Which of the following is true regarding the contribution margin ratio of a company that produces only a single product? Select one: O a. None of the given answer is correct. O b. As fixed expenses decrease, the contribution margin ratio is unaffected. O C. The contribution margin ratio will decline as unit sales decline. O d. The contribution margin ratio equals the selling price per unit less the variable expense ratio. e. The contribution margin ratio divided by the selling price per unit equals the contribution margin per unit.

Which of the following is true regarding the contribution margin ratio of a company that produces only a single product? Select one: O a. None of the given answer is correct. O b. As fixed expenses decrease, the contribution margin ratio is unaffected. O C. The contribution margin ratio will decline as unit sales decline. O d. The contribution margin ratio equals the selling price per unit less the variable expense ratio. e. The contribution margin ratio divided by the selling price per unit equals the contribution margin per unit.

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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6..
On the costvolume - profit graph which of the following would result into a decrease in the breakeven point (Assuming other factors remain unchanged )? a. Decrease in number of units sold b.Decrease in selling price per unit c. Increase in fixed costs d. Decrease in variable cost per unit e. None of the given answers
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.
15. If the total contribution margin increases and fixed costs do not change, then net income can be expected to a. decrease by an equal amount. b. increase by an amount equal to the increase in contribution margin times the CM ratio. c. increase by an equal amount. d. none of these.
Lump sum payments in respect of the termination of employment of a person may be relieved from tax. What are the conditions that must be met for these payments to be made without the deduction of tax.
The contribution margin ratio is calculated as: O a. The selling price per unit ratio /variable cost per unit ratio O b. Selling price per unit the variable cost per unit O c. None of the given answers O d. The selling price per unit/variable cost per unit e. (total sales/total sales) – variable cost ratio
XYZ Company wishes to gain more market share. In order to do that, the company is planning to double the current production and sales quantity. At the same time, the company plans to decrease the selling price per unit by half. Assuming that the total fixed cost and the variable cost per unit remain unchanged, what would be the effect on ?profit .Cannot be determined using the information in the question a O Profit would remain unchanged b O Profit would decrease .c O None of the given answers .d O Profit would increase e O
:Holding other factors constant, a company's contribution margin per unit will increase with All answers given are NOT correct .a O any increase in variable cost per unit .b O .any increase in quantity sold .c O any increase in the selling price per unit .d O increase in its total fixed costs .e O
If sales volume increases and all other factors remain constant, then the: O contribution margin ratio will increase. O margin of safety will increase. break-even point will decrease. O net operating income will decrease.
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
At break even point: a) sales - contribution margin = net income or net loss b) sales - fixed expenses = variable expenses c) sales + variable expenses = contribution margin d) contribution margin + fixed expenses = net income
Holding other factors constant, a company's contribution margin per unit will increase with: a. All answers given are NOT correct. O b. any increase in quantity sold. С. any increase in variable cost per unit O d. any decrease in the selling price per unit e. increase in its total fixed costs