1.

CVP analysis can be used to study the effect of:

A. changes in selling prices on a company's profitability.
B. changes in variable costs on a company's profitability.
C. changes in fixed costs on a company's profitability.
D. changes in product sales mix on a company's profitability.
E. all of the above.
2. The break-even point is that level of activity where:
A. total revenue equals total cost.
B. variable cost equals fixed cost.
C. total contribution margin equals the sum of variable cost plus fixed cost.
D. sales revenue equals total variable cost.
E. profit is greater than zero.
3. The unit contribution margin is calculated as the difference between: A. selling price and fixed
cost per unit.
B. selling price and variable cost per unit.
A. selling price and product cost per unit.
B. fixed cost per unit and variable cost per unit.
C. fixed cost per unit and product cost per unit.
4. Which of the following would produce the largest increase in the contribution margin per unit?
A. A 7% increase in selling price.
B. A 15% decrease in selling price.
C. A 14% increase in variable cost.
D. A 17% decrease in fixed cost.
E. A 23% increase in the number of units sold.
5. Which of the following would take place if a company experienced an increase in fixed costs? A.
Net income would increase.
B. The break-even point would increase.
A. The contribution margin would increase.
B. The contribution margin would decrease.
C. More than one of the above events would occur.
6. Assuming no change in sales volume, an increase in a firm's per-unit contribution margin would:
A. increase net income.
B. decrease net income.
C. have no effect on net income.
D. increase fixed costs.
E. decrease fixed costs.
7. A company that desires to lower its break-even point should strive to: A. decrease selling prices.
B. reduce variable costs.
A. increase fixed costs.
B. sell more units.
C. pursue more than one of the above actions.
8. A company has fixed costs of $900 and a per-unit contribution margin of $3. Which of the
following statements is (are) true?
A. Each unit "contributes" $3 toward covering the fixed costs of $900.
B. The situation described is not possible and there must be an error.
C. Once the break-even point is reached, the company will make money at the rate of $3 per
unit.
D. The firm will definitely lose money in this situation.
E. Statements "A" and "C" are true.
1. Sanderson sells a single product for $50 that has a variable cost of $30. Fixed costs amount to $5 per unit
when anticipated sales targets are met. If the company sells one unit in excess of its break-even volume,
the bottom-line profit will be:
A. $15.
B $20
. .
A. $50.
B. an amount that cannot be derived based on the information presented.
C. an amount other than those in choices "A," "B," and "C" but one that can be derived based on
the information presented.
2. At a volume of 15,000 units, Boston reported sales revenues of $600,000, variable costs of $225,000, and
fixed costs of $120,000. The company's contribution margin per unit is:
A. $17.
B $25
. .
A. $47.
B. $55.
C. an amount other than those above.
3. A recent income statement of Banks Corporation reported the following data:

Sales revenue $8,000,000

Variable costs 5,000,000
Fixed costs 2,200,000
If these data are based on the sale of 20,000 units, the contribution margin per unit would be:
A. $40.
A. $150.
B. $290.
C. $360.
D. an amount other than those above.
4. A recent income statement of Fox Corporation reported the following data:

Sales revenue $3,600,000

Variable costs 1,600,000
Fixed costs 1,000,000
If these data are based on the sale of 10,000 units, the break-even point would be:
A. 2,000 units.
B. 2,778
units. C.
3,600 units.
D. 5,000 units.
E. an amount other than those above.
5. A recent income statement of Yale Corporation reported the following data:
Sales revenue $2,500,000
Variable costs 1,500,000
Fixed costs 800,000
If these data are based on the sale of 5,000 units, the break-even sales would be:
A $2,000,000
. .
A. $2,206,000.
B. $2,500,000.
C. $10,000,000.
D. an amount other than those above.
6. Lawton, Inc., sells a single product for $12. Variable costs are $8 per unit and fixed costs total $360,000
at a volume level of 60,000 units. Assuming that fixed costs do not change, Lawton's break-even point
would be: A. 30,000 units.
B. 45,000 units.
C. 90 ,000 units.
A. negative because the company loses $2 on every unit sold.
B. a positive amount other than those given above.
7. Green, Inc., sells a single product for $20. Variable costs are $8 per unit and fixed costs total $120,000 at
a volume level of 5,000 units. Assuming that fixed costs do not change, Green's break-even sales would
be: A. $160,000.
B $200,000
. .
A. $300,000.
B. $480,000.
C. an amount other than those above.
8. Orion recently reported sales revenues of $800,000, a total contribution margin of $300,000, and fixed
costs of $180,000. If sales volume amounted to 10,000 units, the company's variable cost per unit must
have been:
A. $12. B. $32.
C $50
. .
A. $92.
B. an amount other than those above.
9. Strand has a break-even point of 120,000 units. If the firm's sole product sells for $40 and fixed costs
total $480,000, the variable cost per unit must be:
A. $4.
$36. B.
A. $44.
B. an amount that cannot be derived based on the information presented.
C. an amount other than those in choices "A," "B," and "C" but one that can be derived based on
the information presented.
10. Ribco Co., makes and sells only one product. The unit contribution margin is $6 and the breakeven point
in unit sales is 24,000. The company's fixed costs are: A. $4,000.
A. $14,400.
B. $40,000.
C. $144,000.
E. an amount other than those above.
11. The contribution-margin ratio is:
A. the difference between the selling price and the variable cost per unit.
B. fixed cost per unit divided by variable cost per unit.
C. variable cost per unit divided by the selling price.
D. unit contribution margin divided by the selling price.
E. unit contribution margin divided by fixed cost per unit.
12. At a volume level of 500,000 units, Sullivan reported the following information:

Sales price $60

Variable cost per unit 20
Fixed cost per unit 4
The company's contribution-margin ratio is:
A. 0.33. B. 0.40. C. 0.60. D. 0.67
E. an amount other than those above.
13. Which of the following expressions can be used to calculate the break-even point with the contribution-
margin ratio (CMR)? A. CMR ÷ fixed costs.
B. CMR x fixed costs.
C. Fixed costs ÷ CMR.
A. (Fixed costs + variable costs) x
CMR.
1. The primary purpose of management accounting
is to provide information
a. To internal users
b. To external users
c. To both internal and external users
d. To management and government
2. Which of the following information
characteristics is deemed most important to
management accounting?
a. Verifiability and accuracy
b. Comparability and full disclosure
c. Relevance, flexibility and timeliness
d. Conservatism and substance over form
3. Managerial accounting
a. Is discretionary rather than mandatory
b. Is concerned only with monetary
information
c. Is governed by Generally Accepted
Accounting
Principles (GAAP)
d. Is focused on business as a whole rather
than segments of the business.
4. Managerial accounting is similar to financial
accounting in that
a. Both classify reported information in the
same way.
b. Both concentrate with historical costs.
c. Both deal with economic events.
d. Both are governed by GAAP.
5. Which of the following statements is false?
a. Management accounting is synonymous to
managerial accounting.
b. Management accounting has no externally
imposed standards while financial
accounting has to follow the GAAP.
c. Financial accounting deals with information
that is primarily reported to individuals
outside the organization.
d. Cost accounting refers to accounting for the
annual costs of operating business.
6. Which of the following statements is true?
a. Financial accounting is a subset of cost
accounting.
b. Management accounting is a subset of cost
accounting.
c. Cost accounting is a subset of both
management and financial accounting.
d. Management accounting is a subset of both
cost and financial accounting.
7. The basic management process does not include
a. Planning c. Rationalizing
b. Controlling d.
Subordinating
8. The function of management that compares
planned results against actual results is known as
a. Planning c. Organizing
b. Controlling d. Decision-
making
9. The controller primarily
a. Occupies a line position
b. Occupies a staff position
c. Occupies a non-supervisory rank-and-file
position
d. Has no or very little influence in the
decision-making process
10. Which is a characteristic of a line function rather
than a staff function?
a. It is a function that has an indirect
involvement in operational activities.
b. It is a function that gives support, advice
and service to line managers.
c. It is the authority to command action or give
orders to subordinates.
d. It is exercised laterally or upward.
11. Which of the following statements is true?
a. The controller performs primarily a line
function.
b. The treasurer performs primarily a line
function.
c. The primary functions of a controller are the
basically the same as those of a treasurer.
d. Managers with staff functions are directly
involved in the provision of goods and
services.
12. Controllers are ordinarily not concerned with
a. Preparation of tax returns
b. Reporting to government
c. Protection of assets
d. Investor relations
13. The treasurer is usually not concerned with
 a. Financial reporting
b. Short-term financing
c. Cash custody and banking
d. Credit extension and collection of bad debts
14. A cost that remains unchanged on a per unit
basis in a given time period despite changed in
the level of activity should be considered:
a. A prime cost c. A fixed cost
b. An overhead cost d. A variable cost
15. When cost relationships are linear, total variable
costs will vary in proportion to changes in:
a. Direct labor hours c. Total overhead cost
b. Total materials cost d. Volume of
production
16. Which of the following best describes a fixed
cost?
a. It may change in total when such change is
unrelated to changes in production.
b. It may change in total when such change is
related to changes in production.
c. It is constant per unit of change in
production.
d. It may change in total when such change
depends on production within the relevant
range.
17. The term “relevant range” as used in cost
accounting means the range over which: a. cost
may fluctuate
b. cost relationships are valid
c. production may vary
d. relevant costs are incurred
18. A cost is variable if it varies with the:
a. number of units manufactured
b. number of units sold
c. level of some activity
d. selling price of the product
19. Fixed costs that cannot be reduced within a short
period of time are:
a. Committed c. Avoidable
b. Variable d. Unnecessary
20. A mixed cost:
a. increases in steps as volume increases.
b. contains a fixed component and a variable
component.
c. varies with more than one measure of
volume.
d. cannot be accurately predicted.
21. As volume increases:
a. total fixed costs remain constant and per-
unit fixed costs increase.
b. total fixed costs remain constant and per-
unit fixed costs decrease.
c. total fixed costs remain constant and per
unit fixed costs remain constant.
d. total fixed costs increase and per-unit fixed
costs increase.
22. A committed fixed cost
a. can never be eliminated
b. can be eliminated in the short-term and in
the longterm
c. can be eliminated in the long-term, but not
in the shortterm
d. can be eliminated in the short-term, but not
in the longterm
23. Direct costs are
a. associated with a specific activity
b. always variable
c. usually committed
d. usually discretionary
24. Discretionary costs
a. are usually unavoidable
b. are not necessary for successful operations
c. can be either direct or indirect
d. should be the first ones cut in a cost-
reduction program.
25. Which of the following statement is true?
a. The higher is the production within the
relevant range, the higher is the variable
cost per unit
b. The higher is the production within the
relevant range, the higher is the fixed cost
per unit
c. The lower is the production within the
relevant range, the lower is the total fixed
cost
d. The lower is the production within the
relevant range, the lower is the total variable
cost
26. All else constant, if the selling price falls,
a. Total variables costs will be lower than
expected
b. Contribution margin percentage will be
higher than expected
 c. Total contribution margin will be higher 32. A fixed cost is the same percentage of sales in
than expected three different months. Which of the following
d. Per-unit contribution margin will be lower is true?
than expected a. The company had the same sales in each of
those months
b. The cost is both fixed and variable
27. At the breakeven point, the contribution margin c. The company is operating at its break-even
equals total point
a. Variable costs c. Selling d. The company is achieving its target level of
administrative costs profit
b. Sales revenues d. Fixed costs
33. If the sales mix shifts toward higher contribution
28. Once the breakeven point has been reached, margin products, the break-even point
operating income will increase by the a. Decreases c. Increases
a. Gross margin per unit for each additional
sold b. Remains constant d. Is Zero
b. Contribution margin unit for each additional
unit sold 34. Which cost is not subtracted from selling price
c. Fixed costs per unit for each additional unit to calculate contribution margin per unit?
sold a. Variable manufacturing overhead
d. Variable per unit for each additional unit b. Direct labor
sold c. Variable selling expenses
d. Fixed manufacturing overhead
29. The most likely strategy to reduce the breakeven
point, would be to 35. Within the relevant range, the amount of
a. Increase both the fixed cost and the variable cost per unit
contribution margin a. Differs at each production level
b. Decrease both the fixed costs and the b. Decrease as production increases
contribution margin c. Increase as production increases
c. Decrease the fixed costs and increase the d. Remains constant at each production level
contribution margin
d. Increase the fixed costs and decrease the
36. For a profitable company, the amount by which
contribution margin
sales can decline before losses occur is known as
the
30. One of the major assumptions limiting the a. Sales volume variance c. Variable sales
reliability of breakeven analysis is that ratio
a. Efficiency and productivity will continually b. Hurdle rate d. margin
increase of safety
b. Total variable cost will remain unchanged
over the relevant range
37. The margin of safety is a key concept of CVP
c. Total fixed costs will remain unchanged analysis. The margin of safety is
over the relevant range
a. The contribution margin rate
d. The cost of production factors varies will
b. The difference between budgeted
changes in technology
contribution margin and breakeven
contribution margin
31. Which of the following would cause the break- c. The difference between budgeted sales and
even point to change? breakeven sales
a. Sales increased d. The difference between the breakeven point
b. Total production decreased in sales and cash flow breakeven
c. Total variable costs increase as function of
higher production 38. The percentage change earnings before interest
d. Fixed costs increased owing to additional and taxes associated with the percentage change
equipment in physical plant in sales volume is the degree of
 a. Operating leverage c. Breakeven d. The savings in variable cost is less than the
leverage increase in fixed cost
b. Financial leverage d. Combined
leverage 44. Contribution margin ratio multiplied by the
margin of safety equals
39. A higher degree of operating leverage compared a. Variable cost ratio c. Break even sales ratio
with industry average implies that the firm a. b. Fixed cost ratio d. Net profit ratio
Has higher variable costs
b. Has profit that are more sensitive to changes
in sales volume 45. Over the relevant range, total revenues, and total
c. Is more profitable costs
d. Is less risky a. increase, but at a decreasing rate.
b. decrease.
40. Operating leverage is greatest in companies that c. remain constant.
have: d. can be graphed as straight lines.
a. Low fixed cost and low per unit variable
cost
46. If a company is operating at a loss,
b. High fixed cost and low per unit variable
a. fixed costs are greater than sales.
cost
c. Low fixed cost and high per unit variable b. selling price is lower than variable cost per
cost unit.
d. High fixed cost and high per unit variable c. selling price is less than average total cost
cost per unit.
d. fixed cost per unit is greater than variable
cost per unit.
41. If used in cost-volume-profit analysis, sensitivity
analysis
a. Determines the most profitable mix of 47. As volume increases, average cost per unit
products to be sold a. increases.
b. Allows the decision maker to use b. decreases.
probabilities in the evaluation of decision c. remains constant.
alternatives d. increases in proportion to the change in
c. Is done through various possible scenarios volume.
and computes the impact on profit of
various predictions of future events 48. If all goes according to plan except that total
d. Is limited because in cost-volume-profit fixed costs rise,
analysis, costs are not separated into fixed a. income will be lower than expected.
and variable components. b. total contribution margin will be lower than
expected.
42. The indifference point is the level of volume at c. total sales will be lower than expected.
which a company d. income will be higher than expected.
a. Earns the same profit under different
operating 49. Which of the following decreases per-unit
schemes contribution margin the most for a company
b. Earns no profit currently earning a profit? a. A 10% decrease in
c. Earns its target profit selling price.
d. Earns large amount of profit b. A 10% increase in variable cost per unit.
c. A 10% increase in fixed costs.
43. A point of indifference is reached when d. A 10% increase in fixed cost per unit.
a. The savings in fixed is equal to the decrease
in variable cost 50. If variable cost as a percentage of sales
b. The savings in variable cost is equal to the increases, the
increase in fixed cost a. contribution margin percentage increases.
c. The savings in fixed cost is more than the b. selling price increases.
increase in variable cost c. break-even point in dollars increases.
 d. fixed costs decrease. c. decreases sales required to earn a particular
after-tax profit.
51. Which cost is most likely to be variable for a d. increases sales required to earn a particular
retailer? after-tax profit.
a. Advertising.
b. Cost of goods sold. 58. Contribution margin is
c. Sales salaries. a. the same as gross margin.
d. Rent. b. revenue minus variable costs.
c. revenue minus variable costs and fixed
52. A cost-volume-profit graph reflects relationships costs.
a. expected to hold over the relevant range. d. the ratio of income to sales.
b. of results over the past few years.
c. that the company's managers would like to 59. Classifying a cost as fixed or variable depends
have happen. on how it behaves
d. likely to prevail for the industry. a. per unit, as the volume of activity changes.
b. in total, as the volume of activity changes.
53. If selling price, per-unit variable cost, and total c. both a and b are correct.
fixed costs are constant, d. none of the above.
a. the break-even point in units remains
constant. 60. If a company raises its target dollar
b. profit per unit remains constant for all levels profit, its
of volume within the relevant range. a. break-even point rises.
c. total variable costs equal total fixed costs. b. fixed costs increase.
d. total contribution margin equals total fixed c. required total contribution margin increases.
costs. d. selling price rises.

54. Introducing income taxes into cost-volume-
profit analysis
a. raises the break-even point.
b. lowers the break-even point.
c. increases unit sales needed to earn a
particular target profit.
d. decreases the contribution margin
percentage.
55. If a company is earning a profit, its fixed costs
a. are less than total contribution margin.
b. are equal to total contribution margin.
c. are greater than total variable costs.
d. can be greater than or less than total
contribution margin.
56. Per-unit variable cost
a. remains constant within the relevant range.
b. increases as volume increases within the
relevant range.
c. decreases as volume increases within the
relevant range.
d. decreases if volume increases beyond the
relevant range.
57. An increase in the income tax rate
a. raises the break-even point.
b. lowers the break-even point.
61. If the sales mix shifts toward higher contribution
margin products, the break-even point a.
decreases.
b. increases.
c. remains constant.
d. it is impossible to tell without more
information.
62. The break-even point in units equals total fixed
costs divided by
a. selling price per unit.
b. variable cost per unit.
c. contribution margin per unit.
d. contribution margin percentage.
63. The break-even point in dollars equals total
fixed costs divided by
a. selling price per unit.
b. variable cost as a percentage of selling
price.
c. contribution margin per unit.
d. contribution margin percentage.
64. The margin of safety is
a. the profit currently earned in excess of the
target profit.
 b. the difference between current sales and b. material usage
sales at break-even. c. revenues
c. the ratio of contribution margin to variable d. general and administrative
cost. e. marketing
d. the difference between contribution margin
currently earned and contribution margin at 6 . The amount of raw material purchased in a period
break even.
may be different than the amount of material used in the
65. The indifference point is the level of volume at production because
which a company
a. earns the same profit under different a. finished goods inventory may fluctuate during the
operating schemes. period
b. earns no profit. b. the raw material inventory may increase/decrease
c. earns its target profit. during the period
d. any of the above. c. the number of units sold may be different from the
number of units produced
d. companies often pay for material in the period after it is
1. Just-in-time production process is triggered by?
purchased
a. Economy e. none of the above
b. Supply for the consumer
c. Demand for finished product 7. The purchase budget is *
d. Production capacity
e. Inventory a. not affected by the firm's policy of granting credit to
customers
b. the same thing as production budget
2. Which of the following represents value-added
c. needed only if a firm does not pay for its merchandise in
time in the manufacturing cycle? * the same period as it is purchased
d. affected by a firm’s inventory policy only if the firm
a. Process time
purchases on credit
b. Inspection time
e. none of the above
c. Move time
d. Queue time
8. Which of the following equations can be used to
3. Throughput time consists of: * budget purchases?BI=Beginning
Inventory, EI=Ending Inventory, CGS=Budgeted Cost
a. wait time, process time, inspection time, move time,
queue time of Goods Sold, P=Purchases *
b. process time, inspection time, move time, queue time a. P=CGS+BI-EI
c. inspection time, move time, queue time b. P=CGS+BI
d. move time, queue time c. P=CGS+EI+BI
d. P=CGS+EI-BI
4 . Budgeted production for a period is equal to : e. cannot be obtained from the information given
a. the beginning inventory + sales - ending inventory
b. the ending inventory + sales - ending inventory 9. Manufacturing Cycle Efficiency (MCE) is
c. the ending inventory + the beginning inventory – sales computed as follows: *
d. sales - the beginning inventory + purchases
a. value-added time / delivery cycle time
e. the ending inventory + sales - purchases - the beginning
b. value-added time / throughput time
inventory
c. process time / delivery cycle time
d. throughput time / delivery cycle time
5 . Of the following budgets, which one is least e. value-added time / nonvalue-added time
likely to be determined by the dictates of top
10. If a company policy of maintaining an inventory
management? *
of finished goods at a specified percentage of the
a. sales
next month's budgeted sales, budgeted production c. operating budgets
d. capital budget
for January will exceed budgeted sales for January e. none of the above
when budgeted. *
21. ______ is an example of a line position *
a. January sales exceed budgeted December sales
b. January sales exceed budgeted February sales a. Controller of a merchandising company
c. December sales exceed budgeted January Sales b. Chief financial officer of a merchandising company
d. February sales exceed budgeted December sales c. Store manager for National Bookstore
e. February sales exceed budgeted January sales d. Human resources manager for a community college
e. None of the above
15 . The detailed plan for the acquisition and
22. The following are financial benefits of JIT: A.
replacement of major portions of property, plant,
Reduction in cost of waste and spoilage. B.
and equipment is known as the *
Reductions in paperwork *
a. master budget
b. capital budget a. A Only
c. commitment budget b. B only
d. treasury budget c. Both A and B
e. purchase budget d. None of the above

16. What is the manufacturing cycle efficiency? * 23 . Which ethical standard is most clearly violated
SCM Corporation has provided the following information: Process if a financial manager/ management accountant
Time 35days Storage Time 20days Inspection Time 8days Wait Time
7days knows of a problem that could mislead users but
does nothing about it? *
a. 60%
b. 63.63%
a. Objectivity
c. 50%
b. Integrity
d. 56.45%
c. Competence
e. 55.55%
d. Confidentiality

17. The cash budget ignores all *

24. Cost of conformance includes: *
a. dividend payments
a. prevention cost and external failure cost
b. sales of capital assets
b. prevention cost and appraisal cost
c. non-cash accounting accruals
c. appraisal and internal failure cost
d. sales of common stock
d. internal cost and external cost
e. all of the above

25. Costs of meetings would be classified as:

18. Which of the following items would not be
found in the financing section of the cash budget? * a. external failure cost
b. internal failure cost
a. cash payment for debt retirement c. prevention cost
b. cash payment of interest d. appraisal cost
c. dividend payments
d. payment of accounts payable 26. A management approach that emphasizes the
e. Both C and D importance of managing constraints *
20. The pro forma income statement is not a
component of the * a. Theory of Constraints
b. Decentralization
a. master budget c. Control
b. financial budgets d. Business process
27. The “balanced scorecard” accounting report can 32. Examples of the quality cost of prevention
be made more effective by developing it at a detail include all of the following except: *
level so that employees: * a. tuition fee for external training
b. an annual award for lowest rework rate
a. Can see how it is put together c. depreciation of a training room
b. Appreciate all the effort that goes into its preparation d. additional tolerance controls for machinery
c. Respect management for including them in its
formulation 33. The preparation of an organization’s budget *
d. Can see how their actions contribute to the success of
the firm a. Forces management to look ahead and try to see the
future of the organization
28. Costs incurred in measurement and analysis of b. Requires that the entire management team work
together to make and carry out the yearly plan
data to ascertain conformity of products and c. Makes performance review possible at all levels of
services to the specifications are: * management
d. All of the above
a. external failure cost
b. internal failure cost 34. External factors that cause the achievement of
c. appraisal cost company goals are the *
d. prevention cost
a. Annual budget
29. After critical success factors (CSFs) have been b. Industry price and cost structure
c. Talents possessed by its managers
identified, the next step in developing a d. Board of directors
competitive strategy is to develop relevant and
reliable measure for these CSFs. If these measures 35. Strategic planning is *

are not developed, a firm cannot hope to: * a. Planning activities for promoting products for the future
b. Planning for appropriate assignments of resources
a. Make profit for any extended period c. Setting standards for the use of important but hard to
b. Increase in sales above previous year(s) find materials
c. Develop policies to enhance profitability d. Stating and establishing long term plans
d. Monitor its progress toward achieving its strategic goals 36. Key variables that are identified in strategic
30. The competitive strategy of differentiation planning are *
requires that a product or service must be: * a. Normally controllable if they are internal
b. Seldom if ever controllable
a. Unique in some important way, usually of being of c. Normally controllable if they occur in a domestic market
higher quality d. Normally uncontrollable if they are internal
b. Price competitive
c. Always readily available 37. Authoritative planning usually involves which
d. Produced at a lowest possible cost
level of management? *
31. Costs incurred as a result of poor quality found a. Middle
through appraisal prior to delivery to customers b. Top
c. Middle and top
are: * d. Operational

a. appraisal costs 38. Which of the following statement is true? *

b. prevention costs
c. external failure costs a. All organizations have the same set of budgets
d. internal failure costs b. All organizations are required to budget
c. Budget are quantitative expression of an organization’s
past performance
d. Budget should never be used to evaluate performance 46. A budget that identifies revenues and costs with
e. None of the above
an individual controlling their incurrence is: *
39. The master budget usually includes * a. Responsibility budget
a. An operating budget b. Budgetary control
b. A capital budgets c. Master budget
c. Pro forma financial statements d. Production budget
d. All of the above
47. In preparing quarterly budget estimates, who
40. Typically, as prevention costs increase, other should be responsible for the cash budget? *
cost of quality: *
a. Sales manager
a. decrease b. Production manager
b. increase c. Finance manager
c. are not affected d. General manager
d. change, but the direction cannot be predicted
48. Which of the following components of the
41. The quality cost of prevention is exampled by: * master budget must be prepared before the
others? *
a. cost of servicing warranties
b. an upstream cost
a. Direct labor peso budget
c. a downstream cost
b. Cost of goods sold forecast
d. zero-defects programs
c. Production budget
d. Raw materials purchase budget
42. An example of a recurring short-term plan is *
a. A probable product line change 49. Which of the following factors are not
b. Expansion of plant and facilities
c. A unit sales forecast important to consider in making sales forecast? *
d. A change in marketing strategies
a. Past sales volume
43. The least likely that a production budget b. Distribution costs involved
revision would cause a revision in the * c. Plant capacity
d. None of the above
a. Capital budget
b. Cash budget 50. Management by exception uses which
c. Purchase budget accounting tool to a great extent? *
d. Sales budget
a. CVP Analysis
44. Budgeted production for a period is equal to * b. Financial Statement analysis
c. A worksheet
a. The beginning inventory + sales – the ending inventory d. Variance Analysis
b. The ending inventory + sales + the beginning inventory
c. The ending inventory + beginning inventory – sales
d. Sales – the beginning inventory + purchases
e. None of the above

45. Which of the following budget are

chronologically arranged? *
a. Sales, purchases, cash
b. Sales, production, purchases
c. Production, purchases, selling and administrative
d. A, B and C
e. A and B only
 A 1.50
B 0.33
C. 3.00
D. 2.00

Tom's Taxidermy expects to sell 1,200 units of its

specialty preservation product. The managerial
accountant reported that manager must sell 700
units of specialty product to breakeven. Compute
the margin of safety in units.
A. 700 units
B. 500 units
C. 600 units
D. 1,900 units
The following information for the past year for the
Blaine Corporation has been provided:
During the year, the company produced and sold
60,000 units of product at a selling price of $10.92
per unit. There was no beginning inventory of
product at the beginning of the year.
What is the contribution margin for the year?
What is the contribution margin for the
year?
A.$470,200
B.$278,200
C.$655,200
D. $463,200
Larry Company makes and sells 2 models of
dishwashers, Model ABC and Model XYZ. For
every 2 Model ABC sold, 3 Model XYZ are
sold. The following information is also
provided:
Model ABC Model XYZ
Sales per unit $450 $700
Variable Cost per unit $250 $300
CM per unit $200 $400
What is the weighted average contribution
margin?
A. $300 C. $200
B. $320 D. $400
Light Me Up Lamps has variable expenses of
30% of sales and monthly fixed expenses of
$140,000. The monthly target operating
income is $70,000. What is Light Me Up
Lamps' operating leverage factor at the target
level of operating income?
Jack's Toys sells kites for $20 each. Variable costs
are $5 per kite. Fixed costs are $1,800 per month.
What is the contribution margin per kite?
A. $15.00
B. $5.00
C.$1.33
D. $0.75
Richland Enterprises has budgeted the following
amounts for its next fiscal year:
Total fixed expenses $53,000
Selling price per unit $65
Variable expenses per unit $35
If Richland Enterprises can reduce fixed expenses
by $18,870, how will breakeven sales in units be
affected?
A. Decrease by 189 units
B. Increase by 629 units
C. Decrease by 629 units
D. Increase by 189 units
Pittsboro Corporation produces and sells a
single product. Data for that product are:
Sales price per unit $500
Variable cost per unit $320
Fixed expenses for the month $1,000,000
Currently selling 4,000 units
Management is discussing increasing the price
to $525 to cover an increase in fixed expenses
of $80,000. Management believes they might
lose 2% of sales per month.
What should be the overall effect on the
company's monthly operating income if this
change is implemented?
A. Increase of $3,600
B. Increase of $80,000
C.Decrease of $80,000
D.Decrease of $3,600
If the selling price per unit is $75, the variable
expense per unit is $70, and total fixed
expenses are $62,500 what will the breakeven
sales in units be?
A. 893
B. 12,500
C. 431
D. 833

The selling price of a particular product is

$37.00 per unit, fixed costs total $225,600, and
the breakeven sales in dollars is $940,000,
what will the variable expense per unit be?
A. $117.17
B. $8.88
C. $45.88
D. $28.12

The following information pertains to the Flying

Fig Corporation:
Total Units for information given 3,000
Fixed Cost per Unit $200
Selling Price per Unit $500
Variable Costs per Unit $175
Target Operating Income $300,000
What is the breakeven in units?
A. 2,769 units
B. 923 units
C. 3,429 units
D. 1,846 units