COST ACCOUNTING TEST BANK 14TH EDITION(Chapter 1 - 5)

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COST ACCOUNTING TEST BANK 14TH EDITION(Chapter 1 - 5)COST ACCOUNTING TESTBANK FOR ACCOUNTANCY STUDENTS COST ACCOUNTING TEST BANK 14TH EDITION. CHAPTER 1 (Cost-Volume-Profit Analysis) Objective 1.1 ... 1. Cost-volume-profit analysis is used primarily by management: A. As a planning tool B. For control purposes C. To prepare external financial statements D. To attain accurate financial results Answer: A Diff: 1 Terms: cost-volume-profit (CVP) Objective: 1 AACSB: Communication 2. One of the first steps to take when using CVP analysis to help make decisions is: A. Finding out where the total costs line intersects with the total revenues line on a graph. B. Identifying which costs are variable and which costs are fixed. C. Calculation of the degree of operating leverage for the company. D. Estimating how many products will have to be sold to make a decent profit. Answer: B Diff: 1 Terms: cost-volume-profit (CVP) analysis Objective: 1 COST ACCOUNTING TESTBANK FOR ACCOUNTANCY STUDENTS AACSB: Reflective thinking 3. Cost-volume-profit analysis assumes all of the following EXCEPT: A. All costs are variable or fixed B. Units manufactured equal units sold C. Total variable costs remain the same over the relevant range D. Total fixed costs remain the same over the relevant range Answer: C Diff: 2 Terms: cost-volume-profit (CVP) Objective: 1 AACSB: Reflective thinking 4. Which of the following items is NOT an assumption of CVP analysis? A. Total costs can be divided into a fixed component and a component that is variable with respect to the level of output. B. When graphed, total costs curve upward. C. The unit-selling price is known and constant. D. All revenues and costs can be added and compared without taking into account the time value of money. Answer: B Diff: 3 Terms: cost-volume-profit (CVP) Objective: 1 COST ACCOUNTING TESTBANK FOR ACCOUNTANCY STUDENTS AACSB: Reflective thinking 5. Which of the following items is NOT an assumption of CVP analysis? A. Costs may be separated into separate fixed and variable components. B. Total revenues and total costs are linear in relation to output units. C. Unit selling price, unit variable costs, and unit fixed costs are known and remain constant. D. Proportion of different products will remain constant when multiple products are sold. Answer: C Diff: 3 Terms: cost-volume-profit (CVP) Objective: 1 AACSB: Reflective thinking 6. A revenue driver is defined as: A. Any factor that affects costs and revenues B. Any factor that affects revenues C. Only factors that can influence a change in selling price D. Only factors that can influence a change in demand Answer: B Diff: 1 Terms: revenue driver Objective: 1 AACSB: Reflective thinking COST ACCOUNTING TESTBANK FOR ACCOUNTANCY STUDENTS 7. Operating income calculations use: A. Net income B. Income tax expense C. Cost of goods sold and operating costs D. Nonoperating revenues and nonoperating expenses Answer: C Diff: 2 Terms: revenue driver Objective: 1 AACSB: Reflective thinking 8. Which of the following statements about net income (NI) is true? A. NI = operating income plus nonoperating revenue. B. NI = operating income plus operating costs. C. NI = operating income less income taxes. D. NI = operating income less cost of goods sold. Answer: C Diff: 1 Terms: net income Objective: 1 AACSB: Reflective thinking 9. Which of the following is true about the assumptions underlying basic CVP analysis? A. Only selling price is known and constant. B. Only selling price and variable cost per unit are known and constant. COST ACCOUNTING TESTBANK FOR ACCOUNTANCY STUDENTS C. Only selling price, variable cost per unit, and total fixed costs are known and constant. D. Selling price, variable cost per unit, fixed cost per unit, and total fixed costs are known and constant. Answer: C Diff: 2 Terms: cost-volume-profit (CVP) Objective: 1 AACSB: Reflective thinking 10.The contribution income statement: A. Reports gross margin B. Is allowed for external reporting to shareholders C. Categorizes costs as either direct or indirect D. Can be used to predict future profits at different levels of activity Answer: D Diff: 1 Terms: contribution income statement Objective: 1 AACSB: Reflective thinking 11.Contribution margin equals: A. Revenues minus period costs B. Revenues minus product costs C. Revenues minus variable costs D. Revenues minus fixed costs COST ACCOUNTING TESTBANK FOR ACCOUNTANCY STUDENTS Answer: C Diff: 1 Terms: contribution margin Objective: 1 AACSB: Reflective thinking Answer the following questions using the information below: Sherry's Custom Jewelry sells a single product. 700 units were sold resulting in $7,000 of sales revenue, $2,800 of variable costs, and $1,200 of fixed costs. 12.Contribution margin per unit is: A. $4.00 B. $4.29 C. $6.00 D. None of these answers are correct. Answer: C Explanation: C. ($7,000 - $2,800) / 700 units = $6 per unit Diff: 2 Terms: contribution margin per unit Objective: 1 AACSB: Analytical skills 13.If sales increase by $25,000, operating income will increase by: A. $10,000 B. $15,000 C. $22,200 D. None of these answers are correct. COST ACCOUNTING TESTBANK FOR ACCOUNTANCY STUDENTS Answer: B Explanation: B. [($7,000 - $2,800) / $7,000] × $25,000 = $15,000 Diff: 2 Terms: cost-volume-profit (CVP) analysis Objective: 1 AACSB: Analytical skills Answer the following questions using the information below: Holly's Ham, Inc. sells hams during the major holiday seasons. During the current year 11,000 hams were sold resulting in $220,000 of sales revenue, $55,000 of variable costs, and $24,000 of fixed costs. 14.Contribution margin per ham is: A. $5.00 B. $15.00 C. $20.00 D. None of these answers are correct. Answer: B Explanation: B. ($220,000 - $55,000) / 11,000 hams = $15 per ham Diff: 2 Terms: contribution margin per unit Objective: 1 AACSB: Analytical skills 15.If sales increase by $40,000, operating income will increase by: A. $10,000 COST ACCOUNTING TESTBANK FOR ACCOUNTANCY STUDENTS B. $20,000 C. $30,000 D. None of these answers are correct. Answer: C Explanation: C. Price = $220,000/11,000 = $20.00 Sales in hams = $40,000/$20.00 = 2,000 hams Operating Income increase = 2,000 hams x $15.00 per = $30,000 Diff: 2 Terms: cost-volume-profit (CVP) analysis Objective: 1 AACSB: Analytical skills 16.Kenefic Company sells its only product for $9 per unit, variable production costs are $3 per unit, and selling and administrative costs are $1.50 per unit. Fixed costs for 10,000 units are $5,000. The contribution margin is: A. $6 per unit B. $4.50 per unit C. $5.50 per unit D. $4 per unit Answer: B Explanation: B. $9 - $3 - $1.60 = $4.50 Diff: 2 Terms: cost-volume-profit (CVP) analysis Objective: 1 COST ACCOUNTING TESTBANK FOR ACCOUNTANCY STUDENTS AACSB: Analytical skills 17.The contribution income statement highlights: A. Gross margin B. Products costs and period costs C. Different product lines D. Variable and fixed costs Answer: D Diff: 2 Terms: contribution income statement Objective: 1 AACSB: Communication 18.Fixed costs equal $12,000, unit contribution margin equals $20, and the number of units sold equal 1,600. Operating income is: A. $12,000 B. $20,000 C. $32,000 D. $40,000 Answer: B Explanation: B. (1,600 × $20) - $12,000 = $20,000 Diff: 3 Terms: cost-volume-profit (CVP) analysis Objective: 1 AACSB: Analytical skills COST ACCOUNTING TESTBANK FOR ACCOUNTANCY STUDENTS 19.If selling price per unit is $30, variable costs per unit are $20, total fixed costs are $10,000, the tax rate is 30%, and the company sells 5,000 units, net income is: A. $12,000 B. $14,000 C. $28,000 D. $40,000 Answer: C Explanation: C. [(($30 - $20) × 5,000) - $10,000] × (1.0 - .3) = $28,000 Diff: 2 Terms: cost-volume-profit (CVP) analysis Objective: 1 AACSB: Analytical skills Answer the following questions using the information below: Northenscold Company sells several products. Information of average revenue and costs is as follows: Selling price per unit $20.00 Variable costs per unit: Direct material $4.00 Direct manufacturing labor $1.60 Manufacturing overhead $0.40 Selling costs $2.00 Annual fixed costs $96,000 COST ACCOUNTING TESTBANK FOR ACCOUNTANCY STUDENTS 20.The contribution margin per unit is: A. $6 B. $8 C. $12 D. $14 Answer: C Explanation: C. $20 - $4 - $1.60 - $0.40 - $2 = $12 Diff: 2 Terms: contribution margin per unit Objective: 1 AACSB: Analytical skills [Show More]

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