Question 1

Use the following information to answer the following Questions

-Refer to the figure above. At a given sales volume, the vertical distance between the fixed cost line and the total cost line represents:

Accepted Answer

The vertical distance between the fixed cost line and the total cost line represents the variable cost at a given sales volume. This is because fixed costs remain constant regardless of the volume of goods or services produced, while total costs include both fixed and variable costs. The increase in total costs as production increases is due to variable costs.

Question 2

Use the following information to answer the following Questions

-Refer to the figure above. Assume that the company whose cost structure is depicted in the figure expects to produce a loss for the upcoming period. The loss would be shown on the graph:

Accepted Answer

The loss for a company is represented on a cost-volume-profit (CVP) graph as the area where the total cost line is above the total revenue line, which occurs to the left of the break-even point. This is because, in this region, the company's costs exceed its revenues, leading to a loss.

Question 3

Use the following information to answer the following Questions

-Refer to the figure above. The slope of line A is equal to the:

Accepted Answer

The slope of a line in a cost-volume-profit (CVP) graph represents the change in total revenue for a one-unit change in the quantity sold, which is equivalent to the selling price per unit.

Question 4

Which of the following expressions can be used to calculate break-even sales revenue with the contribution-margin ratio (CMR)?

Accepted Answer

The correct formula to calculate break-even sales revenue using the contribution-margin ratio (CMR) is fixed costs divided by CMR. This is because break-even occurs when total sales revenue equals total costs (fixed and variable), and the CMR is used to determine what portion of sales revenue is actually contributing to covering fixed costs after variable costs have been accounted for.

Question 5

Use the following information to answer the following Questions

-Refer to the figure above. Line A is the:

Accepted Answer

The answer of Use the following information to answer the...

Question 6

A recent income statement of Benton Corporation reported the following data:

-
If these data are based on the sale of 20,000 units, the break-even point would be:

Accepted Answer

The answer of A recent income statement of Benton Corporation...

Question 7

Use the following information to answer the following Questions

-Refer to the figure above. Line C represents the level of:

Accepted Answer

Line C represents the level of fixed cost because it remains constant regardless of the level of production or activity.

Question 8

The contribution-margin ratio is:

Accepted Answer

The contribution-margin ratio is calculated as the unit contribution margin (selling price minus variable cost per unit) divided by the selling price. This ratio indicates the percentage of each sales dollar available to cover fixed costs and to provide profits.

Question 9

A recent income statement of Safety Corporation reported the following data:

If these data are based on the sale of 20,000 units, the break-even point would be:

Accepted Answer

The answer of A recent income statement of Safety Corporation...

Question 10

Use the following information to answer the following Questions

-Refer to the figure above. Line A is the:

Accepted Answer

Line A is the total revenue line because it shows the total amount of revenue that the firm receives at each level of output.

Question 11

A recent income statement of Carson Corporation reported the following data:

If these data are based on the sale of 5,000 units, the break-even sales would be:

Accepted Answer

The answer of A recent income statement of Carson Corporation...

Question 12

Bargain Town 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:

Accepted Answer

The answer of Bargain Town recently reported sales revenues of...

Question 13

Sarafine, 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, Sarafine's break-even sales would be:

Accepted Answer

The break-even point in sales dollars is calculated by dividing the total fixed costs by the contribution margin ratio. The contribution margin per unit is $20 - $8 = $12. The contribution margin ratio is $12 / $20 = 0.6. Therefore, the break-even sales in dollars is $120,000 / 0.6 = $200,000.

Question 14

Hsu, 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, Hsu's break-even point would be:

Accepted Answer

The answer of Hsu, Inc. sells a single product for...

Question 15

Use the following information to answer the following Questions

-Refer to the figure above. The triangular area between the horizontal axis and Line A, to the right of 4,000, represents:

Accepted Answer

The triangular area between the horizontal axis and a line (in this case, Line A) to the right of a certain point (here, 4,000) typically represents profit in graphical economic models. This is because it is the area where revenue exceeds costs, indicating a profit zone.

Question 16

At a volume level of 500,000 units, Sullivan reported the following information:

The company's contribution-margin ratio is closest to:

Accepted Answer

The answer of At a volume level of 500,000 units,...

Question 17

Starlight Co. makes and sells only one product. The unit contribution margin is $6 and the break-even point in unit sales is 24,000. The company's fixed costs are:

Accepted Answer

The break-even point in units is calculated by dividing the total fixed costs by the unit contribution margin. Therefore, fixed costs = 24,000 units * $6 = $144,000.

Question 18

Dane Company 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:

Accepted Answer

The variable cost per unit can be calculated using the formula: Variable Cost per Unit = Selling Price per Unit - (Total Fixed Costs / Break-Even Quantity). Plugging in the given values: Variable Cost per Unit = $40 - ($480,000 / 120,000) = $40 - $4 = $36.

Question 19

Use the following information to answer the following Questions

-Refer to the figure above. The slope of line B is equal to the:

Accepted Answer

The slope of a cost line (like line B) represents the change in total cost for a unit change in activity, which is the definition of variable cost per unit.

Question 20

Use the following information to answer the following Questions

-Refer to the figure above. The vertical distance between the total cost line (Line B) and the total revenue line (Line A) represents:

Accepted Answer

The vertical distance between the total cost line and the total revenue line at any given volume of output represents the profit or loss at that volume. If the total revenue line is above the total cost line, it indicates a profit, and if it's below, it indicates a loss.

Quiz 7: Cost-Volume-Profit Analysis

Use the following information to answer the following Questions -Refer to the figure above. At a given sales volume, the vertical distance between the fixed cost line and the total cost line represents:

Use the following information to answer the following Questions -Refer to the figure above. Assume that the company whose cost structure is depicted in the figure expects to produce a loss for the upcoming period. The loss would be shown on the graph:

Use the following information to answer the following Questions -Refer to the figure above. The slope of line A is equal to the:

Which of the following expressions can be used to calculate break-even sales revenue with the contribution-margin ratio (CMR) ?

Use the following information to answer the following Questions -Refer to the figure above. Line A is the:

A recent income statement of Benton Corporation reported the following data: - If these data are based on the sale of 20,000 units, the break-even point would be:

Use the following information to answer the following Questions -Refer to the figure above. Line C represents the level of:

The contribution-margin ratio is:

A recent income statement of Safety Corporation reported the following data: If these data are based on the sale of 20,000 units, the break-even point would be:

Use the following information to answer the following Questions -Refer to the figure above. Line A is the:

A recent income statement of Carson Corporation reported the following data: If these data are based on the sale of 5,000 units, the break-even sales would be:

Bargain Town 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:

Sarafine, 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, Sarafine's break-even sales would be:

Hsu, 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, Hsu's break-even point would be:

Use the following information to answer the following Questions -Refer to the figure above. The triangular area between the horizontal axis and Line A, to the right of 4,000, represents:

At a volume level of 500,000 units, Sullivan reported the following information: The company's contribution-margin ratio is closest to:

Starlight Co. makes and sells only one product. The unit contribution margin is $6 and the break-even point in unit sales is 24,000. The company's fixed costs are:

Dane Company 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:

Use the following information to answer the following Questions -Refer to the figure above. The slope of line B is equal to the:

Use the following information to answer the following Questions -Refer to the figure above. The vertical distance between the total cost line (Line B) and the total revenue line (Line A) represents: