Grading Summary

These are the automatically computed

results of your exam. Grades for essay Date and Time Started: 8/18/2015 6:57:42 PM
questions, and comments from your Time Spent: 47 min , 08 secs
instructor, are in the "Details" section Points Received: 15 / 50 (30%)
below.

Question Type: # Of Questions: # Correct:

Multiple Choice 10 3

Grade Details - All Questions

Question 1. Question : Which of the following statements about operating leverage is false?

Student Answer:
A change in sales volume will affect a company’s operating
leverage.

The degree of operating leverage is highest in companies that

have relatively high fixed costs and relatively low variable costs in
proportion to total coats.

If a company has an operating leverage of “4,” then a 10%

increase in sales will result in a 40% increase in net income.

The net income of a company with a relatively low operating

leverage will be more sensitive to changes in sales volume than for a
company with a relatively high operating leverage.

Points Received: 0 of 5
Comments:

Question 2. Question : The following information is available for Forrest Company:

Sales price: $90 per unit

Variable cost: $35 per unit
Fixed cost: $37,500

If the variable cost per unit is increased by $7 and the total fixed cost is
increased by $4,500, what will be the new break-even point in units?

Student Answer:
1,000

875

1,429
 467

Points Received: 0 of 5
Comments:

Question 3. Question : Wilson sells a single product for $70 that has a variable cost of $45.
Fixed costs at the break-even point amount to $15 per unit. If the
company sells one unit in excess of its break-even volume, the bottom-
line profit will be:

Student Answer:
$15.

$45.

$55.

$25

Points Received: 0 of 5
Comments:

Question 4. Question : Which of the following statements about cost-volume-profit analysis is

false?

Student Answer:
A company selling multiple products should use the contribution
margin ratio method to perform CVP analysis.

The break-even point is the sales level at which the total

contribution margin is equal to total fixed costs.

An assumption of CVP analysis is that productivity improves over

time.

An assumption of CVP analysis is that variable costs are linear.

Points Received: 5 of 5
Comments:

Question 5. Question : Atlanta, Inc., which uses the high-low method to analyze cost behavior,
has determined that machine hours best explain the company's utilities
cost. The company's relevant range of activity varies from a low of 600
 machine hours to a high of 1,100 machine hours, with the following
data being available for the first six months of the year:

Month Utilities Machine Hours

January $ 8,700 800

February 8,360 720

March 8,950 810

April 9,360 920

May 9,625 950

June 9,150 900

The fixed utilities cost per month is:

Student Answer:
$5,100.

$3,764.

$4,400.

$4,760.

Points Received: 0 of 5
Comments:

Question 6. Question : A product sells for $15 per unit and has variable expenses of $9 per
unit. Fixed expenses total $70,000 per month. How many units of the
product must be sold each month to yield a monthly profit of $20,000?

Student Answer:
10,000 units

3,750 units

6,000 units

15,000 units

Points Received: 5 of 5
Comments:
Question 7. Question : Which of the following would take place if a company were forced to
increase its variable cost per unit?

Student Answer:
Contribution Margin: Increase
Break-even Point: Increase

Contribution Margin: Increase

Break-even Point: Decrease

Contribution Margin: Decrease

Break-even Point: Increase

Contribution Margin: Decrease

Break-even Point: Decrease

Points Received: 0 of 5
Comments:

Question 8. Question : Which of the following statements about cost behavior is true?

Student Answer:
A costs item that is classified as “variable” relative to one activity
base may be classified as “fixed” relative to another activity base.

The concept of “relevant range” applies to fixed costs but not to

variable costs.

As output increases, fixed cost per unit increases.

As output increases, mixed cost per unit increases.

Points Received: 0 of 5
Comments:

Question 9. Question : An example of a committed fixed cost is:

Student Answer:
property taxes on a factory building.

executive travel expenses.

a training program for salespersons.

research and development for new products.

 Points Received: 5 of 5
Comments:

Question 10. Question : The Eola Hills Company has estimated the following cost formulas for
overhead:

Cost Formula

$2,500 plus $0.50 per machine-

Lubricants
hour

$3,000 plus $0.60 per machine-

Utilities
hour

Depreciation $1,000

$1,200 plus $0.10 per machine-

Maintenance
hour

Machine
$ 0.30 per machine-hour
setup

Based on these cost formulas, the total overhead cost expected at an

activity level of 500 machine hours is:

Student Answer:
$7700.

$8450.

$7900.

$8350.

Points Received: 0 of 5
Comments:

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