company's variable cost ratio?
40%
Blissful Blankets' target profit is $520,000. Each blanket has a contribution margin of $21. Fixed costs are $320,000. The number of blankets that must be sold to achieve the target profit is ______.
40,000
Kelly Incorporated sold $930,000 worth of goods during the year, out of which $820,000 was on credit. Accounts receivable at the beginning of the year amounted to $95,000 and $115,000 at the end of the year. What was the company's accounts receivable turnover for the year?
7.81
The budgeting process begins with the preparation of the ______ budget.
sales
In a manufacturing company, the budgets for manufacturing costs, including the direct materials
production budget
The first step in the budgeting process is preparing the Blank______ budget.
sales
The relative proportions in which a company's products are sold is referred to as
sales mix
This year, Sampson Company reported total assets of $2,350,000, total liabilities of $700,000, and total stockholders' equity of $1,650,000. Last year, it reported total assets of $1,650,000, total liabilities of $650,000, and total stockholders' equity of $1,000,000. For the two years, average total assets were $2,000,000 and average total stockholders' equity was $1,325,000. What was the company's the equity multiplier?
1.51
Bovine Corporation has two divisions: televisions and mobile phones. The mobile phone division has a contribution margin of $600,000. The company's common fixed costs and total traceable fixed costs are $100,000 and $500,000 respectively. Assuming the traceable fixed costs of the television division are $300,000, what is the segment margin of the mobile phone division?
$400,000
Taylor Company has current sales of 1,000 units, at a selling price of $190 per unit, variable costs per unit of $76, and fixed expenses of $96,000. The company believes sales will increase by 300 units, if the company introduces sales commissions as an incentive for the sales staff. The change will decrease the selling price to $175 per unit, increase variable cost per unit to $100, and decrease fixed expenses by $20,000. What is the net operating income after the changes?
$21,500
A product has a selling price of $10 per unit, variable expenses of $6 per unit and total fixed costs of $35,000. If 10,000 units are sold, net operating income will be $
5000
Operating leverage is a measure of how sensitive Blank______ is to a given percentage change in sales dollars.
net operating income
Assigning common fixed costs to segments impacts Blank______.
segment margin only
At the break-even point ______.
total revenue equals total cost net operating income is zero
Costs are separated between variable and fixed expenses when using ______ costing, whereas ______ costing separates costs between product and period.
variable, absorption
A company reported $100,000 in sales and $80,000 in variable costs at the breakeven point of 200 units. If the company sells 201 units, net profit will be Blank______.
$100
Comfy Cozy Chairs makes rockers that require $45 of direct materials and $37 of direct labor. Variable manufacturing overhead is $8 per rocker, and fixed manufacturing overhead totals $58,000. Variable selling and administrative costs are $15 per rocker, and fixed selling and administrative costs total $102,000. During the period, 2,000 rockers were produced and 1,640 were sold. The unit product cost using absorption costing is Blank______.
$119
Given the following information, calculate the unit product cost under absorption costing. Direct materials: $50/unit Direct labor: $75/unit Variable manufacturing overhead: $27/unit Fixed manufacturing overhead: $30,000 total Units: 10,000 produced and 6,000 sol
$155
Daisy's Dolls sold 30,000 dolls this year. Each doll sold for $40 and had a variable cost of $19. Fixed expenses were $250,000. Net operating income for the year is Blank______.
$380,000
Put'er There manufactures baseball gloves that require $22 of direct materials and $18 of direct labor. Variable manufacturing overhead cost is $7 per glove and fixed manufacturing overhead cost is $19,000 in total. Variable selling and administrative costs are $11 per unit sold and fixed selling and administrative costs are $13,200. Last period, 800 gloves were produced, and 585 gloves were sold. The unit product cost using variable costing is ______.
$47.00
Place the following line items in order to construct a contribution format income statement.
1. sales 2. variable expenses 3. contribution margin 4. fixed expenses 5. net operating income
JVL Enterprises has set a target profit of $126,000. The company sells a single product for $50 per unit. Variable costs are $15 per unit and fixed costs total $98,000. How many units does JVL have to sell to BREAK-EVEN?
2,800
Spice sells paprika for $9.00 per bottle. Variable cost is $2.43 per bottle and Spice's annual fixed costs are $825,000. The variable expense ratio for paprika is Blank______.
27%
The term "cost structure" refers to the relative proportion of______ and ______ costs in an organization.
Blank 1: variable Blank 2: fixed
Which of the following is NOT a common mistake made in preparing segmented income statements?
Computing contribution margin instead of gross margin.
Cost structure refers to the relative portion of product and period costs in an organization.
False
The margin of safety is the excess of break-even sales dollars over budgeted (or actual) sales dollars.
False
Which of the following statements are correct regarding income statements prepared under variable and absorption costing?
Reported net income on the statements often differ. Both income statements include product and period costs.
Which of the following items are found above the contribution margin on a contribution margin format income statement?
Sales Variable expenses
An otherwise profitable segment may appear to be unprofitable if _____ fixed costs are allocated to it.
common
A company's current sales are $300,000 and fixed expenses total $85,000. The contribution margin ratio is 30%. The company has decided to expand production which is expected to increase sales by $70,000 and fixed expenses by $15,000. If these results occur, net operating income will Blank______.
increase by $6,000
Terry's Trees has reached its break-even point and has a contribution margin ratio of 70%. For each $1 increase in sales Blank______.
total contribution margin will increase by $0.70 net operating income will increase by $0.70
The break-even point is reached when the contribution margin is equal to:
total fixed expenses.
The term used for the relative proportion in which a company's products are sold is Blank______.
sales mix
