Chp. 19 quiz

Concord's CVP income statement included sales of 3500 units, a unit selling price of $300, unit variable cost of $180, fixed expenses of $110000. Net income is a). $310000 a). $1050000 a). $520000 d). $420000

a). $310000 ($300 - $180) x 3500 = $420000; $420000 - $110000 = $310000 (Unit selling price - Unit variable cost) x unit sold = Contribution Margin; Contribution Margin - Fixed Expenses = Net Income

Bramble Corp. Sells 5720 units of Product A and 7280 units of Product B annually. The sales mix Product A is a). 44% b). 56% c). 79% d). Cannot determine from information given

a). 44% 5720/ (5720 + 7280) = 0.44 Product A Units Sold/ (Product A Units Sold + Product B Units Sold)

Which cost is NOT charged to product under variable costing? a). Fixed manufacturing overhead b). Direct labor c). Direct materials d). Variable manufacturing overhead

a). Fixed manufacturing overhead

The contributuin margin ratio is a). contribution margin divided by sales dollars b). sales dollars divided by contribution margin c). sales dollars divided by variable expenses d). sales dollars divided by fixed expenses

a). contribution margin divided by sales dollars

Companies recognize fixed manufacturing overhead costs as period costs (expeneses) when incurred when using a). variable costing b). absorption costing c). full costing d). product costing

a). variable costing

Net income under absorption costing is higher than net income under variable costing a). when units produced exceed units sold b). when units produced are less than units sold c). regardless of the relationship between units produced and units sold d). when units produced equal units sold

a). when units produced exceed units sold

Concord Corporation has two divisions; Sporting Goods and Sports Gear. The sales mix is 80% for Sporting Goods and 20% for Sports Gear, as determined by total sales dollars. Concord incurs $6660000 in fixed costs. The contributuin margin ratio for Sporting Goods is 25%, while for Sports Gear it is 60%. The weighted-average contribution margin ratio is a). 53.00% b). 32.00% c). 70.00% d). 95.00%

b). 32.00% (0.80 x 0.25) + (0.20 x 0.60) = 32% (Sales Mix Goods x Contribution margin ratio Goods) + (Sales Mix Gear x Contribution margin ratio Gear) = Weighted-Average Contribution Margin Ratio

What is the key factor in determining sales mix if a company has limited resources? a). The cost of limited resources b). Contributin margin per unit of limited resource c). Each product's unit contribution margin d). The amount of fixed costs per unit

b). Contributin margin per unit of limited resource

The CVP income statement classifies costs a). by function and computes a gross profit b). as variable or fixed and computes contribution margin c). by function and computes a contribution margin d). as variable or fixed and computes gross profit

b). as variable or fixed and computes contribution margin

Net income under variable costing is contribution margin less a). variable selling and administative expenses and fixed selling and adminstrative expense b). fixed manfucturing overhead and fixed selling adminstrative expenses c). fixed manufacturing overhead and variable mandufacturing overhead d). cost of goods sold

b). fixed manfucturing overhead and fixed selling adminstrative expenses

The margin of safety ratio a). is computed as actual sales divided by break-even sales b). is used to determine the break-even point c). indicates what percent decline in sales could be sustained before the company would operate at a loss d). measures the ratio of fixed costs to variable costs

c). indicates what percent decline in sales could be sustained before the company would operate at a loss

Contribution margin is the amount of revenue remaining after deducting a). fixed costs b). cost of goods sold c). variable costs d). contra-revenue

c). variable costs

The degree of operating leverage a). does not provide a relaible measure of a company's earning volatility b). measures how much of each sales dollar is available to cover fixed expenses c). cannot be used to compare companies d). is computed by dividing total contribution margin by net income

d). is computed by dividing total contribution margin by net income

Sales mix is a). a measure of leverage used by the company b). the mix of variable and fixed expenses in relation to sales c). the trend of sales over recent periods d). the relative percentage in which a company sells its multiple products

d). the relative percentage in which a company sells its multiple products

Only direct materials, direct labor, and variable manufacturing overhead costs are considered product costs when using a). full costing b). absorption costing c). product costing d). variable costing

d). variable costing