ACC 220 - Chapter 18 & 20 questions

A CVP graph does not include a

a. variable cost line.
b. total cost line.
c. sales line.
d. fixed cost line.
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Terms in this set (23)
A CVP graph does not include a

a. variable cost line.
b. total cost line.
c. sales line.
d. fixed cost line.
a. variable cost line.
The break-even point is where

a. total variable costs equal total fixed costs.
b. contribution margin equals total fixed costs.
c. total sales equal total fixed costs
d. total sales equal total variable costs.
b. contribution margin equals total fixed costs.
Which of the following is not a mixed cost?

a. Depreciation
b. Car rental fee
c. Telephone Expense
d. Electricity
a. Depreciation
The relevant range of activity refers to the

a. level of activity where all costs are constant.
b. levels of activity over which the company expects to operate.
c. activity level where all costs are curvilinear.
d. geographical areas where the company plans to operate.
b. levels of activity over which the company expects to operate.
The equation which reflects a CVP income statement is

a. Sales - Variable costs + Fixed costs = Net income.

b. Sales + Fixed costs = Variable costs + Net income.

c. Sales = Cost of goods sold + Operating expenses + Net income.

d. Sales - Variable costs - Fixed costs = Net income.
d. Sales - Variable costs - Fixed costs = Net income.
If a firm increases its activity level,

a. some costs will change, others will remain the same.
b. most costs will rise.
c. costs should remain the same.
d. no costs will remain the same.
a. some costs will change, others will remain the same.
Cost behavior analysis applies to

a. all entities.
b. manufacturers.
c. wholesalers.
d. retailers.
a. all entities.
Required sales in dollars to meet a target net income is computed by dividing

a. variable costs plus target net income by unit contribution margin.
b. total costs plus target net income by contribution margin ratio.
c. fixed costs plus target net income by contribution margin ratio.
d. fixed costs plus target net income by unit contribution margin.
c. fixed costs plus target net income by contribution margin ratio.
Which of the following is not a cost classification?

a. Fixed
b. Mixed
c. Variable
d. Multiple
d. Multiple
Sheffield Corp. has a product with a selling price per unit of $200, the unit variable cost is $180, and the total monthly fixed costs are $300000. How much is Sheffield's contribution margin ratio?

a. 10%
b. 150%
c. 90%
d. 111%
a. 10%
A company desires to sell a sufficient quantity of products to earn a profit of $200000. If the unit sales price is $32, unit variable cost is $12, and total fixed costs are $800000, how many units must be sold to earn net income of $200000? a. 35000 units b. 85000 units c. 50000 units d. 46250 unitsc. 50000 unitsIn the analysis concerning the acceptance or rejection of a special order, which items are relevant? a. Variable costs and avoidable costs b. Fixed costs only c. Variable costs and fixed costs d. Variable costs onlya. Variable costs and avoidable costsA company is considering replacing old equipment with new equipment. Which of the following is a relevant cost for incremental analysis? a. Book value of the old equipment. b. Annual depreciation charge on the old equipment. c. Cost of the new equipment. d. Estimated annual depreciation of the new equipment.c. Cost of the new equipmentWhich of the following is true if a company can accept a special order without affecting its regular sales and is within plant capacity? a. Net income will increase if the special sales price per unit exceeds the unit variable costs. b. Additional fixed costs will probably be incurred. c. Net income will not be affected. d. Net income will decrease.a. Net income will increase if the special sales price per unitWhich of the following is relevant information in a decision whether old equipment presently being used should be replaced by new equipment? a. The salvage value of the old equipment b. The accumulated depreciation of the old equipment c. The book value of the old equipment d. The cost of the old equipmenta. The salvage value of the old equipmentOpportunity cost is usually a. included as part of cost of goods sold. b. a sunk cost. c. a standard cost. d. a potential forgone benefit.d. a potential forgone benefit.When deciding whether or not to replace old equipment with new equipment, the overriding consideration is the a. cost of replacing the old equipment. b. book value of the old equipment. c. difference between future cost savings and the new equipment's costs. d. salvage value of the old equipment.c. difference between future cost savings and the new equipment's costs.A major accounting contribution to the managerial decision-making process in evaluating possible courses of action is to a. determine the amount of money that should be spent on a project. b. assign responsibility for the decision. c. provide relevant revenue and cost data about each course of action. d. decide which actions that management should consider.c. provide relevant revenue and cost data about each course of action.Incremental analysis is most useful a. in choosing between capital budgeting methods. b. in evaluating the master budget. c. in developing relevant information for management decisions. d. as a replacement technique for variance analysis.c. in developing relevant information for management decisions.A revenue that differs between alternatives and makes a difference in decision-making is called a(n) a. incremental revenue. b. sales revenue. c. irrelevant revenue. d. unavoidable revenue.a. incremental revenue.Which of the following is not a true statement? a. Incremental analysis is the same as CVP analysis. b. Incremental analysis focuses on decisions that involve a choice among alternative courses of action. c. Incremental analysis is useful in making decisions. d. Incremental analysis might also be referred to as differential analysis.a. Incremental analysis is the same as CVP analysis.A company has three product lines, one of which reflects the following results: Sales $226000 - Variable expenses 129000 ------------------------------- Contribution margin 97000 - Fixed expenses 130000 ________________________________________ Net loss $(33000) If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company's net income will A. increase by $33000. B. decrease by $97000. C. decrease by $19000. D. increase by $19000.C. decrease by $19000.Oriole, Inc. can produce 100 units of a component part with the following costs: Direct Materials $20000 Direct Labor $4500 Variable Overhead $18000 Fixed Overhead $11000 If Oriole can purchase the units externally for $50000, by what amount will its total costs change? A. An increase of $15500 B. An increase of $7500 C. A decrease of $11000 D. An increase of $50000B. An increase of $7500