Compared to companies that have a cost structure that is mainly comprised of variable costs, companies with a cost :structure that is mainly comprised of fixed costs would Have limited ability to enhance their profits at a higher degree a O Have low operating leverage b O Be less vulnerable to adverse effects of economic downturn cO Be considered more risky d O

Compared to companies that have a cost structure that is mainly comprised of variable costs, companies with a cost :structure that is mainly comprised of fixed costs would Have limited ability to enhance their profits at a higher degree a O Have low operating leverage b O Be less vulnerable to adverse effects of economic downturn cO Be considered more risky d O

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6MCQ: The use of fixed costs to extract higher percentage changes in profits as sales activity changes...

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Similar questions

Would each of the following increase, decrease, or have an indeterminant effect on a firms break-even point (unit sales)? a. The sales price increases with no change in unit costs. b. An increase in fixed costs is accompanied by a decrease in variable costs. c. Variable labor costs decline; other things are held constant.
In a cost-volume-profit analysis, explain what happens at the break-even point and why companies do not want to remain at the break-even point.
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The high-low method and least-squares regression are used by managers to _____________________. A. decide whether to make or buy a component part B. minimize corporate tax liability C. maximize output D. estimate costs
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If the sales mix in a multi-product environment shifts to a higher volume in low contribution margin products, the break-even point will ____________________________________ . A. remain unchanged because all products are included in the calculation of break-even B. increase because the low contribution margin products have little effect on break-even C. increase because the per composite unit contribution margin will decrease D. decrease because the per composite unit contribution margin will increase
Which of the following is a disadvantage of outsourcing? A. freeing up capacity B. freeing up capital C. transferring production and technology risks D. limiting ability to upsize or downsize production
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
1. The difference between contribution margin and income from operations is ________. net income variable costs fixed costs None of these choices are correct. 2. The relationship between a company’s contribution margin and income from operations is measured by _____. contribution margin operating leverage margin of safety break-even point 3. The __________ is the relative distribution of sales among the products sold by a company. sales mix mixed cost product mix None of these choices are correct. 4. The unit selling price of the overall enterprise product equals the ________. average selling price of the products price of the highest-selling product in the mix sum of the unit selling prices of each product multiplied by its sales mix percentage price of the product having the lowest selling price
A company that desires to lower its break-even point should strive to: reduce variable costs. pursue more than one of the above actions. sell more units. decrease selling prices. increase fixed costs.
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