ACCT 2170: Chapters 3 & 4

Sales - Variable Costs =

• Gross Margin

• Contribution Margin

• Operating Profit

• Net Profit

Sales = $800,000

Variable Costs = $520,000

Fixed Costs = $120,000

Calculate the contribution margin ratio.

• 25%

• 30%

• 35%

• 40%

Selling price = $50

Variable manufacturing cost = $20

Variable selling cost = $5

Fixed manufacturing costs = $125,000

Fixed selling costs = $90,000

Calculate the break-even point in units.

• 8,600

• 7,167

• 5,000

• 5,000

Davis Company's sales are $500,000 with operating profits of $125,000. If the contribution margin ratio is 30%, what did the fixed costs amount to?

• $27,500

• $28,000

• $26,000

• $25,000

What describes the extent to which an organization's cost structure is made up of fixed costs?

• Break-even point

• Bottleneck

• Operating Leverage

• Differential Analysis

Which cost are differential for a special order? Check all that apply.

• Direct Materials

• Unavoidable Fixed Overhead

• Indirect Materials

• Variable Overhead

The practice of setting the selling price below cost with the intent to drive competitors out of business is:

• Peak-load Pricing

• Target Costing

• Target Pricing

• Predatory Pricing

Exporting a product to another country at a price below domestic price.

• Dumping

• Price Fixing

• Peak-load Pricing

• Predatory Pricing

Selling price = $50

Variable manufacturing cost = $20

Variable selling cost = $5

Fixed manufacturing costs = $125,000

Fixed selling costs = $90,000

If the company sells 10,000 units, what is the margin of safety.

• 1,200

• 1,400

• 2,000

• 2,100

Differential costs are:

• the profit foregone by selecting one choice instead of another.

• a cost common to all the choices in the question and not clearly allocable to any of them.

• a cost that continues to be incurred in the absence of activity.

• the difference in total costs that result from selecting one choice instead of another.