All other things the same, which of the following would be true of the contribution margin and variable costs of a company with high fixed costs and low variable costs as compared to a company with low fixed costs and high variable costs? Contribution Margin Variable Costs A. Higher Higher B. Lower Higher C. Higher Lower D. Lower Lower Option A Option B Option C Option D

All other things the same, which of the following would be true of the contribution margin and variable costs of a company with high fixed costs and low variable costs as compared to a company with low fixed costs and high variable costs? Contribution Margin Variable Costs A. Higher Higher B. Lower Higher C. Higher Lower D. Lower Lower Option A Option B Option C Option D

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 4DQ: A company accepts incremental business at a special price that exceeds the variable cost. What other...

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Which of the following costs are always incremental and relevant in decision analysis? a) Opportunity costs and sunk costs b) Avoidable costs and opportunity costs c) Only avoidable costs d) Avoidable costs and sunk costs Which of the following will increase a company's breakeven point? a) reducing its total fixed costs b) increasing the selling price per unit c) increasing variable cost per unit d) increasing contribution margin per unit
Which of the following option shows the rate at which company is earning profit? Select one: a. All options are correct b. Margin of safety c. Contribution margin d. Profit volume ratio
Which of the following statements accurately describes the "relevant range?" a. The operation range in which fixed costs are expected to remain the same. b. The operation range in which the firm can earn a profit. c. The operation range which can satisfy unusual product demand. d. The operation range in which variable costs rise proportionately.
“Companies should always make and sell all products whose selling prices exceed variable costs.” Assuming xed costs areirrelevant, do you agree? Explain.
Which of the following statements about CVP analysis is true? O a. Unit selling price, unit variable costs, and total fixed costs are known and remain constant . b. All of the given answers are false. O . Operating income calculations in CVP analysis are based on gross margin. O d The CVP analysis assumes that total variable costs remain the same over a relevant range .
Consider a situation in which a firm needs to make a decision regarding the resources to allocate between two products. One product makes a significantly larger contribution margin than the other. How might the contribution margin affect the decision that the firm makes? What if both contribution margins were positive or both were negative? Are there other factors when considering the contribution margin you should look for? What makes the contribution margin positive or negative?
Which of the following is the indicator of the rate at which company is earning profit? Select one: a. Margin of safety b. All options are correct c. Contribution margin d. Profit volume ratio
The line that begins at the origin on a CVP graph represents total expenses. total fixed expenses. total sales revenues. both the total expenses and the total sales revenues. Which of the following best describes the concept of a "constraint?" Expected future costs that differ among alternatives. None of the items in this list of answers. A benefit foregone by choosing one alternative course over another. The distribution of all products to be sold.
Which of the following statements is true when making decisions using cost-volume-profit (CVP) analysis? Select one: a. As long as the contribution margin is a positive number, net income will be positive b. As long as variable costs are more than fixed costs, net income will be negative c. As long as the contribution margin is greater than fixed costs, net income will be positive d. As long as the sales price per unit is greater than fixed costs per unit, net income will be positive
Which of the following statements about operating leverage is NOT true? Group of answer choices Operating leverage predicts the effect of fixed costs on operating income when sales volume changes. A higher proportion of fixed cost in a cost structure results in higher operating leverage. The higher the operating leverage, the higher the risk of loss when sales volume decreases. A higher proportion of fixed cost in a cost structure results in lower operating leverage.
The figure below shows each break-even point of Company A and Company B. Which of the following is an appropriate description concerning the benefit-risk analysis of the two companies? a.) Both companies have the same break-even point and fixed cost, so the profit and loss is also equal as long as the sales are equal. b.) The break-even points of both companies are equal, so the sales necessary for making equal profits are also equal for both companies. c.) The variable cost ratio of Company A is lower than Company B, and therefore, when the sales above the break-even point are equal, the profit of Company A is higher than Company B. d.) When the sales of both companies above the break-even point are equal, Company B that has a lower fixed cost makes a higher profit than Company A.
Which of the following cost behavior assumptions is true? (You may select morethan one answer.)a. Variable costs are constant if expressed on a per unit basis.b. Total variable costs increase as the level of activity increases.c. The average fixed cost per unit increases as the level of activity increases.d. Total fixed costs decrease as the level of activity decreases