Choose the best answer for each of the following multiple-choice questions. 1. Cost-volume-profit analysis includes some simplifying assumptions. Which of the following is not one of these assumptions? a. Cost and revenues are predictable. b. Cost and revenues are linear over the relevant range. c. Changes in beginning and ending inventory levels are insignificant in amount. d. Sales mix changes are irrelevant. 2. The term relevant range , as used in cost accounting, means the range a. over which costs may fluctuate b. over which cost relationships are valid c. of probable production d. over which production has occurred in the past 10 years 3. How would the following be used in calculating the number of units that must be sold to earn a targeted operating income? 4. Information concerning Korian Corporation’s product is as follows: Assuming that Korian increased sales of the product by 20 percent, what should the operating income be? a. $20,000 b. $24,000 c. $32,000 d. $80,000 5. The following data apply to McNally Company for last year: McNally wants to sell an additional 50,000 units at the same selling price and contribution margin. By how much can fixed costs increase to generate additional profit equal to 10 percent of the sales value of the additional 50,000 units to be sold? a. $50,000 b. $57,500 c. $67,500 d. $125,000 6. Bryan Company’s break-even point is 8,500 units. Variable cost per unit is $140, and total fixed costs are $297,500 per year. What price does Bryan charge? a. $140 b. $35 c. $175 d. Cannot be determined from the above data

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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
BuyFind

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

Solutions

Chapter 16, Problem 19E
Textbook Problem

Choose the best answer for each of the following multiple-choice questions.

  1. 1. Cost-volume-profit analysis includes some simplifying assumptions. Which of the following is not one of these assumptions?
    1. a. Cost and revenues are predictable.
    2. b. Cost and revenues are linear over the relevant range.
    3. c. Changes in beginning and ending inventory levels are insignificant in amount.
    4. d. Sales mix changes are irrelevant.
  2. 2. The term relevant range, as used in cost accounting, means the range
    1. a. over which costs may fluctuate
    2. b. over which cost relationships are valid
    3. c. of probable production
    4. d. over which production has occurred in the past 10 years
  3. 3. How would the following be used in calculating the number of units that must be sold to earn a targeted operating income?

Chapter 16, Problem 19E, Choose the best answer for each of the following multiple-choice questions. 1. Cost-volume-profit , example  1

  1. 4. Information concerning Korian Corporation’s product is as follows:

Chapter 16, Problem 19E, Choose the best answer for each of the following multiple-choice questions. 1. Cost-volume-profit , example  2

Assuming that Korian increased sales of the product by 20 percent, what should the operating income be?

  1. a. $20,000
  2. b. $24,000
  3. c. $32,000
  4. d. $80,000
  5. 5. The following data apply to McNally Company for last year:

Chapter 16, Problem 19E, Choose the best answer for each of the following multiple-choice questions. 1. Cost-volume-profit , example  3

McNally wants to sell an additional 50,000 units at the same selling price and contribution margin. By how much can fixed costs increase to generate additional profit equal to 10 percent of the sales value of the additional 50,000 units to be sold?

  1. a. $50,000
  2. b. $57,500
  3. c. $67,500
  4. d. $125,000
  5. 6. Bryan Company’s break-even point is 8,500 units. Variable cost per unit is $140, and total fixed costs are $297,500 per year. What price does Bryan charge?
    1. a. $140
    2. b. $35
    3. c. $175
    4. d. Cannot be determined from the above data

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Chapter 16 Solutions

Cornerstones of Cost Management (Cornerstones Series)
Ch. 16 - Why might a multiple-product firm choose to...Ch. 16 - How do income taxes affect the break-even point...Ch. 16 - Explain how a change in sales mix can change a...Ch. 16 - Explain how a change in sales mix can change a...Ch. 16 - Why does the activity-based costing approach to...Ch. 16 - Super-Tees Company plans to sell 12,000 T-shirts...Ch. 16 - Jay-Zee Company makes an in-car navigation system....Ch. 16 - Health-Temp Company is a placement agency for...Ch. 16 - Olivian Company wants to earn 420,000 in net...Ch. 16 - Vandenberg, Inc., produces and sells two products:...Ch. 16 - Dupli-Pro Copy Shop provides photocopying service....Ch. 16 - Ringsmith Company is considering two different...Ch. 16 - Zebra Company manufactures custom-designed skins...Ch. 16 - Gelbart Company manufactures gas grills. Fixed...Ch. 16 - Schylar Pharmaceuticals, Inc., plans to sell...Ch. 16 - Reagan, Inc., has developed a chew-proof dog...Ch. 16 - Jonah Graham owns and operates The Green Thumb...Ch. 16 - Big Red Motors, Inc., employs 15 sales personnel...Ch. 16 - Sports-Reps, Inc., represents professional...Ch. 16 - Campbell Company manufactures and sells adjustable...Ch. 16 - Head-Gear Company produces helmets for bicycle...Ch. 16 - Sara Pacheco is a sophomore in college and earns a...Ch. 16 - Carmichael Corporation is in the process of...Ch. 16 - Choose the best answer for each of the following...Ch. 16 - Nail Glow, Inc., produces novelty nail polishes....Ch. 16 - Income statements for two different companies in...Ch. 16 - Steinberg Company produces commercial printers....Ch. 16 - X-Cee-Ski Company recently expanded its...Ch. 16 - Busy-Bee Baking Company produces a variety of...Ch. 16 - Busy-Bee Baking Company produces a variety of...Ch. 16 - Jester Company had unit contribution margin on...Ch. 16 - Loessing Company produced and sold 12,000 units...Ch. 16 - Junior Company has a breakeven point of 34,600...Ch. 16 - Bialy Company had the following information: What...Ch. 16 - If a companys variable cost per unit increases,...Ch. 16 - Don Masters and two of his colleagues are...Ch. 16 - More-Power Company has projected sales of 75,000...Ch. 16 - Consider the following information on four...Ch. 16 - Hammond Company runs a driving range and golf...Ch. 16 - Salamanca produces and sells refrigerator magnets...Ch. 16 - Faldo Company produces a single product. The...Ch. 16 - Katayama Company produces a variety of products....Ch. 16 - Mahan Consulting is a service organization that...Ch. 16 - Ironjay, Inc., produces two types of...Ch. 16 - Drake Company produces a single product. Last...Ch. 16 - Salem Electronics currently produces two products:...Ch. 16 - Good Scent, Inc., produces two colognes: Rose and...

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