With regard to the CVP graph, which of the following statements is NOT correct? a. The CVP graph assumes that volume is the only factor affecting total cost. b. The CVP graph assumes that fixed expenses are constant in total within the relevant range. c. The CVP graph assumes that selling prices do not change. d. The CVP graph assumes that variable costs go down as volume goes up.

With regard to the CVP graph, which of the following statements is NOT correct? a. The CVP graph assumes that volume is the only factor affecting total cost. b. The CVP graph assumes that fixed expenses are constant in total within the relevant range. c. The CVP graph assumes that selling prices do not change. d. The CVP graph assumes that variable costs go down as volume goes up.

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 8MCQ: The contribution margin is the a. amount by which sales exceed total fixed cost. b. difference...

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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.
When should a segment be dropped? A. only when the decrease in total contribution margin is less than the decrease in fixed cost B. only when the decrease in total contribution margin is equal to fixed cost C. only when the increase in total contribution margin is more than the decrease in fixed cost D. only when the decrease in total contribution margin is less than the decrease in variable cost
The contribution margin is the a. amount by which sales exceed total fixed cost. b. difference between sales and total cost. c. difference between sales and operating income. d. difference between sales and total variable cost. e. difference between variable cost and fixed cost.
Which of the following statements is true regarding average fixed costs? A. Average fixed costs per unit remain fixed regardless of level of activity. B. Average fixed costs per unit rise as the level of activity rises. C. Average fixed costs per unit fall as the level of activity rises. D. Average fixed costs per unit cannot be determined.
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.
Which of the following is not an assumption underlying cost-volume-profit analysis?a. The sales mix is constant.b. The break-even point will be passed during the period.c. Total sales and total costs can be represented by straight lines.d. Costs can be accurately divided into fixed and variable components.
Which of the following is not an assumption underlying cost-volume-profit analysis? a.The break-even point will be passed during the period. b.Total sales and total costs can be represented by straight lines. c.Costs can be accurately divided into fixed and variable components. d.The sales mix is constant.
Which one of the following is not considered an assumption of cost-volume-profit analysis? a. Costs are linear b. Sales mix of products sold does not change c. Selling price per unit changes with volume d. Costs can be divided into variable and fixed components e. Fixed cost per unit is not constant
Which of the following is true of the contribution margin ratio? a.If the contribution margin ratio increases, the price must have decreased. b.If the contribution margin ratio increases, the variable cost ratio decreases. c.It is the proportion of each sales dollar available to cover variable costs. d.If the contribution margin ratio increases, more units must be sold to break even. e.It is complementary to the net profit ratio.
How do costs behave when there is a change in volume?a) ______ increases or decreases in total in direct proportion to increases or decreases in sales volume. b) ______ remains the same in total, regardless of change in sales. c) ______ have both a variable and fixed component. d) Answer the following regarding the high-low method:i) What is the formula for determining the variable costs when using the high low method:ii) Given the following information for the high and low levels, what is the variable cost per unit and the total fixed costs? iii) Based on the information in part ii), what is the relevant range?In MyAccountingLab, complete Try It! 21-1 and S21-1 through S21-3.LO2. What is contribution margin, and how is it used to compute operating income?a) What is the contribution margin if net sales revenue is $100,000 and variable costs are $40,000? b) Based on the information in part a), what is the contribution margin ratio?In MyAccountingLab, complete Try It! 21-2 and S21-4 and…
Which of the following statements is NOT true about costs per unit within the relevant range? Question 7 options: Fixed costs decrease in proportion to increases in volume. Mixed costs decrease but not in direct proportion to increases in volume. Variable costs stay constant with changes in volume. Curvilinear costs stay constant with changes in volume.
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.