Chapter 22, Cost-Volume-Profit Video Solutions, Accounting Principles , Tenth Edition

Problem 1

Variable costs are costs that:
a. vary in total directly and proportionately with changes in the activity level.
b. remain the same per unit at every activity level.
c. Neither of the above.
d. Both (a) and (b) above.

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Problem 2

The relevant range is:
a. the range of activity in which variable costs will be curvilinear.
b. the range of activity in which fixed costs will be curvilinear.
c. the range over which the company expects to operate during a year.
d. usually from zero to $100 \%$ of operating capacity.

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Problem 3

Mixed costs consist of a:
a. variable cost element and a fixed cost element.
b. fixed cost element and a controllable cost element.
c. relevant cost element and a controllable cost element.
d. variable cost element and a relevant cost element.

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02:29

Problem 4

Your phone service provider offers a plan that is classified as a mixed cost. The cost per month for 1,000 minutes is $$\$ 50$$. If you use 2,000 minutes this month, your cost will be:
a. $$\$ 50$$.
c. more than $$\$ 100$$.
b. $$\$ 100$$.
d. between $$\$ 50$$ and $$\$ 100$$.

Brittany Hull

Numerade Educator

01:04

Problem 5

One of the following is not involved in CVP analysis. That factor is:
a. sales mix.
c. fixed costs per unit.
b. unit selling prices
d. volume or level of activity.

Amany Waheeb

Numerade Educator

Problem 6

Contribution margin:
a. is revenue remaining after deducting variable costs.
b. may be expressed as contribution margin per unit.
c. is selling price less cost of goods sold.
d. Both (a) and (b) above.

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Problem 7

When comparing a traditional income statement to a CVP income statement:
a. net income will always be greater on the traditional statement.
b. net income will always be less on the traditional statement.
c. net income will always be identical on both.
d. net income will be greater or less depending on the sales volume.

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Problem 8

Brownstone Company's contribution margin ratio is $$30 \%$$. If Brownstone's sales revenue is $$\$ 100$$ greater than its break-even sales in dollars, its net income:
a. will be $$\$ 100$$.
b. will be $$\$ 70$$.
c. will be $$\$ 30$$.
d. cannot be determined without knowing fixed costs.

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02:02

Problem 9

Gossen Company is planning to sell 200,000 pliers for $$\$ 4$$ per unit. The contribution margin ratio is $$25 \%$$. If Gossen will break even at this level of sales, what are the fixed costs?
a. $$\$ 100,000$$
c. $$\$ 200,000$$.
b. $$\$ 160,000$$.
d. $$\$ 300,000$$.

Amany Waheeb

Numerade Educator

Problem 10

The mathematical equation for computing required sales to obtain target net income is. Required sales =
a. Variable costs + Target net income.
b. Variable costs + Fixed costs + Target net income.
c. Fixed costs + Target net income.
d. No correct answer is given.

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Problem 11

Marshall Company had actual sales of $$\$ 600,000$$ when breakeven sales were $$\$ 420,000$$. What is the margin of safety ratio?
a. $$25 \%$$.
c. $$334 \%$$.
b. $$30 \%$$.
d. $$45 \%$$.

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Problem 12

Margin of safety is computed as:
a. Actual sales - Break-even sales.
b. Contribution margin - Fixed costs.
c. Break-even sales - Variable costs
d. Actual sales - Contribution margin.

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01:04

Problem 13

On a CVP income statement:
a. Sales - Cost of goods sold $=$ Contribution margin
b. Sales - Variable costs - Fixed costs = Contribution margin.
c. Sales - Variable costs = Contribution margin.
d. Sales - Fixed costs = Contribution margin.

Amany Waheeb

Numerade Educator

Problem 14

Cournot Company sells 100,000 wrenches for $$\$ 12$$ a unit. Fixed costs are $$\$ 300,000$$, and net income is $$\$ 200,000$$. What should be reported as variable expenses in the CVP income statement?
a. $$\$ 700,000$$.
c. $$\$ 500000$$,
b. $$\$ 900,000$$.
d. $$\$ 1,000,000$$

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Problem 15

Under variable costing, fixed manufacturing costs are classified as:
a. period costs.
c. both (a) and (b).
b. product costs
d. neither (a) nor (b).

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