ACG 2

Connor Company's fixed costs are $400,000, the unit selling price is $25, and the unit variable costs are $15. What is the break-even sales (units) if the variable costs are increased by $2?

50,000 units

The difference between the current sales revenue and the sales at the break-even point is called the

margin of safety

For purposes of analysis, mixed costs are

separated into their variable and fixed cost components

The contribution margin ratio is

the same as the profit-volume ratio

Cost behavior refers to the manner in which

a cost changes as the related activity changes

If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break-even sales (units)?

4,808 units

When Isaiah Company has fixed costs of $120,000 and the contribution margin is $30, the break-even point is

4000 units

Piper Technology's fixed costs are $1,500,000, the unit selling price is $250, and the unit variable costs are $130, what is the amount of sales required to realize an operating income of $200,000?

14,167 units

If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars)?

$2,125,000

Carter Co. sells two products, Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are: ​ Product Unit SellingPrice Unit VariableCost Unit ContributionMargin Arks $120 $80 $40 Bins 80 60 20 ​ ​ What was Carter Co.'s sales mix last year?

20% Arks, 80% Bins

Reynold's Grocery has fixed costs of $350,000, the unit selling price is $29, and the unit variable costs are $20. What is the break-even sales (units) if the variable costs are decreased by $4?

26,923 units

If fixed costs are $300,000, the unit selling price is $31, and the unit variable costs are $22, what is the break-even sales (units) if fixed costs are reduced by $30,000?

30,000 units

Carter Co. sells two products, Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are: ​ Product Unit SellingPrice Unit VariableCost Unit ContributionMargin Arks $120 $80 $40 Bins 80 60 20 ​ ​ Assuming that last year's fixed costs totaled $960,000, what was Carter Co.'s break-even point in units?

40,000 units

A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (5,000 units): Direct materials $70,000 Direct labor 20,000 Variable factory overhead 10,000 Fixed factory overhead 2,000 $102,000 Operating expenses: Variable operating expenses $17,000 Fixed operating expenses 1,000 18,000 ​ If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, what is the amount of the manufacturing margin that would be reported on the absorption costing income statement?

not reported

Most operating decisions of management focus on a narrow range of activity called the

relevant range of production

Which of the following describes the behavior of a variable cost per unit?

remains constant with changes in the activity level

Which of the following costs is a mixed cost?

rental costs of $10,000 per month plus $0.30 per machine hour of use

Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?

salary of a factory supervisor

Under variable costing, which of the following costs would not be included in finished goods inventory?

salary of factory supervisor

The graph of a variable cost when plotted against its related activity base appears as a

straight line

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

straight-line depreciation on factory equipment

Accountants prefer the variable costing method over absorption costing method for evaluating the performance of a company because

by using the absorption costing method, income could appear to be higher by producing more inventory.

If fixed costs increased and variable costs per unit decreased, the break-even point would

cannot be determined from the data provided

The contribution margin ratio is computed as: a.contribution margin divided by variable cost of salesb.sales divided by contribution marginc.contribution margin divided by cost of salesd.contribution margin divided by sales

contribution margin divided by sale

What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?

contribution margin ratio

Costs that can be influenced by management at a specific level of management are called:

controllable cost.

Management will use both variable and absorption costing in all of the following activities except:

controlling inventory levels

Which of the following describes the behavior of the fixed cost per unit?

decreases with increasing production

Which of the following would be included in the cost of a product manufactured according to absorption costing?

depreciation expense on factory building

Another name for variable costing is:

direct costing

Which of the following would be included in the cost of a product manufactured according to variable costing?

direct materials

Which of the following is an example of a cost that varies in total as the number of units produced changes?

direct materials cost

The amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured:

exceeds units sold

Costs that remain constant in total dollar amount as the level of activity changes are called

fixed costs

The three most common cost behavior classifications are

fixed costs, variable costs, and mixed costs

Under variable costing, which of the following costs would not be included in finished goods inventory?

fixed factory overhead cost

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents

the break-even point

The level of inventory of a manufactured product has increased by 4,000 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $22.00 $11.00 Unit operating expenses of the period 7.00 5.00 ​ What would be the effect on income from operations if absorption costing is used rather than variable costing?

$44,000 increase

The systematic examination of the relationships among selling prices, volume of sales and production, costs, and profits is termed

cost-volume-profit analysis

Under absorption costing, which of the following costs would not be included in finished goods inventory?

the salaries for salespeople

It would be acceptable to have the selling price of a product just above the variable costs and expenses of making and selling it in:

the short run

Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service?

total of miles driven

A cost that has characteristics of both a variable cost and a fixed cost is called a

mixed cost

Which of the following activity bases would be the most appropriate for food costs of a hospital?

number of patients who stay in the hospital

Under variable costing, which of the following costs would be included in finished goods inventory?

only variable factory overhead cost

A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (20,000 units): Direct materials $180,000 Direct labor 240,000 Variable factory overhead 280,000 Fixed factory overhead 100,000 $800,000 Operating expenses: Variable operating expenses $130,000 Fixed operating expenses 50,000 180,000 ​ If 1,500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

$52,500

The amount of income under absorption costing will equal the amount of income under variable costing when units manufactured:

units equal sold

Costs that vary in total in direct proportion to changes in an activity level are called

variable costs

In cost-volume-profit analysis, all costs are classified into the following two categories:

variable costs and fixed costs

On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is the:

variable selling and administrative expenses

O'Boyle Co.'s fixed costs are $256,000, the unit selling price is $36, and the unit variable costs are $20, what is the break-even sales (units)?

16,000 units

Which of the graphs in Figure 21-1 illustrates the behavior of a total fixed cost?

Graph 1? IDK

With the aid of computer software, managers can vary assumptions regarding selling prices, costs, and volume, and can immediately see the effects of each change on the break-even point and profit. This is called

"what if" or sensitivity analysis

If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?

$1,875,000

As production increases, the fixed cost per unit

decreases

A business operated at 100% of capacity during its first month, with the following results: Sales (90 units) $90,000 Production costs (100 units): Direct materials $40,000 Direct labor 20,000 Variable factory overhead 2,000 Fixed factory overhead 7,000 69,000 Operating expenses: Variable operating expenses $ 8,000 Fixed operating expenses 1,000 9,000 ​ What is the amount of the income from operations that would be reported on the variable costing income statement?

$18,200

Which of the graphs in Figure 21-1 illustrates the nature of a mixed cost?

Graph 2

Which of the graphs in Figure 21-1 illustrates the behavior of a total variable cost?

Graph 3

S&P Enterprises sold 10,000 units of inventory during a given period. The level of inventory of the manufactured product remained unchanged. The manufacturing costs were as follows: Variable Fixed Unit manufacturing costs of the period $11.00 $7.00 Unit operating expenses of the period 3.00 2.50 ​ Which of the following statements is true?

Net income will be the same under both variable and absorption costing.

Which of the following statements is correct using the direct costing concept?

Only variable manufacturing costs are included in the calculation of cost of goods manufactured while fixed costs are considered period costs.

Which of the following is not an example of a cost that varies in total as the number of units produced changes?

Supervisory salary

Contribution margin reporting can be beneficial for analyzing which of the following?

all of the above

The amount of income under absorption costing will be less than the amount of income under variable costing when units manufactured:

are less than units sold

Contribution margin is

the excess of sales revenue over variable cost

A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (10,000 units): Direct materials $170,000 Direct labor 360,000 Variable factory overhead 190,000 Fixed factory overhead 50,000 $770,000 Operating expenses: Variable operating expenses $ 60,000 Fixed operating expenses 18,000 78,000 ​ If 500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

$36,000

A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (20,000 units): Direct materials $180,000 Direct labor 240,000 Variable factory overhead 280,000 Fixed factory overhead 100,000 $800,000 Operating expenses: Variable operating expenses $130,000 Fixed operating expenses 50,000 180,000 ​ If 1,600 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

$56,000

Carter Co. sells two products, Arks and Bins. Last year, Carter sold 14,000 units of Arks and 56,000 units of Bins. Related data are: ​ Product Unit SellingPrice Unit VariableCost Unit ContributionMargin Arks $120 $80 $40 Bins 80 60 20 ​ ​ What was Carter Co.'s variable cost of E?

$64

If fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, what is the amount of sales required to realize an operating income of $200,000?

10,769 units

If fixed costs are $450,000, the unit selling price is $75, and the unit variable costs are $50, what are the old and new break-even sales (units) if the unit selling price increases by $10?

18,000 units and 12,857 units

If fixed costs are $400,000 and the unit contribution margin is $20, what amount of units must be sold in order to have a zero profit?

20,000 units

Jacob Inc. has fixed costs of $240,000, the unit selling price is $32, and the unit variable costs are $20. What are the old and new break-even sales (units) if the unit selling price increases by $4?

20,000 units and 15,000 units

If fixed costs are $500,000, the unit selling price is $55, and the unit variable costs are $30, what is the break-even sales (units) if fixed costs are increased by $80,000?

23,200 units

Payton Industries has fixed costs of $490,000, the unit selling price is $35, and the unit variable costs are $20. What is the break-even sales (units) if fixed costs are reduced by $40,000?

30,000 units

Understanding how costs behave is useful to management for all the following reasons except

predicting customer demand

The level of inventory of a manufactured product has increased by 5,000 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $24.00 $10.00 Unit operating expenses of the period 8.00 3.00 ​ What would be the effect on income from operations if variable costing is used rather than absorption costing?

$50,000 decrease