Topic 4 Practice Quiz

Simplifying assumptions identified for the use of cost behavior pattern data include:

linearity and relevant range

Using the high-low method, the monthly fixed component of maintenance cost is:

$1,6000

If a firm's sales are $280,000 and its contribution margin ratio is 60%, its variable expenses will amount to:

$112,000

Company X has Sales revenue of $50,000 in June. Using the traditional income statement format, Cost of goods sold is $20,000 and Operating income is $20,000 in June. When preparing a contribution margin format income statement for June it is determined that Fixed expenses amount to $10,000 and Operating income would be:

$20,000

Janson Company prepares an income statement for financial accounting purposes using the traditional income statement format, as well as an income statement for managerial accounting purposes using the contribution margin format. Selected information from both income statement formats are as follows:

$40,000

XYZ Company has a variable cost ratio of 40%, fixed expenses of $200,000, and desires to earn operating income of $100,000. Total sales revenue required to achieve XYZ Company's desired operating income is:

$500,000

Using the high-low method, Company X has determined the variable portion of its cost formula for electricity to be $2 per unit. For the month of July Company X estimates that total electricity cost will amount to $66,000 based on producing 30,000 units. The amount of fixed electricity cost estimated for July is:

$6,000

ABC Company's sales are $100,000, fixed costs are $50,000, and variable costs are $30,000. ABC Company's contribution margin and operating income are __________blank and __________blank respectively.

$70,000;$20,000

Managerial accounting, as opposed to financial accounting, is primarily concerned with:

present and future planning and control

If the selling price per unit were to drop $2, from $100 to $98, the sales volume were to increase 500 units to 4,500 units per month, and advertising expense were to increase by $1,000:

the breakeven point would increase

The formula for expressing the total of a fixed, variable, or mixed cost at any level of activity is:

total cost = fixed cost + (variable rate x volume activity)

Production labor wages are an example of a __________blank cost behavior pattern.

variable

The contribution margin format income statement is organized by:

cost behavior classifications

sales volume were to decrease 15%, from 4,000 units per month to 3,400 units per month, operating income would:

decrease $30,000

ABC Company's sales are $100,000, fixed costs are $50,000, and variable costs are $30,000. ABC Company's contribution margin ratio is:

70%

If a firm's fixed costs were increased by $12,000 and the contribution margin ratio remained at 60 percent, then sales must increase by $ __________blank in order to cover the additional fixed expenses:

?

The breakeven point in terms of total revenues per month is:

?

Managerial accounting supports the management process least significantly by:

helping one

Mixed costs are also referred to as:

Semivariable costs

Mix Masters, Incorporated, currently sells Product A and Product B in the following annual sales mix. For the coming year the company expects that sales of Product A will increase by 50% and sales of Product B will decrease by 33.3%. Current contribution margin ratios will remain unchanged for next year as will total fixed costs of $700,000

before $1,750,000; after $2,000,000