Corporate Finance - Ivy Software (MBA
Prepworks) Verified Test Questions and
Answers (Guaranteed Pass)
• If the quantity sold is greater than the quantity produced there has to be: -✓✓Finished
goods beginning inventory. If you sell more than you produce, you must obtain the units
somewhere. You obtain them from the finished goods beginning inventory.
• Contribution margin and contribution margin per unit are the same. -✓✓False
• Breakeven indicates that the sales dollars cover all fixed and variable costs of
manufacturing -✓✓True
• Inventoriable costs using variable costing is appropriate for external reporting -
✓✓False
• Essex company sells two products- A and B. Product A sales are two times that of
product B. The contribution per unit for A is $4 and B is $1. What is the weighted
average contribution margin per unit? -✓✓$3
• Absorption costing clearly separates fixed costs from variable costs -✓✓false
• Converse company has two products- A and B. The weighted average contribution
margin per unit is $4. Converse sells twice as many As as Bs. The contribution margin
per unit for B is $2. What is it for A? -✓✓$5
• If the breakeven is 5000 units and fixed costs are $50,000, what is the contribution
margin per unit? -✓✓$10
• Which of the following will be found on an absorption costing income statement but not
on a variable costing income statement? -✓✓Gross Margin and Cost of Goods Sold
• If units produced are less than units sold, net income using absorption costing is -
✓✓Less than variable costing
• If the selling price is $5 per unit the variable cost is $1 per unit and the fixed cost is
$20,000, what is the breakeven in units? -✓✓$5,000 (5x - 1x - 20000 = 0, 4x -
20,000=0, 4x=20000, x = 5000)
• The total of ALL the right-hand sides of the T-accounts must equal the total of ALL the
left-hand sides of the T-Accounts (T/F) -✓✓True. The double-entry system of
,accounting means that for each transaction recorded, there is a left-hand (debit) entry
offset by a right-hand (credit) entry.
• Since the total of all the R sides of accounts equals the total of L sides, then the total
amount of increases entered in the general ledger must equal the total amount of
decreases (T/F) -✓✓False. Cash (Asset) and Common Stock (Owners' Equity) is used
to record the sale of company stock. While the R side equals the L side, they both
increase, thus, the total amount of increases does not equal the decreases.
• Almost all the data necessary to prepare an income statement is contained in the
retained earnings account. -✓✓False. not Almost all. ALL.
• A transaction is an event that affects the financial position of a company. -✓✓True.
• Credits are generally good and debits are generally bad. -✓✓False. credit means
nothing more than the R side while a debit means the L side. Neither is good or bad.
• Bookkeeping accounts are a method of accumulating financial transactions and
summarizing their effects on balance sheet items. -✓✓True. Bookkeeping accounts
provide an easy means for recording, collecting, and reporting financial transactions of a
firm.
• Liabilities normally have a L balance -✓✓False. Liabilities and OE usually have R
balances while assets have L balances
• It is possible to have the books in balance but with mistakes. -✓✓Having the books in
balance simply means that each time you entered a transaction you placed equal
amounts on the R and L sides. Books which balance do not rule out the possibility that a
transaction could have been posted to the wrong account.
• The main purpose of the trial balance is to make sure you have not committed any
math errors in your T- Accounts (T/F) -✓✓True. The trial balance is taken as a partial
check of the arithmetic accuracy of the entries previously made.
• Fixed costs are fixed per unit produced, but vary in total (true or false) -✓✓False. Fixed
costs vary by unit produced but are fixed in total. Remember the graph with the straight
line over all the units of production.
• True or False: Variable costs are fixed per unit but vary in total. -✓✓True.
• Elmwood Inc. manufactures guitars. Elmwood's management has discovered that after
3,000 guitars are manufactured, there is a need to add an additional quality control
engineer. If this is done it is an excellent example of a semi variable cost. -✓✓False.
This scenario indicates a semi fixed cost not a semi variable cost. This is an example of
a stepped fixed cost.
, • The "Flex" in flexible budget comes from the assumption of activity levels that vary. -
✓✓True.
• Elmwood industries reported earnings of $3.10 per share in 2013. how far off could
this number be and still be in accordance with GAAP? In other words, could this number
be:
$3.40
$4.00
$2.15
D) $3.10 the number can't be off -✓✓$3.40. GAAP have leeway of approximately 10%
• Which of the following is most useful to management in exercising their control
function?
A) budget
B) Performance Report
C) Annual Report
D) Income Tax Report -✓✓Performance report.
• Performance report is -✓✓shows the budgeted numbers, the actual numbers, and the
variance.
• Annual report -✓✓published for external users of the financial statements such as
creditors and stockholders
• In reviewing the balance sheet of an unknown company, which item would you look for
to determine whether or not the unknown company is a manufacturing company?
Cash
Accounts receivable
Inventory
Accounts payable -✓✓Inventory
• As the production level increases, the cost per unit decreases for a fixed cost (true or
false) -✓✓True. if the fixed cost is $100,000 and the units of production increase from 0
to 10,000 units, you are dividing $100,000 by a larger number of units. Since the
numerator is fixed and the denominator gets larger the CPU decreases.
• In the long run, all fixed costs become variable (true or false) -✓✓true.
• Lucius Smith is an assembler for a chair manufacturer. normally he spends one hour
(at $25/hour) for each chair he assembles. after assembling 500 chairs he wants to
spend 10 minutes more per chair to improve quality. Management approves. This will
change the:
fixed cost line
variable cost line
Prepworks) Verified Test Questions and
Answers (Guaranteed Pass)
• If the quantity sold is greater than the quantity produced there has to be: -✓✓Finished
goods beginning inventory. If you sell more than you produce, you must obtain the units
somewhere. You obtain them from the finished goods beginning inventory.
• Contribution margin and contribution margin per unit are the same. -✓✓False
• Breakeven indicates that the sales dollars cover all fixed and variable costs of
manufacturing -✓✓True
• Inventoriable costs using variable costing is appropriate for external reporting -
✓✓False
• Essex company sells two products- A and B. Product A sales are two times that of
product B. The contribution per unit for A is $4 and B is $1. What is the weighted
average contribution margin per unit? -✓✓$3
• Absorption costing clearly separates fixed costs from variable costs -✓✓false
• Converse company has two products- A and B. The weighted average contribution
margin per unit is $4. Converse sells twice as many As as Bs. The contribution margin
per unit for B is $2. What is it for A? -✓✓$5
• If the breakeven is 5000 units and fixed costs are $50,000, what is the contribution
margin per unit? -✓✓$10
• Which of the following will be found on an absorption costing income statement but not
on a variable costing income statement? -✓✓Gross Margin and Cost of Goods Sold
• If units produced are less than units sold, net income using absorption costing is -
✓✓Less than variable costing
• If the selling price is $5 per unit the variable cost is $1 per unit and the fixed cost is
$20,000, what is the breakeven in units? -✓✓$5,000 (5x - 1x - 20000 = 0, 4x -
20,000=0, 4x=20000, x = 5000)
• The total of ALL the right-hand sides of the T-accounts must equal the total of ALL the
left-hand sides of the T-Accounts (T/F) -✓✓True. The double-entry system of
,accounting means that for each transaction recorded, there is a left-hand (debit) entry
offset by a right-hand (credit) entry.
• Since the total of all the R sides of accounts equals the total of L sides, then the total
amount of increases entered in the general ledger must equal the total amount of
decreases (T/F) -✓✓False. Cash (Asset) and Common Stock (Owners' Equity) is used
to record the sale of company stock. While the R side equals the L side, they both
increase, thus, the total amount of increases does not equal the decreases.
• Almost all the data necessary to prepare an income statement is contained in the
retained earnings account. -✓✓False. not Almost all. ALL.
• A transaction is an event that affects the financial position of a company. -✓✓True.
• Credits are generally good and debits are generally bad. -✓✓False. credit means
nothing more than the R side while a debit means the L side. Neither is good or bad.
• Bookkeeping accounts are a method of accumulating financial transactions and
summarizing their effects on balance sheet items. -✓✓True. Bookkeeping accounts
provide an easy means for recording, collecting, and reporting financial transactions of a
firm.
• Liabilities normally have a L balance -✓✓False. Liabilities and OE usually have R
balances while assets have L balances
• It is possible to have the books in balance but with mistakes. -✓✓Having the books in
balance simply means that each time you entered a transaction you placed equal
amounts on the R and L sides. Books which balance do not rule out the possibility that a
transaction could have been posted to the wrong account.
• The main purpose of the trial balance is to make sure you have not committed any
math errors in your T- Accounts (T/F) -✓✓True. The trial balance is taken as a partial
check of the arithmetic accuracy of the entries previously made.
• Fixed costs are fixed per unit produced, but vary in total (true or false) -✓✓False. Fixed
costs vary by unit produced but are fixed in total. Remember the graph with the straight
line over all the units of production.
• True or False: Variable costs are fixed per unit but vary in total. -✓✓True.
• Elmwood Inc. manufactures guitars. Elmwood's management has discovered that after
3,000 guitars are manufactured, there is a need to add an additional quality control
engineer. If this is done it is an excellent example of a semi variable cost. -✓✓False.
This scenario indicates a semi fixed cost not a semi variable cost. This is an example of
a stepped fixed cost.
, • The "Flex" in flexible budget comes from the assumption of activity levels that vary. -
✓✓True.
• Elmwood industries reported earnings of $3.10 per share in 2013. how far off could
this number be and still be in accordance with GAAP? In other words, could this number
be:
$3.40
$4.00
$2.15
D) $3.10 the number can't be off -✓✓$3.40. GAAP have leeway of approximately 10%
• Which of the following is most useful to management in exercising their control
function?
A) budget
B) Performance Report
C) Annual Report
D) Income Tax Report -✓✓Performance report.
• Performance report is -✓✓shows the budgeted numbers, the actual numbers, and the
variance.
• Annual report -✓✓published for external users of the financial statements such as
creditors and stockholders
• In reviewing the balance sheet of an unknown company, which item would you look for
to determine whether or not the unknown company is a manufacturing company?
Cash
Accounts receivable
Inventory
Accounts payable -✓✓Inventory
• As the production level increases, the cost per unit decreases for a fixed cost (true or
false) -✓✓True. if the fixed cost is $100,000 and the units of production increase from 0
to 10,000 units, you are dividing $100,000 by a larger number of units. Since the
numerator is fixed and the denominator gets larger the CPU decreases.
• In the long run, all fixed costs become variable (true or false) -✓✓true.
• Lucius Smith is an assembler for a chair manufacturer. normally he spends one hour
(at $25/hour) for each chair he assembles. after assembling 500 chairs he wants to
spend 10 minutes more per chair to improve quality. Management approves. This will
change the:
fixed cost line
variable cost line
