If a company decreases the variable expense per unit while increasing the total fixed expenses, the total expense line relative to its previous position will: shift downward and have a steeper slope. shift downward and have a flatter slope. shift upward and have a flatter slope. shift upward and have a steeper slope.

If a company decreases the variable expense per unit while increasing the total fixed expenses, the total expense line relative to its previous position will: shift downward and have a steeper slope. shift downward and have a flatter slope. shift upward and have a flatter slope. shift upward and have a steeper slope.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 14MC: When fixed costs increase and all other variables remain unchanged, the contribution margin will A....

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A company's break-even point will not be changed by: a change in the selling price per unit. a change in the income tax rate. a change in the variable cost per unit. a change in total fixed costs.
If total fixed costs decreases while the sale price per unit and the variable costs per unit remainconstant, the:(A) contribution margin increases(B) contribution margin decreases(C) breakeven point increases(D) breakeven point decreases Which of the following would appear on both the budgeted income statement and on theschedule of expected cash disbursements for operating expenses?(A) Depreciation expense(B) Rent expense(C) Sales commission expense(D) Both B and C A business always absorbs its overheads on labour hours. In the 8th period 18,000 hours wereworked, actual overheads were $279,000 and there was$36,000 over-absorption. The overheadabsorption rate per hour was:(A) $15.50(B) $17.50(C) $18.00(D) $13.50
A company's break-even point will not be increased by: an increase in the variable cost per unit. an increase in the number of units produced and sold. an increase in the variable cost ratio. a decrease in the selling price per unit.
Which of the following is true regarding the contribution margin ratio of a company that produces only a single product? Select one: a. The contribution margin ratio equals the selling price per unit less the variable expense ratio. b. The contribution margin per unit multiplied by the selling price per unit equals the contribution margin ratio. c. None of the given answer is correct. d. As fixed expenses decrease, the contribution margin ratio increases. e. The contribution margin ratio will decline as unit sales decline.
If both the fixed costs associated with a product and the variable costs (as apercentage of sales dollars) decrease, what will be the effect on the contribution margin ratio and the break-even point, respectively?a. Decrease, increase.b. Increase, decrease.c. Decrease, decrease.d. Increase, increase.
If the percentage change in operating income resulting from a given percentagechange in sales is higher than the percentage change in sales itself, thena. an increase in the selling price would not alter the contribution marginper unit.b. variable costs per unit have increased.c. variable costs have decreased in total.d. the company has operating leverage.e. the company has no fixed costs.
Once the break-even point is reached: the contribution margin ratio begins to decrease. the total contribution margin changes from negative to positive. net operating income will increase by the unit contribution margin for each additional item sold. variable expenses will remain constant in total.
Would an increase in variable costs per unit cause a company’s break-even point to increase or decrease? Explain why?
In the cost-volume-profit analysis, income taxes a.increase the sales volume required to break even. b.are treated as a variable cost. c.are treated as a fixed cost. d.increase the sales volume required to earn a desired profit.
Which of the following is true about the changes in fixed cost? An increase in production will result in an increase in per unit fixed cost. A decrease in fixed cost will result in an increase in variable cost. An increase in production will result in a decrease in per unit fixed cost. A decrease in production will result in an increase in total fixed cost.
Under the contribution income statement, a company’s contribution margin will be: Higher if fixed SG& A costs decrease. Higher if variable SG& A costs increase. Lower if fixed manufacturing overhead costs decrease. Lower if variable manufacturing overhead costs increase.
Which of the following describes the behavior of the fixed cost per unit? a.remains constant with changes in production b.decreases with decreasing production c.decreases with increasing production d.increases with increasing production

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		shift downward and have a steeper slope.
		shift downward and have a flatter slope.
		shift upward and have a flatter slope.
		shift upward and have a steeper slope.