Managerial Graduate
Content
1.
The contribution margin per unit is the difference between the selling price and the variable cost per unit, and the contribution margin margin ratio is the ratio of the contribution margin to the selling selling price per unit. If the selling price and the variable cost per unit both increase 10 percent and fixed costs do not change, what is the effect on the contribution margin per unit and the contribution margin ratio? a. Contribut Contribution ion mar margin gin per unit unit and the contribut contribution ion margin margin ratio both both remain remain unchanged. unchanged. b. Contribution margin margin per unit and the contribution contribution marg margin in ratio both increase. increase. c. Contribut Contribution ion mar margin gin per unit unit increases increases and the contrib contributio ution n margin margin ratio decreases decreases.. d. Contribut Contribution ion mar margin gin per unit unit increases increases and the contrib contributio ution n ratio remains remains unchanged unchanged..
.2.
compan! increased the selling price for its its product from "1.00 "1.00 to "1.20 "1.20 a unit when total fixed costs increased from "#00,000 to "#$0,000 and variable variable cost per unit remained unchanged. %ow would these changes affect the brea&'even point? a. The brea&'even brea&'even point point in units units would would be increa increased. sed. b. The brea&'even point in units would be decreased. decreased. c. The brea&'even brea&'even point point in units units would would remain remain unchang unchanged. ed. d. The effect effect cannot cannot be determ determined ined from from the the informatio information n given. given.
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)hich of the following would cause the brea&'even point to change? a. *ale *aless incr increa ease sed d. b. +ixed costs increased due due to addition to ph!sical ph!sical plant. c. To Total tal variabl variablee costs increa increased sed as a funct function ion of higher higher produc production tion.. d. Total Total produc producti tion on decrea decreased sed..
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The Compan! is planning to sell roduct - for "10 a unit. ariable ariable costs costs are "/ a unit and fixed costs are "100,000. )hat must total sales sales be to brea& even? a. "2//,// b. "2$0,000 c. "200,000 d. "1//,//
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ach of the following would affect the brea&'even point except a change in the a. ari riab able le cos costt p per er uni unit. t. b. To Total tal fixed costs. c. *ale *aless pri price ce pe perr unit unit.. d. 3umb 3umber er of unit unitss so sold ld..
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If the fixed costs attendant to a product increase while variable costs and sales price remain constant, what will happen to 415 contribution margin and 425 brea&'even point? Contribution 6argin a. Unchanged b. Unchanged c. Increase d. Decrease
7rea&'even oint Unchanged Increase Decrease Increase
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The Toxic 7an& 7and is holding a concert in Toronto. +ixed costs relating to staging a concert are "($0,000. a ariable riable costs per patron are "$.00. The selling price for a tic&etis "2$.00. The Toxic 7an& 7and has sold 2(,000 tic&ets so far. %ow man! tic&ets does the Toxic Toxic 7an& 7and need to sell to brea& even? a. 2(,000 b. 20,000 c. 1#,000 d. 1,$00
8.
Consider the 6arshall Compan!9s segment anal!sis :ivision $300 300,000 *ales 150,000 ariable costs 150,000 Contribution margin 50,000 :irect costs 100,000 *egment margin 90,000 llocated common costs $ 10,000 ;perating income 4loss5
:ivision 7 $200,0 0,000 150,000 50,000 30,000 20,000 60,000 $(40,000)
Total Compan! $500,00 ,000 300,000 200,000 80,000 120,000 150,000 $(30,000)
Common costs are allocated arbitraril! based on sales dollars. dollars. If 6arshall eliminates *egment 7, what is the impact on the operating loss of the compan!? a. Th Thee loss loss decr decrea ease sess b! "#0, "#0,00 000. 0. b. The loss increases b! "20,000. c. Th Thee loss loss decr decrea ease sess b! "/0, "/0,00 000. 0. d. The loss loss iincr ncreas eases es b! "#0,00 "#0,000. 0.
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The difference in cost between two alternatives, such as to ma&e a component component part of a final product versus bu!ing the part from an outside supplier is called a. ari riab ablle cos cost. b. :ifferential cost. cost. c. r ro oduct duct cost ost. d. In Ind dir ireect cost cost..
10.
nother nother term for cost incurred to sell and deliver products is a. :iff :iffer eren enti tial al cost costs. s. b. dministrative costs. costs. c. =en =ener eral al cos costs. ts. d. :ist :istri ribu buti tion on cost costs. s.
11.
n example of a distribution cost that that can be directl! directl! assigned assigned to selling selling activit! would be be a. dve dvert rtis isin ing g cost costs. s. b. Commissions. c. *a *ale less man manag ager9 er9ss sal salar! ar!.. d. Tele leph phon onee exp expen ense ses. s.
12.
Consider the income statement for 7ogside +arm
*ales ariable costs Contribution margin +ixed costs 3et income
$500,000 350,000 150,000 80,000 $ 70,000
)hat is the brea&'even point in sales dollars 4rounded to the nearest dollar5? a. "1#,28/ b. "$00,000 c. "2//,// d. "120,000 1(.
Consider the income statement for 7ogside +arm $500,000 *ales 350,000 ariable costs 150,000 Contribution margin 80,000 +ixed costs $ 70,000 3et income t what sales level does 7ogside achieve net income of "100,000? a. "00,000 b. "/00,000 c. "(00,000 d. "$(0,000
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*egment profitabilit! anal!sis ma! be used to evaluate the profitabilit! of a. :ivisions. b. *ales territories. c. r ro oduct duct lines ines.. d. ll ll of of tthe hese se are are cor corre rect ct..
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7rea&'even sales volume in units is determined b! a. :ividing :ividing the the fixed cost cost b! the differe difference nce bet between ween the the unit selling selling price price and unit unit variable variable b. c. d.
costs. *ubtracting the fixed cost cost from the contribution contribution margin. :ividing :ividing the fixed cost b! the the unit unit selling selling price. price. *ubtractin *ubtracting g the variabl variablee cost per per unit unit from the the unit selli selling ng price. price.
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The excess of revenue over variable costs, including manufacturing, selling and administrative, administrative, is called a. =ross mar marg gin. b. 6anufacturing margin. margin. c. Cont Contri ribu buti tion on marg margin in.. d. *egm *egmen entt marg margin in..
1.
The =a!lord Compan! has sales sales of "800,000, variable costs of "#00,000, "#00,000, and fixed costs of "2$0,000. "2$0,000. Compute the following
a. b. c. d.
Cont Contri ribu buti tion on marg margin in ra rati tio o 7rea&'even sales volume volume 6a 6arg rgin in of safe safet! t! rati ratio o 3et 3et incom incomee as a p per erce cent ntag agee of sal sales es 18. )hich of the following is a more descriptive term of the t!pe of cost accounting often called direct costing? a. rim imee costing b. ;ut'of'poc&et costing costing c. ari riab ablle cos costing ting d. @ele @elev vant ant co cost stin ing g
1<.
+ran&lin Compan! is a medium'si>ed manufacturer of bic!cles. :uring the !ear a new line called @adical was made available to +ran&linAs customers. customers. The brea&'even point for sales of @adical is "2$0,000 with a contribution contribution margin of #0 percent. ssuming ssuming that the profit for the @adical line during the !ear amounted to "80,000, total sales during the !ear would have amounted to a. "#$0,000. b. "#20,000. c. "#00,000. d. "#$,000.
20.
Bohns Compan! operates in three different different industries each of which which is appropriatel! regarded as a reportable segment. segment. *egment 3o. 1 contributed /0 percent of Bohns Bohns Compan!As total total sales. *ales for *egment 3o. 1 were "/00,000 and variable costs were "#00,000. To Total tal common costs for all segments were "(20,000. Bohns allocates common costs based on the ratio of each segmentAs segmentAs sales to the total sales. )hat should be the contribution margin presented for *egment 3o. 1? a. "4100,0005 b. "8,000 c. "20,000 d. "200,000
21.
The Toxic 7an& 7and is holding a concert in Toronto. Toronto. +ixed costs relating to staging a concert are "($0,000. a ariable riable costs per patron are "$.00. The selling price for a tic&etis "2$.00. The Toxic 7an& 7and has sold 2(,000 tic&ets so far. %ow man! tic&ets does the Toxic Toxic 7an& 7and need to sell to achieve net income of "$,000. a. 21,2$0 b. 1#,000 c. 1,$00 d. 1,000
22.
The Toxic 7an& 7and is holding a concert in Toronto. Toronto. +ixed costs relating to staging a concert are "($0,000. a ariable riable costs per patron are "$.00. The selling price for a tic&etis "2$.00. The Toxic 7an& 7and has sold 2(,000 tic&ets so far. t the current level of sales, what is the margin of safet! in dollars? a. "1(,$00 b. c. "8,$00 "180,000
d. "11$,000 2(. The Toxic 7an& 7and is holding a concert in Toronto. Toronto. +ixed costs relating to staging a concert are "($0,000. a ariable riable costs per patron are "$.00. The selling price for a tic&etis "2$.00. The Toxic 7an& 7and has sold 2(,000 tic&ets so far. %ow man! tic&ets does the Toxic Toxic 7an& 7and need to sell to achieve net income of "$0,000 after income tax, assuming the income tax rate is $0? a. 2,$00 b. 18,000 c. 22,$00 d. 1,$00 2#.
In performing an activit!'based activit!'based costing stud! for distribution distribution costs, appropriate cost drivers for preparing preparing orders for shipment would include all of the following except the a. 3umb 3umber er of of o ord rder erss sshi hipp pped ed.. b. Time spent pac&ing pac&ing orders. c. Ti Time me devo devoted ted to ssell elling ing each each produ product. ct. d. 3umb 3umber er of of it item emss per per orde orderr.
2$.
Consider the income statement for 7ogside +arm *ales ariable costs Contribution margin +ixed costs 3et income
$500,000 350,000 150,000 80,000 $ 70,000
t what sales level does 7ogside achieve net income of "100,000? a. "00,000 b. "/00,000 c. "(00,000 d. "$(0,000 Th 2/. 2/. The chief management accountant called “controller” “controller” traditionally traditionally performs these functions except
a. Th The e esta establ blis ishm hmen entt and and impl implem emen enta tati tion on of the the nan nanci cial al planning process. b. Financial and management reporting reporting and and interpretati interpretation. on. c. Pr Protect otection ion of company company resourc resources es and economic economic evaluati evaluation. on. d. Relate Relate o specic specic proble problems ms where where expert expert help is needed needed !. "hich of the following is a controller#s rresponsibilit esponsibility$ y$ a. Tax plann planning ing and accounti accounting ng b. %ust %ustod odia ian n of fun funds ds c. %red %redit it and and coll collec ecti tion on d. &rrangi &rranging ng short't short'term erm loans loans and nanci nancing ng (. "hich of the following is a controller#s responsibility$ a. Tax plann planning ing and accounti accounting ng b. %ust %ustod odia ian n of fun funds ds
c. %red %redit it and and coll collec ecti tion on d. &rrangi &rranging ng short't short'term erm loans loans and nanci nancing ng ). &s business increases in complexity* the function of controllership has attained top level recognition in the corporate arena. +any areas related to nance and accounting accounting have been identied identied with controllership. controllership. ,ne ,ne area that violates basic internal control when assigned to controllership function is a. %red %redit it col colle lect ctio ion n b. -nte -ntern rnal al audi auditi ting ng c. o ong' ng'ra range nge nan nancia ciall planni planning ng d. Taxation axation and reportin reporting g to government government agencies agencies /0. To distin distingui guish sh betwe between en manage managemen mentt accou accounti nting ng and nanci nancial al accounting* the following statements are correct* except a. +ana +anage geme ment nt ac acco coun unti ting ng** in view view of it its s vari variou ous s in inte tegr grat ated ed rec ecip ipie ient nts* s* sh shou ould ld have have a se sepa para rate te data data rec ecor ordi ding ng and and retrieval system from nancial accounting. b. Fin inan anci cial al ac acco coun unti ting ng is boun bound d by 1&&P* 1&&P* and and mana manage geme ment nt accounting need not be in conformity with the 1&&P. c. Financ inancial ial account accounting ing can be regar regarded ded as th the e proce process ss while while management that process. accounting can be regarded as the product of d. +anagement +anagement accoun accounting ting output output must must be released released on time time so as not to erode erode its usefuln usefulness2 ess2 nancial nancial accountin accounting g output output can still be useful even when delayed. /3. "hich of the following does not relate to management accounting$ a. &ccount &ccounting ing reports reports may include include non'monet non'monetary ary informat information. ion. b. -t is sub4ec sub4ectt to restr restrictio ictions ns imposed imposed by by 1&&P c. Re Report ports s are often often based based on estimates estimates and and are seldom seldom useful useful for everyt everythin hing g other other than than the purpos purpose e for which which they they are are prepared. d. -t prov provid ides es data data for for ext xter erna nall user users s with within in the the busi busine ness ss organi5ations. /. "hich of the following does not relate to management accounting$ a. &ccount &ccounting ing reports reports may include include non'monet non'monetary ary informat information. ion. b. -t is sub4ec sub4ectt to restr restrictio ictions ns imposed imposed by by 1&&P c. Re Report ports s are often often based based on estimates estimates and and are seldom seldom useful useful for everyt everythin hing g other other than than the purpos purpose e for which which they they are are prepared. d. -t prov provid ides es data data for for ext xter erna nall user users s with within in the the busi busine ness ss organi5ations. 33. If merican irlines irlines cuts its domestic fares b! (0, a. its xe xed d costs costs will will decr decreas ease. e. b. its prot prot will will incr increase ease by /06. /06. c. a pr pro ott can can only only be ear earned ned by decr decrea easi sing ng the numb number er of
7ights. d. a pr pro ott can can be earne earned d ei eith ther er by in incr crea easi sing ng the numb number er of passengers or by decreasing decreasing variable costs.
(#. If a compan! compan! had a contrib contributi ution on margin margin of "(00,00 "(00,000 0 and a contri contribut bution ion margin ratio of #0, total variable costs must have been a. 89:0* 9:0*0 000 00.. b. 83(0* 3(0*0 000 00.. c. 8!:0*000. d. 830* 30*0 000 00..
($. The contribution margin rratio atio increases when a. xed xed costs costs incre increas ase. e. b. x xed ed costs costs decre decrease ase.. c. variable variable costs costs as as a percent percentage age of sales sales decr decrease ease.. d. variable variable costs costs as a percent percentage age of sales sales incr increase. ease.
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