1. Contribution margin: A. can be stated as a total amount, on a per unit basis, or as a percent of sales. B. is the amount of revenue available to contribute to covering fixed costs. C. is the amount of revenue remaining after deducting variable costs. D. All of the statements are true statements. 2.The break-even point: A. can be abbreviated "BE" B. all of these statements are correct C. is calculated for internal purposes only D. is important for management planning purposes 3. Lumber used to construct a Little Free Library would be classified as a: A. direct labor cost B. direct material cost C. indirect labor cost D. fun cost 4.Utilities for a company's corporate headquarters would be classified as a: A. period cost B. prime cost C. manufacturing overhead cost D. selling cost 5. In order to compute a company's cost of goods manufactured, assuming the direct material cost must be computed, the beginning and ending inventory balances are needed for: A. Work in process only B. Raw materials and work in process only C. Raw materials, work in process, and finished goods D. Raw materials only 6. Identify the true statement: A. indirect materials would be a product cost and a prime cost B. sales commission is a period cost and a conversion cost C. sales commission is a period cost and a prime cost D. indirect materials would be a product cost and a conversion cost 7.Which one of the following statements is not true? A. Total variable costs decrease as the production level increases. B. Variable costs per unit remain the same regardless of the production level. C. Fixed costs per unit increase as the production level decreases. D. Total fixed costs remain the same regardless of level of production. 8.If a company increases its fixed costs, then their new break-even point will: A. remain the same B. All of the statements are true. C. increase D. decrease 9.If a company increases its variable costs, then their new break-even point will: A. remain unchanged B. Decrease C. No way to know D. increase 10.The following information applies for Zap Company: Sales revenue: $1,350,000 Cost of goods sold: $450,000 Operating expenses: $350,000 The cost of goods sold consists of $375,000 variable and $75,000 fixed. The operating expenses consist of $50,000 variable and $300,000 fixed. The company would show which amount on their Contribution Margin Income Statement? A. Gross profit of $900,000 B. Gross profit of $550,000 C. Contribution margin of $900,000 D. Contribution margin of $925,000 11. If a company increases its variable costs, then their contribution margin per unit will: A. All of the statements are true. B. decrease C. increase D. remain the same 12. On a CVP graph, the total cost line intersect the cost axis at: A. the break-even point B. the variable cost amount C. the origin D. the fixed cost amount 13.Which of the following items does not appear on a CVP graph? A. Total cost line B. The break-even point C. Total sales line D. Total variable cost line 14.Oak Corporation has total variable costs of $180,000, total fixed costs of $170,000, and total sales revenues of $300,000. Compute the required amount of sales dollars to break-even. A. $300,000 B. $170,000 C. $425,000 D. $283,333 15.Of the items listed, which would appear first on a contribution margin income statement? A. Fixed costs B. Contribution margin C. Variable costs D. Net income 16. Cabriolet Company sells 100,000 mini car figurines for $12 per unit. Fixed costs are $300,000, and net income is $200,000. What should be reported as variable expenses in the contribution margin income statement? A. $700,000 B. $900,000 C. $1,000,000 D. $500,000 17.If a company's level of production increases by 10%, total variable costs will: A. decrease by 10% B. remain the same C. increase by exactly 3.141592653589793238462643 ... is it pie day yet? D. increase by 10% 18. Daffodil Manufacturing produces hair brushes. The selling price is $20 per unit and the variable costs are $8 per brush. Fixed costs per month are $4,800. If Daffodil sells 25 more units beyond breakeven, how much does profit increase as a result? A. $200 B. $500 C. $300 D. $1,000

19. The amount by which actual or expected sales exceeds break-even sales is referred to as the: A. contribution margin B. margin of safety C. degree of operating leverage D. margarine spread of accounting 20. The ______________________________ measures how sensitive net income is to a percentage change in sales dollars. A. margin of safety B. break-even point C. contribution margin D. degree of operating leverage 21. Huckleberry Industries produces flash drives for computers, which it sells for $20 each. Each flash drive costs $12 of variable costs to make. During April, 1,000 drives were sold. Fixed costs for March were $2 per unit for a total of $1,000 for the month. How much is the contribution margin ratio? A. 60% B. 70% C. 40% D. 30%

22.Ivy Company had actual sales of $600,000 when the break-even sales were $420,000. What is their margin of safety ratio? A. 30% B. 45% C. 25% D. 33.3% 23. Pansy Corporation has sales of $2,000,000, variable costs of $1,100,000, and fixed costs of $750,000. Pansy's degree of operating leverage is: A. 6.00 B. 1.20 C. 1.47 D. 1.22 24. A cost structure which relies more heavily on fixed costs makes the company: A. either more or less sensitive to changes in sales revenue, depending on other factors. B. have a lower break-even point. C. less sensitive to changes in sales revenue. D. more sensitive to changes in sales revenue. 25. Daisy Manufacturing's variable costs are 30% of sales. The company is considering an advertising campaign that will cost $44,000. If sales are expected to increase $80,000, by how much will the company's net income increase? A. $12,000 B. $24,000 C. $36,000 D. $56,000 26.In a sales mix situation, at any level of units sold, net income will be higher if: A. more lower contribution margin units are sold than higher contribution margin units. B. more higher contribution margin units are sold than lower contribution margin units. C. None of these statements are correct. D. more fixed expenses are incurred. 27. Swanowa Company has two divisions; Nursery Plants and Yard Equipment. The sales mix is 65% for Nursery Plants and 35% for Yard Equipment. Swanowa incurs $4,440,000 in fixed costs. The contribution margin ratio for Nursery Plants is 30%, while for Yard Equipment it is 50%. The break-even point in dollars is A. $12,000,000

B. $11,100,000

C. $13,325,582

D. $1,642,800 28. Hayduke Corporation reported the following results from the sale of 6,000 units in May: sales $300,000, variable costs $180,000, fixed costs $90,000, and net income $30,000. Assume that Hayduke increases the selling price by 10% on June 1. How many units will have to be sold in June to maintain the same level of net income?

A. 5,160 B. 6,000 C. 4,800 D. 5,400