ACCT 526 FINAL EXAM | UNIVERSITY OF LOUISIANA
QUESTIONS AND CORRECT DETAILED ANSWERS
WITH RATIONALES || 100% GUARANTEED PASS!!
<LATEST VERSION>
Question 1
A company sells a product for $80 per unit. Variable cost per unit is $50, and total
fixed costs are $180,000. What is the break-even point in units?
A. 3,000
B. 4,500
C. 6,000
D. 9,000
Correct Answer: C
Rationale:
Contribution margin per unit = $80 − $50 = $30.
Break-even units = $180,000 ÷ $30 = 6,000 units.
Question 2
Using the data from Question 1, what is the break-even point in sales dollars?
A. $360,000
B. $420,000
C. $480,000
D. $600,000
Correct Answer: C
Rationale:
Break-even sales = 6,000 units × $80 = $480,000.
,Question 3
If fixed costs increase by $60,000 while selling price and variable costs remain
unchanged, how many additional units must be sold to maintain the same profit
level?
A. 1,000
B. 1,500
C. 2,000
D. 2,500
Correct Answer: C
Rationale:
Additional units required = $60,000 ÷ $30 contribution margin = 2,000 units.
Question 4
A company has a contribution margin ratio of 35%. Fixed costs are $280,000.
What level of sales is required to earn an operating income of $70,000?
A. $800,000
B. $900,000
C. $1,000,000
D. $1,200,000
Correct Answer: C
Rationale:
Required sales = (Fixed costs + Target income) ÷ CM ratio
= ($280,000 + $70,000) ÷ 0.35 = $1,000,000.
,Question 5
Which cost must be ignored when performing cost-volume-profit analysis?
A. Variable manufacturing costs
B. Fixed selling costs
C. Mixed costs
D. Allocated common fixed costs
Correct Answer: D
Rationale:
Allocated common fixed costs do not change with volume and distort CVP
analysis. CVP focuses on traceable fixed and variable costs.
Question 6
A product line shows the following information:
Sales $500,000; Variable costs $320,000; Traceable fixed costs $140,000.
Allocated corporate fixed costs total $60,000. What is the segment margin?
A. $(20,000)
B. $40,000
C. $100,000
D. $180,000
Correct Answer: B
Rationale:
Contribution margin = $500,000 − $320,000 = $180,000
Segment margin = $180,000 − $140,000 = $40,000.
Allocated corporate costs are excluded.
, Question 7
If the product line in Question 6 is eliminated, what is the effect on company
profit?
A. Decrease of $20,000
B. Increase of $40,000
C. Decrease of $40,000
D. Increase of $100,000
Correct Answer: C
Rationale:
The segment margin represents the contribution to overall profit. Eliminating it
causes a $40,000 decrease in company profit.
Question 8
Which cost is most relevant in a keep-or-drop decision?
A. Sunk costs
B. Avoidable fixed costs
C. Allocated overhead
D. Book value of equipment
Correct Answer: B
Rationale:
Only avoidable costs change as a result of the decision and therefore are relevant.
Question 9
A company has excess capacity and receives a special order priced above variable
cost but below normal selling price. Fixed costs will not change. What is the
impact on operating income?
A. Decrease
B. No change
QUESTIONS AND CORRECT DETAILED ANSWERS
WITH RATIONALES || 100% GUARANTEED PASS!!
<LATEST VERSION>
Question 1
A company sells a product for $80 per unit. Variable cost per unit is $50, and total
fixed costs are $180,000. What is the break-even point in units?
A. 3,000
B. 4,500
C. 6,000
D. 9,000
Correct Answer: C
Rationale:
Contribution margin per unit = $80 − $50 = $30.
Break-even units = $180,000 ÷ $30 = 6,000 units.
Question 2
Using the data from Question 1, what is the break-even point in sales dollars?
A. $360,000
B. $420,000
C. $480,000
D. $600,000
Correct Answer: C
Rationale:
Break-even sales = 6,000 units × $80 = $480,000.
,Question 3
If fixed costs increase by $60,000 while selling price and variable costs remain
unchanged, how many additional units must be sold to maintain the same profit
level?
A. 1,000
B. 1,500
C. 2,000
D. 2,500
Correct Answer: C
Rationale:
Additional units required = $60,000 ÷ $30 contribution margin = 2,000 units.
Question 4
A company has a contribution margin ratio of 35%. Fixed costs are $280,000.
What level of sales is required to earn an operating income of $70,000?
A. $800,000
B. $900,000
C. $1,000,000
D. $1,200,000
Correct Answer: C
Rationale:
Required sales = (Fixed costs + Target income) ÷ CM ratio
= ($280,000 + $70,000) ÷ 0.35 = $1,000,000.
,Question 5
Which cost must be ignored when performing cost-volume-profit analysis?
A. Variable manufacturing costs
B. Fixed selling costs
C. Mixed costs
D. Allocated common fixed costs
Correct Answer: D
Rationale:
Allocated common fixed costs do not change with volume and distort CVP
analysis. CVP focuses on traceable fixed and variable costs.
Question 6
A product line shows the following information:
Sales $500,000; Variable costs $320,000; Traceable fixed costs $140,000.
Allocated corporate fixed costs total $60,000. What is the segment margin?
A. $(20,000)
B. $40,000
C. $100,000
D. $180,000
Correct Answer: B
Rationale:
Contribution margin = $500,000 − $320,000 = $180,000
Segment margin = $180,000 − $140,000 = $40,000.
Allocated corporate costs are excluded.
, Question 7
If the product line in Question 6 is eliminated, what is the effect on company
profit?
A. Decrease of $20,000
B. Increase of $40,000
C. Decrease of $40,000
D. Increase of $100,000
Correct Answer: C
Rationale:
The segment margin represents the contribution to overall profit. Eliminating it
causes a $40,000 decrease in company profit.
Question 8
Which cost is most relevant in a keep-or-drop decision?
A. Sunk costs
B. Avoidable fixed costs
C. Allocated overhead
D. Book value of equipment
Correct Answer: B
Rationale:
Only avoidable costs change as a result of the decision and therefore are relevant.
Question 9
A company has excess capacity and receives a special order priced above variable
cost but below normal selling price. Fixed costs will not change. What is the
impact on operating income?
A. Decrease
B. No change
