 |
| 1 | |
Which of the following best describes the changes in the relationship between total fixed costs and total variable costs when total volume decreases? |
| | A) | Total fixed costs stay the same and total variable costs stay the same. |
| | B) | Total fixed costs decreases and total variable costs stay the same. |
| | C) | Total fixed costs stay the same and total variable costs decrease. |
| | D) | Total fixed costs decrease and total variable costs decrease. |
|
|
|
| 2 | |
Which of the following best describes contribution margin? |
| | A) | Difference between fixed costs and variable costs. |
| | B) | Difference between revenue and fixed costs. |
| | C) | Amount available to cover fixed costs and profit. |
| | D) | Amount available to cover variable costs. |
|
|
|
| 3 | |
The table below provides volume and cost data for four companies. Assuming all companies charge the same sales price per unit, if sales volume increases 20%, which company will have the largest profit?
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078025656/862043/ch2_3.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (14.0K)</a>]]>
|
| | A) | A |
| | B) | B |
| | C) | C |
| | D) | D |
|
|
|
| 4 | |
The table below provides volume and cost data for four companies. If the sales price per unit is $100 and 2,000 units are sold which company exhibits the highest operating leverage?
<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078025656/862043/ch2_3.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (14.0K)</a>]]> |
| | A) | A |
| | B) | B |
| | C) | C |
| | D) | D |
|
|
|
| 5 | |
Georgetown Motors has the following information available for the month of March: <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078025656/862020/ch2_5.JPG','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (15.0K)</a>]]>
Georgetown's contribution margin is: |
| | A) | $280,000. |
| | B) | $440,000. |
| | C) | $800,000. |
| | D) | $960,000. |
|
|
|
| 6 | |
Georgetown Motors has the following information available for the month of March:<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078025656/862020/ch2_5.JPG','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (15.0K)</a>]]> Georgetown's magnitude of operating leverage is: |
| | A) | 1.18. |
| | B) | 1.2. |
| | C) | 1.375. |
| | D) | 140 %. |
|
|
|
| 7 | |
Georgetown Motors has the following information available for the month of March:<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078025656/862020/ch2_5.JPG','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (15.0K)</a>]]> Georgetown's management is expecting sales to increase 30% next month. What percentage will net income increase? |
| | A) | 30% |
| | B) | 41.25% |
| | C) | 137.5% |
| | D) | 140 % |
|
|
|
| 8 | |
Georgetown Motors has the following information available for the month of March:<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078025656/862020/ch2_5.JPG','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (15.0K)</a>]]> Georgetown's management estimates that they could increase sales 50% if they increased their fixed advertising expenses to $100,000. This action most likely would: |
| | A) | have no effect on the magnitude of operating leverage. |
| | B) | decrease their magnitude of operating leverage. |
| | C) | increase their magnitude of operating leverage. |
| | D) | decrease their profit (net income). |
|
|
|
| 9 | |
Body Boards Inc.(BBI) normally produces and sells between 500 and 600 surfboards a year. BBI is considering purchasing equipment that costs $70,000. The new equipment will double its capacity to 1,000 boards a year. |
| | A) | This action would have no effect on BBI's relevant range. |
| | B) | BBI's relevant range will be lower than before the equipment purchase. |
| | C) | BBI's relevant range will be higher after the equipment purchase. |
| | D) | This action would definitely decrease their profit (net income). |
|
|
|
| 10 | |
Body Boards Inc.(BBI) produces and sells 500 surfboards a year. It has a variable cost per unit of $175. Its total fixed costs are $25,000 per year. What is the total cost of producing 500 boards? |
| | A) | $24,825 |
| | B) | $25,175 |
| | C) | $87,500 |
| | D) | $112,500 |
|
|
|
| 11 | |
Body Boards Inc.(BBI) produces and sells 500 surfboards a year. BBI has a variable cost per unit of $175 and produces 500 surfboards per year. Its total fixed costs are $25,000 per year. What is the average cost of producing one surfboard? |
| | A) | $225.00 |
| | B) | $248.25 |
| | C) | $251.75 |
| | D) | $875.00 |
|
|
|
| 12 | |
Image <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078025656/862043/ch2_12.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (12.0K)</a>]]>
The graph depicted above: |
| | A) | Indicates a mixed cost behavior pattern. |
| | B) | Indicates a fixed cost behavior pattern. |
| | C) | Indicates a variable cost behavior pattern. |
| | D) | Indicates a cost-volume-profit behavior pattern. |
|
|
|
| 13 | |
Regression Analysis: |
| | A) | Is a tool used to predict volume analysis. |
| | B) | Produces an estimate of fixed costs. |
| | C) | Should not be used with current data. |
| | D) | Requires extensive record-keeping. |
|
|
|
| 14 | |
Bob's Bistro operates a small chain of upscale restaurants. Bob employs managers who are paid $70,000 per year. |
| | A) | Relative to the number of restaurants, this is a fixed cost. |
| | B) | Relative to the number of managers, this is a fixed cost. |
| | C) | Relative to the number of customers, this is a fixed cost. |
| | D) | Relative to the number of customers, this is a variable cost. |
|
|
|
| 15 | |
Bob's Bistro operates a small chain of upscale restaurants. Bob pays average paper costs (napkins, cups, etc.) of $.50 per customer. |
| | A) | Relative to the number of restaurants, this is a fixed cost. |
| | B) | Relative to the number of customers, this is a fixed cost. |
| | C) | Relative to the number of wait staff, this is a fixed cost. |
| | D) | Relative to the number of customers, this is a variable cost. |
|
|
.