4. Which of the following statements is correct?a. Gross margin and contribution margin are the same.b. Contribution margin is the excess of sales over variable costs, and this is the amount available for the recovery offixed assets and generation of profit.c. One inherent, simplifying assumption in CVP analysis is that production equals sales.d. Unit variable costs change directly with the cost driver or activity level.5. In CVP analysis, it is assumed thata. all costs are classifiable as either direct or indirect costs.b. cost and revenue relationships are predictable and linear over any range of activity.c. selling prices per unit and market conditions remain unchanged.d. total fixed costs are constant over the relevant range, but fixed costs per unit vary directly with the cost driver orvolume.6. Management may use CVP analysis to determine the relative profitability of a product bya. determining the unit contribution margin and the projected profits at various levels of production.b. controlling the physical production of the products.c. assigning costs to a product in such a way that the contribution margin is maximized.d. keeping all costs to an absolute minimum.7. Cost-volume-profit relationships that are curvilinear may be analyzed linearly by considering onlya. a relevant range of activity.b. the variable costs.c. the fixed costs.d. the relevant costs.

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4. Which of the following statements is correct? a. Gross margin and contribution margin are the same. b. Contribution margin is the excess of sales over variable costs, and this is the amount available for the recovery of fixed assets and generation of profit. c. One inherent, simplifying assumption in CVP analysis is that production equals sales. d. Unit variable costs change directly with the cost driver or activity level. 5. In CYP analysis, it is assumed that

4. Which of the following statements is correct? a. Gross margin and contribution margin are the same. b. Contribution margin is the excess of sales over variable costs, and this is the amount available for the recovery of fixed assets and generation of profit. c. One inherent, simplifying assumption in CVP analysis is that production equals sales. d. Unit variable costs change directly with the cost driver or activity level. 5. In CYP analysis, it is assumed that

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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When using CVP Analysis, Net Profit (positive NI) would occur when Fixed Costs (FC) exceed total Contribution Margin. TRUE FALSE
Show how each of these costs will behave as the volume of activity decreases. Variable cost per unit Total variable cost Fixed cost per unit Total fixed cost A. Increase B. Decrease C. Remains the same
The break-even point is that level of activity where: Select one: O a. sales revenue eguals fixed cost. O b. variable cost equals fixed cost. Oc total contribution margin equals the sum of variable cost plus fixed cost. O d. sales revenue equals total variable.cost Oe. contribution margin equals fixed cost.
Which of the following statements is true? I. Incremental analysis is an analytical approach that focuses only on those revenues and costs that will not change as a result of a decision. II. When expressed on a per unit basis, fixed costs can mislead decision makers into thinking of them as variable costs. II. To estimate what the profit will be at various levels of sales volume, multiply the number of units to be sold above or below the break-even point by the unit contribution margin. Statements I and III are true. Statements II and III are true. All of the statements are true. None of the statements are true.
Variable costing income will be greater than absorption costing income when: a. Sales is greater than production. b. contribution pricing is applied c. Production is less than or equal to sales. d. Production is greater than sales
CLEAR MY CHOICE Which of the following statements about CVP analysis is false? O a. Operating income calculations in CVP analysis are based on contribution margin not gross margin. O b. All of the given answers are true. O c. Total revenues and total costs are linear in relation to output units. O d. Managers use (CVP) analysis to study the behavior of and relationship among the elements such as total revenues, total costs, and income O e. Unit selling price, unit variable costs, and total fixed costs are known and remain constant. NEXT PAC AGE ere to search
Within the relevant range, as volume of activity increases a. Total fixed costs remain the sameb. Fixed cost per unit decreasesc. Variable cost per unit remains the samed.Total variable costs increasese. all of the above
5. Which of the following statements is correct: A. total fixed cost remain constant while variable cost as total increases as level of activities decreases. B. fixed cost per unit and total variable costs increases as level of activities increases. C. variable cost per unit and total fixed cost remain constant as level of activities increases. D. fixed cost per unit remain constant and variable cost per unit decreases as level of activities decreases. W Pe
Which of the followings is not correct about cost-based pricing? Select one: a. Total fixed costs change as the production amount changes. b. Total costs are the sum of total fixed and variable costs. c. Total variable costs increase due to a rise in production level. d. Variable costs per unit tend to be constant with respect to number of units produced.
Which of the following statements about CVP analysis is false? O a. Operating income calculations in CVP analysis are based on contribution margin not gross margin. O b. Unit selling price, unit variable costs, and total fixed costs are known and remain constant. Oc. Managers use (CVP) analysis to study the behavior of and relationship among the elements such as total revenues, total costs, and income O d. Total revenues and total costs are linear in relation to output units. O e. All of the given answers are true. LEVIOUS PAGE FINISH ATTEMPT ... Finish Esc FnLock F1 F2 F3 F4 FB F9 F10 F11 @ 23 2$ % 1 3 4 6 8. Q W E IT Y S G Y J L. C NIM 24 Alt こ0 >
Which of the following statements about CVP analysis is false? O a. Operating income calculations in CVP analysis are based on contribution margin not gross margin. O b. Unit selling price, unit variable costs, and total fixed costs are known and remain constant. O c. Managers use (CVP) analysis to study the behavior of and relationship among the elements such as total revenues, total costs, and income O d. Total revenues and total costs are linear in relation to output units. O e. All of the given answers are true. OUS PAGE FINISH ATTEMPT ... F1 F2 F3 F4 F5 F6 F7 F8 F10 23 % & 2 3 4 7 8. V Q W T A F K 13 C V BYNI M 24 S