# Which is the true statement?in a cvp income statement, costs and

28.Which is the true statement?
a.In a CVP income Statement, costs and expenses are classified only by function
b.The CVP income statement is prepared for both internal and external use
c.The CVp income statement shows contribution margin instead of gross profit
d.In a traditional income statement,costs and expenses are classified as either variable or fixed

29.Variable costs are 60% of the unit selling price.
The contribution margin ratio is 40%
The contribution margin per unit is \$500
The fixed costs are \$300,000
Which of the following does not express the break-even point?
a.300,000+.60X=X
b.300,000+.40X=X
c.300,000/\$500=X
d.300,000/.40=X

30.A CVP graph does not include a
a.variable cost line
b.fixed cost line
c.sales line
d.total cost line

31.Boswell company reported the following information for the current year:Sales(50,000 units)\$1,000,000, direct materials and direct labor 500,000, other variable costs 50,000, and fixed costs 270,000.

31-1 What is Boswell’s break-even point in units?
a.24,546
b.30,000
c.38,334
d.42,188

31-2 What is Boswell’s contribution margin ratio?
a.68%
b.45
c.32
d.55

32.Walters Corporation sells radios for %50 per unit.The fixed costs are 420,000 and the variable costs are 60% of the selling price.As a result of new automated equipment,it is anticipated that fixed costs will increase by 100,000 and variable costs will be 50% of the selling price.The new break-even point in units is
a21,000
b20,800
c20,600
d16,800

33.Cunningham,Inc. sells MP3 players for \$60 each.Variable costs are \$40 per unit, and fixed costs total \$90,000.What sales are needed by Cunningham to break even?
a.120,000
b.225,000
c.270,000
d.360,000

34.What is the key factor in determining sales mix if company has limited resources?
a.Contribution margin per unit of limited resource
b.The amount of fixed costs per unit
c.Total contribution margin
d.The cost of limited resources

35. (Oven Hours Required) (Contribution Margin Per Unit)
Muffins 0.2 \$3    \$15/hour
Coffee Cakes 0.3 \$4  \$13.33 / hour
The company has oven capacity of 1,200hours.How much will contribution margin be if it produces only the most profitable product?
a.12,000
b.16,000
c.18,000
d.24,000

36.Curtis Corporation’s contribution margin is \$20 per unit for Product A and \$24 for Product B.Product A requires 2 machine hours and Product B requires 4 machine hours.How much is the contribution margin per unit of limited resource of reach product?
A B
a.\$10 \$6
b.\$10 \$6.66
c.\$8 \$6
d.\$8 \$6.66

37.Reducing reliance on human workers and instead investing heavily in computers and online technology will
a.reduce fixed costs and increase variable costs
b.reduce variable costs and increase fixed costs
c.have no effect on the relative proportion of fixed and variable costs
d.make the company less susceptible to economic swings

38.Cost structure refers to the relative proportion of
b.selling and administrative expenses versus costs of goos sold
c.contribution margin versus sales
d.none of the above

39.Mercantile Corporation has sales of 2,000,000,variable costs of 1,100,000,and fixed costs of 750,000.

39-1)mercantile’s degree of operating leverage is
a1.22
b1.47
c1.20
d6.00

39-2)margin of safety ratio is
a .08
b .17
c .20
d .83

40.Which of the following statements is not true?
a.Operating leverage refers to the extent to which company’s net income reacts to given change in sales
b.Companies that have higher fixed costs relative to variable costs have higher operating leverage.
c.when a company’s sales revenue is increasing,high operating leverage is good b/c it means profits will increase rapidly
d.When a company’s sales revenue is decreasing,high operating leverage is good b/c it means profits will decrease at slower pace than revenues decrease

42.Nielson Corp.sells its product for 8,800per unit. Variable costs per unit are:manufacturing,\$4,800and selling and administrative,\$100. Fixed costs are:24,000 manufacturing overhead,and 32,000selling and administrative. There was no beginning inventory at 1/1/12.Production was 20 units per year in 2012-14.Sales was 20units in 2012,16units in 2013, and 24units in 2014.

42-1)Income under absorption costing for 2014 is
a26,400
b31,200
c32,800
d37,600

42-2)Income under variable costing for 2013 is
a6,400
b11,200
c12,800
d17,600

42-3)Income under variable costing for 2014 is
a26,400
b31,200
c32,800
d37,600

42-4)For the 3years 2012-14
a.absorption costing income exceeds variable costing income by 8,000
b.absorption costing income equals variable costing income
c.variable costing income exceeds absorption costing income by 8,000
d.absorption costing income may be greater than,equal to,or less than variable costing income,depending on the situation

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