ACCY 200 Exam 2 UPDATED ACTUAL
Exam Questions and CORRECT Answers
The term "relevant range" is used to describe:
the range of activity where total variable cost remains unchanged as activity changes.
the range of activity where a particular relationship between fixed and variable costs stays valid.
the range of activity where costs will always fluctuate.
the range of activity where fixed costs change proportionately as activity changes. - CORRECT
ANSWER - the range of activity where a particular relationship between fixed and variable
costs stays valid.
As the level of activity decreases:
fixed cost per unit decreases.
fixed cost remains constant in total.
variable cost remains constant in total.
variable cost per unit decreases. - CORRECT ANSWER - fixed cost remains constant in
total.
Each of a company's two product lines has a different contribution margin ratio. If the company's
total sales remain the same but the sales mix shifts toward selling more of the product with the
lower contribution ratio, which of the following is true?
operating income will decrease.
the average contribution margin ratio will decrease.
,the breakeven point will increase.
all of the answers are true. - CORRECT ANSWER - all of the answers are true.
When the high-low method of estimating a cost behavior pattern is used:
the highest and lowest sales price and volume amounts are used in the calculation.
the direct result of the high-low calculations is the fixed expense amount.
the resulting cost formula will explain total cost accurately for every value between the high and
low volumes.
cost and volume data must be reviewed for outliers. - CORRECT ANSWER - cost and
volume data must be reviewed for outliers.
The contribution margin format income statement:
uses a behavior pattern classification for costs rather than a functional cost classification
approach.
results in a larger amount of operating income than the traditional income statement format.
is most frequently used for financial statement reporting purposes.
emphasizes that all costs change in proportion to any change in revenues. - CORRECT
ANSWER - uses a behavior pattern classification for costs rather than a functional cost
classification approach.
ABU Co. has several products, each with a different contribution margin ratio. If the same
number of units were sold in July as in June, but the sales mix changed:
, operating income would be the same in June and July.
the company's overall contribution margin ratio would be the same in June and July.
fixed expenses in July would be in a different relevant range than in June.
total contribution margin in July would be different from that in June. - CORRECT
ANSWER - total contribution margin in July would be different from that in June.
The concept of operating leverage refers to which of the following?
Operating income changes proportionately more than revenues for any given change in activity
level.
Operating income changes proportionately less than revenues for any given change in activity
level.
Operating income changes proportionately less than income for any given change in activity
level.
Operating income changes proportionately more than income for any given change in activity
level. - CORRECT ANSWER - Operating income changes proportionately more than
revenues for any given change in activity level.
Managerial accounting can best be described as: - CORRECT ANSWER - the preparation and
use of accounting information within the organization.
The decision to continue or discontinue a segment of the business should focus on:
Exam Questions and CORRECT Answers
The term "relevant range" is used to describe:
the range of activity where total variable cost remains unchanged as activity changes.
the range of activity where a particular relationship between fixed and variable costs stays valid.
the range of activity where costs will always fluctuate.
the range of activity where fixed costs change proportionately as activity changes. - CORRECT
ANSWER - the range of activity where a particular relationship between fixed and variable
costs stays valid.
As the level of activity decreases:
fixed cost per unit decreases.
fixed cost remains constant in total.
variable cost remains constant in total.
variable cost per unit decreases. - CORRECT ANSWER - fixed cost remains constant in
total.
Each of a company's two product lines has a different contribution margin ratio. If the company's
total sales remain the same but the sales mix shifts toward selling more of the product with the
lower contribution ratio, which of the following is true?
operating income will decrease.
the average contribution margin ratio will decrease.
,the breakeven point will increase.
all of the answers are true. - CORRECT ANSWER - all of the answers are true.
When the high-low method of estimating a cost behavior pattern is used:
the highest and lowest sales price and volume amounts are used in the calculation.
the direct result of the high-low calculations is the fixed expense amount.
the resulting cost formula will explain total cost accurately for every value between the high and
low volumes.
cost and volume data must be reviewed for outliers. - CORRECT ANSWER - cost and
volume data must be reviewed for outliers.
The contribution margin format income statement:
uses a behavior pattern classification for costs rather than a functional cost classification
approach.
results in a larger amount of operating income than the traditional income statement format.
is most frequently used for financial statement reporting purposes.
emphasizes that all costs change in proportion to any change in revenues. - CORRECT
ANSWER - uses a behavior pattern classification for costs rather than a functional cost
classification approach.
ABU Co. has several products, each with a different contribution margin ratio. If the same
number of units were sold in July as in June, but the sales mix changed:
, operating income would be the same in June and July.
the company's overall contribution margin ratio would be the same in June and July.
fixed expenses in July would be in a different relevant range than in June.
total contribution margin in July would be different from that in June. - CORRECT
ANSWER - total contribution margin in July would be different from that in June.
The concept of operating leverage refers to which of the following?
Operating income changes proportionately more than revenues for any given change in activity
level.
Operating income changes proportionately less than revenues for any given change in activity
level.
Operating income changes proportionately less than income for any given change in activity
level.
Operating income changes proportionately more than income for any given change in activity
level. - CORRECT ANSWER - Operating income changes proportionately more than
revenues for any given change in activity level.
Managerial accounting can best be described as: - CORRECT ANSWER - the preparation and
use of accounting information within the organization.
The decision to continue or discontinue a segment of the business should focus on:
