EBK HORNGREN'S COST ACCOUNTING
16th Edition
ISBN: 9780134475950
Author: Datar
Publisher: PEARSON CO
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Question
Chapter 11, Problem 11.18MCQ
To determine
Opportunity Cost:
Opportunity cost is total of potential income and other benefits that are lost due to rejection of alternatives. These costs are considered to evaluate the multiple project or options available.
Contribution Margin:
Contribution margin is the excess of selling price over the variable costs of a product. It is a tool to evaluate the capability of the company to generate sufficient revenue so as to cover its variable cost.
To identify: The correct option
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Students have asked these similar questions
Which of the following statements is true when making decisions using cost-volume-profit (CVP) analysis?
Select one:
a.
As long as the contribution margin is a positive number, net income will be positive
b.
As long as variable costs are more than fixed costs, net income will be negative
c.
As long as the contribution margin is greater than fixed costs, net income will be positive
d.
As long as the sales price per unit is greater than fixed costs per unit, net income will be positive
The contribution margin ratio can be calculated in all of the following ways except:
a.1 − Variable cost ratio.
b.Contribution margin per unit / Price.
c.Total contribution margin / Total sales.
d.Fixed costs / Contribution margin ratio.
e.All of these choices are correct.
Total contribution margin divided by total sales is the:
a.contribution margin ratio.
b.sales ratio.
c.target income.
d.margin of safety.
e.indifference point.
The difference between sales price per unit and variable cost per unit is the:
Multiple Choice
Total contribution margin (CM).
Contribution margin per unit (cm).
Breakeven point.
Contribution margin ratio.
Margin of safety (MOS).
Chapter 11 Solutions
EBK HORNGREN'S COST ACCOUNTING
Ch. 11 - Prob. 11.1QCh. 11 - Define relevant costs. Why are historical costs...Ch. 11 - All future costs are relevant. Do you agree? Why?Ch. 11 - Distinguish between quantitative and qualitative...Ch. 11 - Describe two potential problems that should be...Ch. 11 - Variable costs are always relevant, and fixed...Ch. 11 - A component part should be purchased whenever the...Ch. 11 - Prob. 11.8QCh. 11 - Managers should always buy inventory in quantities...Ch. 11 - Management should always maximize sales of the...
Ch. 11 - Prob. 11.11QCh. 11 - Cost written off as depreciation on equipment...Ch. 11 - Managers will always choose the alternative that...Ch. 11 - Prob. 11.14QCh. 11 - Prob. 11.15QCh. 11 - Qualitative and quantitative factors. Which of the...Ch. 11 - Special order, opportunity cost. Chade Corp. is...Ch. 11 - Prob. 11.18MCQCh. 11 - Keep or drop a business segment. Lees Corp. is...Ch. 11 - Relevant costs. Ace Cleaning Service is...Ch. 11 - Disposal of assets. Answer the following...Ch. 11 - Relevant and irrelevant costs. Answer the...Ch. 11 - Multiple choice. (CPA) Choose the best answer. 1....Ch. 11 - Special order, activity-based costing. (CMA,...Ch. 11 - Make versus buy, activity-based costing. The...Ch. 11 - Inventory decision, opportunity costs. Best Trim,...Ch. 11 - Relevant costs, contribution margin, product...Ch. 11 - Selection of most profitable product. Body Image,...Ch. 11 - Theory of constraints, throughput margin, relevant...Ch. 11 - Closing and opening stores. Sanchez Corporation...Ch. 11 - Prob. 11.31ECh. 11 - Relevance of equipment costs. Janets Bakery is...Ch. 11 - Equipment upgrade versus replacement. (A. Spero,...Ch. 11 - Special order, short-run pricing. Diamond...Ch. 11 - Short-run pricing, capacity constraints. Fashion...Ch. 11 - International outsourcing. Riverside Clippers Corp...Ch. 11 - Relevant costs, opportunity costs. Gavin Martin,...Ch. 11 - Opportunity costs and relevant costs. Jason Wu...Ch. 11 - Opportunity costs. (H. Schaefer, adapted) The Wild...Ch. 11 - Make or buy, unknown level of volume. (A....Ch. 11 - Make versus buy, activity-based costing,...Ch. 11 - Prob. 11.42PCh. 11 - Product mix, special order. (N. Melumad, adapted)...Ch. 11 - Theory of constraints, throughput margin, and...Ch. 11 - Theory of constraints, contribution margin,...Ch. 11 - Closing down divisions. Ainsley Corporation has...Ch. 11 - Dropping a product line, selling more tours....Ch. 11 - Prob. 11.48PCh. 11 - Dropping a customer, activity-based costing,...Ch. 11 - Equipment replacement decisions and performance...
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Similar questions
- How do you calculate Break-even Point? Select one: O a. Fixed cost/ Contribution per unit b. Contribution per unit/ Fixed cost c. Fixed cost/ Sales price per unit d. Fixed cost/ Variable cost per unitarrow_forwardWhich 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.arrow_forwardThe contribution-margin ratio is: Select one: a. unit contribution margin divided by the selling price b. the difference between the selling price and the variable cost per unit. c. unit contribution margin divided by fixed cost per unit. d. variable cost per unit divided by the selling price e. fixed cost per unit divided by variable cost per unit.arrow_forward
- 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…arrow_forwardThe 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.arrow_forwardContribution margin is a.the same as sales revenue b.the excess of sales over variable costs c.another term for volume in the "cost-volume-profit" analysis d.profitarrow_forward
- Which of the following best describes a variable cost? A cost that: a. Represents a fixed proportion of total costs b. Has a direct relationship with outputc. Is sometimes also known as an indirect cos d. Falls on average, as output increases.arrow_forwardbased on the attached what is the answer?arrow_forwardIf the units produced exceed unit sales, which method would you expect to show the higher netoperating income, variable costing or absorption costing? Why?arrow_forward
- Contribution margin is a function of both the selling price of a product, the variable costs of the product, and the volumes of the product sold. It is possible to obtain the same TOTAL Contribution margin for the same product being sold at different prices and different volumes. True Falsearrow_forwardThe conventional CVP (Cost-volume and profit) analysis has some underlying assumptions regarding costs and selling price. Which one of the following is NOT one of those assumptions: a. The selling price per unit will remain unchanged. b. Fixed costs per unit will decrease. c. The costs can be expressed as straight lines in a BEP (Break-even-point) graph. d. The actual variable costs per unit vary over the production range.arrow_forwardAnswer 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.…arrow_forward
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