EXAM 2 ACC 213 UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

EXAM 2 ACC 213 UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS

Question:
1. If the contribution margin is not sufficient to cover fixed expenses: Multiple Choice
A) total profit equals total expenses.
B) contribution margin is negative.
C) a loss occurs.
D) variable expenses equal contribution margin.
Answer:
C.

Question:
2. Which of the following is true regarding the contribution margin ratio of a company that produces only a
single product? Multiple Choice
A) As fixed expenses decrease, the contribution margin ratio increases.
B) The contribution margin ratio multiplied by the selling price per unit equals the contribution margin per
unit.
C) The contribution margin ratio will decline as unit sales decline.
D) The contribution margin ratio equals the selling price per unit less the variable expense ratio.
Answer:
B)

Question:
3. A $2.00 increase in a product's variable expense per unit accompanied by a $2.00 increase in its selling
price per unit will: Multiple Choice
A) decrease the degree of operating leverage.
B) decrease the contribution margin.
C) have no effect on the break-even volume.
D) have no effect on the contribution margin ratio.
Answer:
C)

Question:
4. If sales volume increases and all other factors remain constant, then the: Multiple Choice
A) contribution margin ratio will increase.
B) break-even point will decrease.
C) margin of safety will increase.
D) net operating income will decrease.
Answer:
C)

, Question:
5. Ploeger Corporation has provided the following contribution format income statement. Assume that the
following information is within the relevant range.
Sales (4,000 units) $ 240,000 Variable expenses 156,000 Contribution margin 84,000 Fixed expenses
81,900 Net operating income $ 2,100
The break-even point in dollar sales is closest to:
Multiple Choice
A) $234,000
B) $237,900
C) $156,000
D) $0
Answer:
A) CM ratio = Contribution margin ÷ Sales = $84,000 ÷ $240,000 = 35%
Dollar sales to break even = Fixed expenses ÷ CM ratio = $81,900 ÷ 35% = $234,000

Question:
6. Kelchner Corporation has provided the following contribution format income statement. Assume that
the following information is within the relevant range. Sales (3,000 units) $ 180,000 Variable expenses
108,000 Contribution margin 72,000 Fixed expenses 62,400 Net operating income $ 9,600
The contribution margin ratio is closest to:
Multiple Choice
A) 67%
B) 40%
C) 33%
D) 60%
Answer:
B) CM ratio = Contribution margin ÷ Sales = $72,000 ÷ $180,000 = 40%

Question:
7. Gayne Corporation's contribution margin ratio is 12% and its fixed monthly expenses are $84,000. If the
company's sales for a month are $738,000, what is the best estimate of the company's net operating
income? Assume that the fixed monthly expenses do not change. Multiple Choice
A) $565,440
B) $654,000
C) $88,560
D) $4,560
Answer:
D)

Question:
8. Gayne Corporation's contribution margin ratio is 12% and its fixed monthly expenses are $84,000. If the
company's sales for a month are $738,000, what is the best estimate of the company's net operating
income? Assume that the fixed monthly expenses do not change. Multiple Choice
A) $565,440
B) $654,000
C) $88,560
D) $4,560