Which of the following is not an assumption made when performing cost-volume-profit analysis?Multiple ChoiceNumber of units produced is greater than the number of units sold.Worker efficiency is held constant.The company produces within the relevant range of activity.There is a linear relationship between cost and volume for both fixed and variable cost.

Cost-volume-profit (CVP) analysis is a financial management tool used to analyze the relationship…

Answered: Which of the following is not an…

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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Which of the following line items will not be found in the absorption costing income statement? Group of answer choices Variable manufacturing and non-manufacturing costs Contribution margin Gross profit Fixed manufacturing costs
Kindly answer all questions: 1.) Cost behavior is considered linear whenever a straight line is a reasonable approximation for the relation between cost and activity. A. True B. False 2.) Which of the following is an example of a cost that is variable with respect to the number of units produced? A. rent on administrative office building B. rent on factory building C. Salaries of top marketing executives D. direct labor cost, where the direct labor force is adjusted to actual production of the period 3.) Fixed costs are constant in total amount over the relevant range of operations. A. True B. False 4.) The cost function derived by the simple least squares method: A. must be tested for minimum and maximum points. B. is parabolic. C. is linear. D. is curvilinear.
If an organization wants to make a profit, it must generate more sales revenue than the total costs it incurs. This relation can be expressed using which of the following profit equations? O a. Operating income = [(Sales price per unit - Variable cost per unit) x #units sold] - Fixed cost O b. Operating income = [Sales price per unit - Fixed cost per unit) x # units produced] -Variable cost Oc Operating income Sales revenue - Total variable costs - Discretionary costs O d. Operating income - Sales revenue - Committed costs - Fixed costs
Describe the differences in behavior of fixed costs, variable costs, semi-variable costs and step costs. Then discuss how break-even analysis and contribution margin can be useful in making business decisions.
Cost-volume-profit analysis is used to make many decisions, including product pricing and controlling costs. What are the limitations of using operating leverage to predict profitability?
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
When the total contribution margin is greater than total fixed costs, a company has Select one: a. Higher variable cost and fixed cost. b. A net loss c. Zero profit. d. Net income.

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