ACCT 5331 - Assignments & Quizzes

The high-low method:

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When answering "what-if" questions, which of the following statements is true?

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Which of the following statements is true when performing "what-if" analysis?

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Which of the following statements is true with respect to the equation Y = a + bX?

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Which of the following statements is true?

A CVP graph and a profit graph both depict the break-even point.

The unit product costs calculated in this learning objective relied on which of the following costing methods?

Absorption costing

Which of the following is not a product cost for external reporting purposes? Direct materials Administrative costs Direct labor Manufacturing overhead

Administrative costs

Which of the following statements is true with respect to sell or process further decisions?

All joint costs should always be ignored.

Which of the following statements is false? Variable costs change, in total, as the level of activity changes. Variable costs are constant on a per unit basis. Average fixed cost per unit increases as the activity level increases. Total fixed costs do not change within the relevant range.

Average fixed cost per unit increases as the activity level increases.

Which of the following statements is true?

CM ratio = Contribution margin ÷ Sales Correct

Which of the following is the first step in the three-step process discussed in the video?

Calculate the sales value if processed further minus the sales value at the split-off point.

Which of the following cost classifications are not mentioned in the chapter overview video? Direct and indirect costs Committed and discretionary costs Product and period costs Relevant and irrelevant costs

Committed and discretionary costs

The equation for calculating the markup percentage excludes which of the following?

Contribution margin ratio

The degree of operating leverage is calculated using which of the following formulas?

Contribution margin ÷ Net operating income

Which of the following statements is true? Opportunity costs are always irrelevant in decision-making. Differential costs are always relevant in decision-making. Sunk costs are always relevant in decision-making. Future costs that do not differ between the alternatives are always relevant in decision-making.

Differential costs are always relevant in decision-making.

Conversion costs equal: Direct labor + selling and administrative costs. Direct materials + manufacturing overhead. Direct labor + direct materials. Direct labor + manufacturing overhead.

Direct labor + manufacturing overhead

Which of the following equations is correct?

Dollar sales to attain the target profit = (Target profit + Fixed expenses) ÷ CM ratio

Which of the following equations is correct?

Dollar sales to break even = Fixed expenses ÷ CM ratio

Which of the following formulas is correct for a multiproduct company?

Dollar sales to break-even = Fixed expenses ÷ Overall CM ratio

Which of the following equations is correct?

EVC = Reference value + Differentiation value

Which of the following statements is true?

Future costs that do not differ between the alternatives are irrelevant to the decision-making process. Sunk costs are an example of a differential cost.

Operating leverage is a measure of:

How sensitive net operating income is to a percentage change in unit sales.

Which of the following statements is false? A mixed cost includes variable and fixed components. For a mixed cost, the average cost per unit decreases as the activity level increases. In the equation Y =a + bX, the a equals the total fixed cost. In the equation Y = a + bX, the b equals the activity level.

In the equation Y = a + bX, the b equals the activity level.

Which of the following is not one of the three basic manufacturing cost categories? Indirect materials Direct materials Direct labor Manufacturing overhead

Indirect materials

Which of the following statements is true with respect to least-squares regression?

It fits a regression line that minimizes the sum of the squared errors.

Which of the following is true with respect to R2?

It is a measure of the goodness of fit of the regression line to the data points.

Which of the following equations is correct?

Margin of safety in dollars = Total sales − Break-even sales

The margin of safety percentage is calculated using which of the following formulas?

Margin of safety in dollars ÷ Sales

Which of the following statements is true?

Opportunity costs are relevant when making decisions and sunk costs are irrelevant when making decisions

Traditional format income statements: Use the term contribution margin rather than gross margin. Report variable selling expenses separate from fixed selling expenses. Organize costs based on product versus period cost classifications.

Organize costs based on product versus period cost classifications.

Which of the following was the constraining resource in the example discussed in the video?

Pounds of direct materials

Which of the following statements is true? Product costs can be reported in raw materials, work in process, or finished goods inventories. Selling costs can only be reported in finished goods inventory. Product costs are excluded from the income statement. Selling costs are excluded from the income statement.

Product costs can be reported in raw materials, work in process, or finished goods inventories.

Which of the following pricing guidelines is correct?

Reference value ≤ Value-based price ≤ EVC

Which of the following costs classifications are used for making decisions? Relevant and irrelevant costs Correct Product and period costs Direct and indirect costs Variable and fixed costs

Relevant and irrelevant costs

Contribution format income statements: Report all variable and fixed administrative expenses below the contribution margin. Report variable selling expenses separate from fixed selling expenses. Organize costs based on product versus period cost classifications. Organize costs based on direct versus indirect cost classifications.

Report variable selling expenses separate from fixed selling expenses.

Which of the following equations is correct?

Target cost = Anticipated selling price − Desired profit

Which of the following statements is false with respect to special order decisions?

The company considering the special order is usually operating at full capacity.

Which of the following statements is true with respect to the example described in the video?

The fixed manufacturing overhead, common, but allocated was treated as an irrelevant cost.

1. Which of the following statements is true?

The foundation for this chapter is the contribution format income statement.

Which of the following was introduced as an additional assumption in the example discussed in the video?

The maximum demand for each product is 1,000 units.

Which of the following statements is true? Direct labor is an example of an indirect cost. Each cost is either direct or indirect regardless of the cost object. The same cost can be direct or indirect depending on the cost object. Common costs should be allocated to cost objects in most cases.

The same cost can be direct or indirect depending on the cost object.

Which of the following statements is true with respect to the example described in the video?

The special tool mentioned in the problem was treated as an incremental fixed cost.

Which of the following statements is false? This learning objective assumes that the total variable cost holds constant. This learning objective assumes that the total fixed cost holds constant. This learning objective assumes that the selling price holds constant. This learning objective assumes that the variable cost per unit holds constant.

This learning objective assumes that the variable cost per unit holds constant.

1. Which of the following is NOT one of the three lines included in a cost-volume-profit (CVP) graph? Total variable expense Total fixed expense Total expense Total sales

Total variable expense

Which of the following equations is correct?

Unit sales to attain the target profit = (Target profit + Fixed expenses) ÷ CM per unit Correct

Which of the following equations is correct?

Unit sales to break even = Fixed expenses ÷ CM per unit Correct

Which of the following cost classifications are used to predict cost behavior? Controllable and uncontrollable costs Value-added and non-value-added costs Variable and fixed costs Product and period costs

Variable and fixed costs

Which of the following statements is true with respect to multiproduct break-even analysis?

We assume a constant sales mix.

Which of the following statements is true?

When the CM ratio is computed using total amounts it equals the CM ratio derived when computed on a per-unit basis.

Which of the following statements is true? Indirect costs can be easily and conveniently traced to cost objects. Direct costs cannot be easily and conveniently traced to cost objects. When the cost object is a product, manufacturing overhead is an indirect cost. Common costs are a type of direct cost.

When the cost object is a product, manufacturing overhead is an indirect cost.

Which of the following guidelines for making volume trade-off decisions is mentioned in the video?

Which of the following guidelines for making volume trade-off decisions is mentioned in the video?

The first step in the three-step process described in the video is to:

calculate the contribution margin that would disappear if the segment is dropped.

The second step in the three-step process described in the video is to:

calculate the total differential manufacturing costs.