The unit contribution margin is calculated as the difference between: a. selling price and fixed cost per unit. b. selling price and variable cost per unit. c. selling price and product cost per unit. d. fixed cost per unit and variable cost per unit. e. fixed cost per unit and product cost per unit 2. At the break-even point, the total contribution margin is: a. Zero b. Equal to total fixed costs c. Equal to total costs d. Equal to total variable costs 3. A company with a negative margin of safety also has a (an) a. Operating loss b. Operating profit c. Sales above its break-even point d. Sales equal to its break-even point 4. The break-even point is that level of activity where: a. total revenue equals total cost. b.variable cost equals fixed cost. c. total contribution margin equals the sum of variable cost plus fixed cost. d. sales revenue equals total variable cost. e. profit is greater than zero. 5. CVP analysis can be used to study the effect of: * a.changes in selling prices on a company's profitability. b. changes in variable costs on a company's profitability. c. changes in fixed costs on a company's profitability. d. changes in product sales mix on a company's profitability. e. all of the above. 6. Which of the following does NOT affect a company’s break-even point? a. Total fixed costs b. Unit variable cost c. Unit selling price d. Number of units sold 7. Which of the following would take place if a company experienced an increase in fixed costs? a. Net income would increase. b. The break-even point would increase. c. The contribution margin would increase. d. The contribution margin would decrease. e. More than one of the above events w
The unit contribution margin is calculated as the difference between: a. selling price and fixed cost per unit. b. selling price and variable cost per unit. c. selling price and product cost per unit. d. fixed cost per unit and variable cost per unit. e. fixed cost per unit and product cost per unit 2. At the break-even point, the total contribution margin is: a. Zero b. Equal to total fixed costs c. Equal to total costs d. Equal to total variable costs 3. A company with a negative margin of safety also has a (an) a. Operating loss b. Operating profit c. Sales above its break-even point d. Sales equal to its break-even point 4. The break-even point is that level of activity where: a. total revenue equals total cost. b.variable cost equals fixed cost. c. total contribution margin equals the sum of variable cost plus fixed cost. d. sales revenue equals total variable cost. e. profit is greater than zero. 5. CVP analysis can be used to study the effect of: * a.changes in selling prices on a company's profitability. b. changes in variable costs on a company's profitability. c. changes in fixed costs on a company's profitability. d. changes in product sales mix on a company's profitability. e. all of the above. 6. Which of the following does NOT affect a company’s break-even point? a. Total fixed costs b. Unit variable cost c. Unit selling price d. Number of units sold 7. Which of the following would take place if a company experienced an increase in fixed costs? a. Net income would increase. b. The break-even point would increase. c. The contribution margin would increase. d. The contribution margin would decrease. e. More than one of the above events w
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Answer the following:
1. The unit contribution margin is calculated as the difference between:
a. selling price and fixed cost per unit.
b. selling price and variable cost per unit.
c. selling price and product cost per unit.
d. fixed cost per unit and variable cost per unit.
e. fixed cost per unit and product cost per unit
2. At the break-even point, the total contribution margin is:
a. Zero
b. Equal to total fixed costs
c. Equal to total costs
d. Equal to total variable costs
3. A company with a negative margin of safety also has a (an)
a. Operating loss
b. Operating profit
c. Sales above its break-even point
d. Sales equal to its break-even point
4. The break-even point is that level of activity where:
a. total revenue equals total cost.
b.variable cost equals fixed cost.
c. total contribution margin equals the sum of variable cost plus fixed cost.
d. sales revenue equals total variable cost.
e. profit is greater than zero.
5. CVP analysis can be used to study the effect of: *
a.changes in selling prices on a company's profitability.
b. changes in variable costs on a company's profitability.
c. changes in fixed costs on a company's profitability.
d. changes in product sales mix on a company's profitability.
e. all of the above.
6. Which of the following does NOT affect a company’s break-even point?
a. Total fixed costs
b. Unit variable cost
c. Unit selling price
d. Number of units sold
7. Which of the following would take place if a company experienced an increase in fixed costs?
a. Net income would increase.
b. The break-even point would increase.
c. The contribution margin would increase.
d. The contribution margin would decrease.
e. More than one of the above events would occur.
8. Under CVP analysis, which of the following is NOT assumed to be constant?
a. Unit variable cost
b. Unit selling price
c. Unit fixed cost
d. Sales mix
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