ACCT 526 UPDATED ACTUAL EXAM
QUESTIONS AND CORRECT ANSWERS
●● Which of the following is true of the break-even point?
Answer: It is the point where total revenue equals total cost.
●● Marc Company sells a product for $20, incurs a variable cost of $12
per unit, and has total fixed costs of $6,000. What is the per-unit
contribution margin?
Answer: $8
20-12=8
*sales- VC= contribution
●● Whittier Company plans to produce and sell 2,000 units next month.
The following data is given.
Per unit
TotalSelling price $50
Variable cost $24
Total
,Fixed costs $28,000
Calculate the break-even point in units.
Answer: 1077
28000/26= 1077
* fixed expense/ contribution margin per unit= break even point in units
●● Paule Company manufactures computers. The budgeted sales are
$300,000, budgeted variable costs are $153,000, and budgeted fixed
costs are $270,000. Calculate the variable cost ratio.
Answer: 51%
(153000/ 300000)X 100= 51%
* (variable cost/ sales) X 100= variable cost ratio
●● Information for Noble Company is as follows:
Sales 400,000
Variable costs 100,000
Fixed costs 150,000
,Calculate the break-even point in sales dollars.
Answer: 200000
*(contribution margin/ sales) X100= contribution margin ratio
(300000/ 400000)X100= 75%
*Fixed cost/ contribution margin ratio= Break even point in sales dollars
150000/ 75%= 200000
●● Which of the following is the mathematical expression for
calculating number of units to earn target income?
Answer: Number of Units to Earn Target Income = (Total Fixed Cost +
Target Income) ÷ Contribution Margin per Unit
●● Assuming that fixed costs remain the same, the change in operating
income from a change in revenues is calculated by.
Answer: multiplying the contribution margin ratio and the break-even
sales.
●● In a cost-volume-profit graph, the break-even point lies at the point:
Answer: where the total revenue line and the total cost line intersect.
, ●● Which of the following is an assumption of CVP analysis?
Answer: Linear revenue and cost functions remain constant over the
relevant range.
●● Which of the following differentiates direct fixed expenses from
common fixed expenses?
Answer: The direct fixed expenses are those fixed costs that can be
traced to a segment, whereas the common fixed expenses are not
traceable to the segments.
●● Which of the following statements is true of sales mix?
Answer: It is the relative combination of products being sold by a firm.
●● A company manufactures two products. Information about the two
product lines for the current year is as follows:
Product A
Selling price per unit $90
Variable costs per unit $50
Product B
selling price per unit $120
variable costs per unit $60
QUESTIONS AND CORRECT ANSWERS
●● Which of the following is true of the break-even point?
Answer: It is the point where total revenue equals total cost.
●● Marc Company sells a product for $20, incurs a variable cost of $12
per unit, and has total fixed costs of $6,000. What is the per-unit
contribution margin?
Answer: $8
20-12=8
*sales- VC= contribution
●● Whittier Company plans to produce and sell 2,000 units next month.
The following data is given.
Per unit
TotalSelling price $50
Variable cost $24
Total
,Fixed costs $28,000
Calculate the break-even point in units.
Answer: 1077
28000/26= 1077
* fixed expense/ contribution margin per unit= break even point in units
●● Paule Company manufactures computers. The budgeted sales are
$300,000, budgeted variable costs are $153,000, and budgeted fixed
costs are $270,000. Calculate the variable cost ratio.
Answer: 51%
(153000/ 300000)X 100= 51%
* (variable cost/ sales) X 100= variable cost ratio
●● Information for Noble Company is as follows:
Sales 400,000
Variable costs 100,000
Fixed costs 150,000
,Calculate the break-even point in sales dollars.
Answer: 200000
*(contribution margin/ sales) X100= contribution margin ratio
(300000/ 400000)X100= 75%
*Fixed cost/ contribution margin ratio= Break even point in sales dollars
150000/ 75%= 200000
●● Which of the following is the mathematical expression for
calculating number of units to earn target income?
Answer: Number of Units to Earn Target Income = (Total Fixed Cost +
Target Income) ÷ Contribution Margin per Unit
●● Assuming that fixed costs remain the same, the change in operating
income from a change in revenues is calculated by.
Answer: multiplying the contribution margin ratio and the break-even
sales.
●● In a cost-volume-profit graph, the break-even point lies at the point:
Answer: where the total revenue line and the total cost line intersect.
, ●● Which of the following is an assumption of CVP analysis?
Answer: Linear revenue and cost functions remain constant over the
relevant range.
●● Which of the following differentiates direct fixed expenses from
common fixed expenses?
Answer: The direct fixed expenses are those fixed costs that can be
traced to a segment, whereas the common fixed expenses are not
traceable to the segments.
●● Which of the following statements is true of sales mix?
Answer: It is the relative combination of products being sold by a firm.
●● A company manufactures two products. Information about the two
product lines for the current year is as follows:
Product A
Selling price per unit $90
Variable costs per unit $50
Product B
selling price per unit $120
variable costs per unit $60
