Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 6, Problem 1MC
Which of the following is not an assumption of CVP analysis?
a. A straight line can be used to approximate the relationship between total cost and activity within the relevant range.
b. Production and sales are equal.
c. Sales mix remains constant for any company selling more than one product.
d. All costs can be accurately described as either fixed, variable, mixed, or step.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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
1. Distinguish between variable and fixed costs both on a per unit and total basis (graphs may be used to
assist in explanation).
2. Identify any three (3) basic assumptions of CVP Analysis.
3. Briefly explain the term sales mix.
Chapter 6 Solutions
Managerial Accounting
Ch. 6 - Identify and briefly describe the assumptions of...Ch. 6 - Why should managers create a CVT graph?Ch. 6 - When considering a CVP graph, how is the...Ch. 6 - Your supervisor has requested that you prepare a...Ch. 6 - Why is it important for a company to know its...Ch. 6 - Explain the difference between unit contribution...Ch. 6 - A Company’s Cost structure can have a high...Ch. 6 - Prob. 8QCh. 6 - Prob. 9QCh. 6 - Bert Company and Ernie Company are competitors in...
Ch. 6 - Prob. 11QCh. 6 - Explain margin of safety. Why is important for...Ch. 6 - Give an example of a company to which margin of...Ch. 6 - Explain how a decision to automate a manufacturing...Ch. 6 - Explain degree of operating leverage and how it...Ch. 6 - Prob. 16QCh. 6 - Why is sales mix important to multiproduct CVP...Ch. 6 - Prob. 18QCh. 6 - Prob. 19QCh. 6 - Prob. 20QCh. 6 - Prob. 21QCh. 6 - Prob. 22QCh. 6 - Which of the following is not an assumption of CVP...Ch. 6 - Prob. 2MCCh. 6 - Prob. 3MCCh. 6 - Prob. 4MCCh. 6 - Prob. 5MCCh. 6 - Prob. 6MCCh. 6 - Prob. 7MCCh. 6 - Prob. 8MCCh. 6 - Prob. 9MCCh. 6 - Prob. 10MCCh. 6 - Prob. 1MECh. 6 - Prob. 2MECh. 6 - Prob. 3MECh. 6 - Prob. 4MECh. 6 - Prob. 5MECh. 6 - Calculating Break-Even Point After Cost Structure...Ch. 6 - Prob. 7MECh. 6 - Prob. 8MECh. 6 - Prob. 9MECh. 6 - Prob. 10MECh. 6 - Prob. 11MECh. 6 - Prob. 12MECh. 6 - Prob. 13MECh. 6 - Prob. 14MECh. 6 - Prob. 15MECh. 6 - Analyzing Multiproduct CVP Refer to the...Ch. 6 - Prob. 17MECh. 6 - Prob. 18MECh. 6 - Prob. 19MECh. 6 - Prob. 2ECh. 6 - Determining Break-Even Point, target Profit....Ch. 6 - Analyzing Changes in Price, Cost Structure, Degree...Ch. 6 - Prob. 5ECh. 6 - Prob. 6ECh. 6 - Matching Terms to Definitions Match the...Ch. 6 - Analyzing Break-Even Point, Preparing CVP Graph,...Ch. 6 - Calculating Contribution Margin, Contribution...Ch. 6 - Prob. 10ECh. 6 - Calculating Target Profit, Margin of Safety,...Ch. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - Analyzing Multiproduct CVP Biscayne’s Rent-A-Ride...Ch. 6 - Prob. 17ECh. 6 - Prob. 18ECh. 6 - Prob. 19ECh. 6 - Prob. 20ECh. 6 - Prob. 21ECh. 6 - Prob. 22ECh. 6 - Prob. 1.1GAPCh. 6 - Prob. 1.2GAPCh. 6 - Prob. 1.3GAPCh. 6 - Prob. 1.4GAPCh. 6 - Prob. 2.1GAPCh. 6 - Prob. 2.2GAPCh. 6 - Prob. 2.3GAPCh. 6 - Prob. 2.4GAPCh. 6 - Prob. 3.1GAPCh. 6 - Prob. 3.2GAPCh. 6 - Prob. 3.3GAPCh. 6 - Prob. 3.4GAPCh. 6 - Prob. 3.5GAPCh. 6 - Calculating Contribution Margin, Contribution...Ch. 6 - Prob. 4.1GAPCh. 6 - Analyzing Break-Even Point, Target Profit, Degree...Ch. 6 - Prob. 4.3GAPCh. 6 - Prob. 4.4GAPCh. 6 - Prob. 4.5GAPCh. 6 - Prob. 4.6GAPCh. 6 - Prob. 4.7GAPCh. 6 - Prob. 4.8GAPCh. 6 - Analyzing Multiproduct CVP, Break-Even Point,...Ch. 6 - Prob. 5.2GAPCh. 6 - Prob. 5.3GAPCh. 6 - Prob. 5.4GAPCh. 6 - Prob. 6.1GAPCh. 6 - Prob. 6.2GAPCh. 6 - Prob. 6.3GAPCh. 6 - Prob. 6.4GAPCh. 6 - Prob. 6.5GAPCh. 6 - Prob. 6.6GAPCh. 6 - Prob. 7.1GAPCh. 6 - Prob. 7.2GAPCh. 6 - Prob. 7.3GAPCh. 6 - Prob. 1.1GBPCh. 6 - Prob. 1.2GBPCh. 6 - Prob. 1.3GBPCh. 6 - Prob. 1.4GBPCh. 6 - Prob. 2.1GBPCh. 6 - Prob. 2.2GBPCh. 6 - Prob. 2.3GBPCh. 6 - Prob. 2.4GBPCh. 6 - Prob. 3.1GBPCh. 6 - Prob. 3.2GBPCh. 6 - Prob. 3.3GBPCh. 6 - Prob. 3.4GBPCh. 6 - Prob. 3.5GBPCh. 6 - Prob. 3.6GBPCh. 6 - Prob. 4.1GBPCh. 6 - Prob. 4.2GBPCh. 6 - Prob. 4.3GBPCh. 6 - Prob. 4.4GBPCh. 6 - Prob. 4.5GBPCh. 6 - Prob. 4.6GBPCh. 6 - Prob. 4.7GBPCh. 6 - Prob. 4.8GBPCh. 6 - Prob. 5.1GBPCh. 6 - Prob. 5.2GBPCh. 6 - Prob. 5.3GBPCh. 6 - Prob. 5.4GBPCh. 6 - Prob. 6.1GBPCh. 6 - Prob. 6.2GBPCh. 6 - Prob. 6.3GBPCh. 6 - Prob. 6.4GBPCh. 6 - Prob. 6.5GBPCh. 6 - Prob. 6.6GBPCh. 6 - Prob. 7.1GBPCh. 6 - Prob. 7.2GBPCh. 6 - Prob. 7.3GBP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.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 positivearrow_forwardWhich of the following statements accurately describes the "relevant range?" a. The operation range in which fixed costs are expected to remain the same. b. The operation range in which the firm can earn a profit. c. The operation range which can satisfy unusual product demand. d. The operation range in which variable costs rise proportionately.arrow_forwardCLEAR 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 searcharrow_forward
- In determining cost behavior in business, the cost function is often expressed as Y=a+bX. Which one of the following cost estimation methods uses only two levels of activities in estimating fixed and variable costs for the predictive equation? Group of answer choices Multiple Regression Graphic Method High-low Method Simple Regressionarrow_forwardWhich of the following is not a true statement about variable costs? a. Total cost is known to change in proportion to any changes in related level of volume or activity. O b. When considering total cost behaviour, focus on fixed and variable costs. O c. A total cost that can change in proportion to changes in the number of products produced. O d. Total cost never changes in proportion to any changes in related levels of volume or activity. O e. An important cost to identify so managers can make important management decisions.arrow_forwardThe total contribution margin is equivalent to the combined net profit and fixed costs. It can be computed also by adding sales and variable costs. a. Both statements are correct.b. Both statements are false.c. Only the first statement is correct.d. Only the second statement is correct.arrow_forward
- Which of the following best describes a fixed cost? a.Cost representing a fixed proportion of total costs b.Cost directly related to output c.Cost that remains at the same level up to a particular level of output . d.Cost that remains at the same level when output increases.arrow_forwardWhich of the following statements is true? OA. When a large proportion of income is spent on a product or service, the more elastic the supply will be. Percentage change in price OB Elasticity of supply Percentage change in quantity supplied OC. Products or services in which inputs are readily available have a more elastic supply. OD. None of the above is true. hand written otherwise skiparrow_forwardOn a cost-volume-profit graph, when the Total Cost line is higher than the Total Revenue line, the difference represents Select one: O A. a positive return on the investment O B. a net loss O C. net income O D. not enough information is presentedarrow_forward
- In Cost-Volume-Profit analysis, it is an important assumption that all units produced are sold; in other words, number of units produced is as sumed to be equal to number of units sold. Select one: 1.True 2.Falsearrow_forwardWhich of the following statements is FALSE? a. There is a cause-and-effect relationship between the cost driver and the amount of cost. b. Over the long run all costs have cost drivers. c. Volume of production is a cost driver of direct manufacturing costs. d. Fixed costs have cost drivers over the short run.arrow_forward8. In a contribution income statement, a. costs are classified as to function. b. fixed and variable manufacturing costs are combined as one level item. c. fixed costs are shown separately from variable costs. d. fixed manufacturing costs are shown separately from variable manufacturing costs, but fixed and variable operating costs are combined as one line item. 9. Sensitivity analysis, when used in cost-volume-profit analysis, a.is done through various possible scenarios and computes the impact on profit of various predictions of future events. b. is done through various possible scenarios and determines the effect of the cost accounting systems used in each scenario. c. allows the decision-maker to introduce probabilities in the evaluation of decision alternatives. d. allows managers to study how total fixed costs vary with cost drivers. 10. The assumptions under which CVP analysis operates primarily hinge on certainty. However, when uncertainty enters the situation, the results may…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
INVENTORY & COST OF GOODS SOLD; Author: Accounting Stuff;https://www.youtube.com/watch?v=OB6RDzqvNbk;License: Standard Youtube License