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30 Cards in this Set
- Front
- Back
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How may the following be used in calculating the break-even point in units?
Fixed Cost : Contribution Margin per unit a. Denominator : Numerator b. Denominator : Not Used c. Numerator : Not Used d. Numerator : Denominator |
d. Numerator : Denominator |
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The contribution margin increases when sales volume remains the same and
a. Variable cost per unit decrease b. Variable cost per unit increases c. Fixed costs decreases d. Fixed costs increases |
a. Variable cost per unit decrease |
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The peso amount of sales needed to attain a desired profit is calculated by dividing the contribution margin ratio into
a. Fixed costs b. Desired profit c. Desired profit plus fixed cost d. Desired profit less fixed cost |
c. Desired profit plus fixed cost |
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At break-even point, fixed cost is always
a. Less than the contribution margin b. Equal to the contribution margin c. More than the contribution margin d. More than the variable costs |
b. Equal to the contribution margin |
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The contribution margin ratio always increases when the
a. Break-even point increases (THEORY) b. Break-even point decreases c. Variable costs as a percentage of net sales decreases d. Variable costs as a percentage of net sales increases |
c. Variable costs as a percentage of net sales decreases |
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If the fixed costs attendant to a product increases while variable costs and sales price remains constant, what will happen to (1) contribution margin and (2) break-even point? a. Increase; Decrease b. Decrease; Increase c. Unchanged; Increase d. Unchanged; Unchanged |
c. Unchanged; Increase |
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If the fixed costs for a product decrease and the variable costs (as a percentage of sales pesos) decrease, what will be the effect on the contribution margin ratio and the break-even point, respectively?
a. Increase; Decreased b. Decreased; Increased c. Decreased; Decreased d. Increased; Increased |
a. Increase; Decreased |
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Which of the following would cause the break-even point to change? a. Sales increased b. Total production decreased c. Total variable costs increased as a function of higher production d. Fixed costs increased |
d. Fixed costs increased |
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The method of cost accounting that lends itself to break-even analysis is a. Variable b. Standard c. Absolute d. Absorption |
a. Variable |
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Each of the following would affect the break-even point except a change in the a. Number of units sold b. Variable cost per unit c. Total fixed costs d. Sales price per unit |
a. Number of units sold |
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In setting earnings objectives, management must consider all of these items except a. Sales volume attainable in the present plant b. The break-even point c. Indices in industrial production d. Earnings or losses for a given sales volume level |
c. Indices in industrial production |
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To obtain the break-even point stated in terms of pesos of sales, total fixed costs are divided by which of the following?
a. Variable cost per unit b. (sales price per unit-variable cost per unit)/ sales price per unit c. Fixed cost per unit d. Variable cost per unit/ sales price per unit |
b. (sales price per unit-variable cost per unit)/ sales price per unit |
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Cost-volume-profit analysis allows management to determine relative profitability of a product by
a. Highlighting potential bottlenecks in the production process. b. Keeping fixed costs to an absolute minimum c. Determining the contribution margin per unit and projected profits at various levels of production d. Assigning costs to a product in a manner that maximizes the contribution margin |
c. Determining the contribution margin per unit and projected profits at various levels of production |
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Cost-volume-profit analysis includes some inherent, simplifying assumptions. Which of the following is not one of these assumptions? a. Costs and revenues are predictable and are linear over the relevant range b. Variable costs fluctuate proportionately with volume c. Changes in beginning and ending inventory levels are insignificant in amount d. Sales mix will change as fixed costs increase beyond the relevant range. |
d. Sales mix will change as fixed costs increase beyond the relevant range. |
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If a company's variable costs are 70% of sales, which formula represents the computation of peso sales that will yield a profit equal to 10% of the contribution margin where S equals sales in pesos for the period and FC equals total fixed cost for the period? a. 0.20/FC b. FC/0.20 c. 0.27/FC d. FC/0.27 |
d. FC/0.27 |
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A company increased the selling price for its product from P1.00 to P1.10 a unit when total fixed costs increased from P400,000 to P480,000 and variable cost per unit remain unchanged. How would these changes affect the break-even point? a. The break-even point in units would be increased b. The break-even point in units would be decreased c. The break-even point in units would remain unchanged d. The effect cannot be determined. |
d. The effect cannot be determined. |
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Margin of safety reveals the amount by which sales could decrease before losses occur is computed by a. Subtracting variable costs from sales b. Adding variable costs and fixed costs c. Subtracting break-even sales from actual sales d. Adding contribution margin and fixed costs |
c. Subtracting break-even sales from actual sales |
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In a sales mix break-even problem, total fixed costs divided by the composite contribution margin is to arrive at the
a. Total units to break-even b. Units to break-even for a particular product in the mix c. Total break-even sales pesos d. Composite break-even point in units |
d. Composite break-even point in units |
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Margin of safety ratio is computed by dividing excess of actual or budgeted sales from break-even sales or it can be determined by
a. Dividing contribution margin ratio by variable cost ratio b. Dividing profit ratio by contribution margin ratio c. Dividing contribution margin ratio by profit ratio d. Dividing variable cost ratio by contribution margin ratio |
b. Dividing profit ratio by contribution margin ratio |
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In a break-even chart, when the costs and profit line intersects with the sales line, it reveals the
a. Break-even point b. Point of profit c. Point of desired sales d. Point of total costs |
c. Point of desired sales |
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Break-even analysis assumes linearity over the relevant range with respect to (1) Total Costs; (2) Total Revenues
a. Yes; No b. Yes; Yes c. No; Yes d. No; No |
b. Yes; Yes |
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How would the following be used in calculating the expected sales level expressed in units? Contribution Margin/Unit : Estimated Operating Loss a. Denominator : Numerator b. Numerator : Numerator c. Not used : Denominator d. Numerator : Denominator |
a. Denominator : Numerator |
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In cost-volume-profit analysis, which of the following should be subtracted from fixed cost in the numerator?
a. Predicted operating loss b. Predicted operating profit c. Unit contribution margin d. Variable costs |
a. Predicted operating loss |
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Break-even analysis assumes over the relevant range that
a. Total costs are unchanged b. Selling prices are unchanged c. Variable costs are non-linear d. Fixed costs are non-linear |
b. Selling prices are unchanged |
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In using cost-volume-profit analysis to calculate the expected sales level expressed in units, a predicted operating loss would be
a. Added to fixed costs in the numerator b. Added to fixed costs in the denominator c. Subtracted from fixed costs in the numerator d. Subtracted from fixed costs in the denominator |
c. Subtracted from fixed costs in the numerator |
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What is the product contribution margin?
a. Sales minus all variable costs c. Sales minus all fixed costs b. Sales minus variable cost of goods sold d. Sales minus fixed manufacturing overhead |
a. Sales minus all variable costs |
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Which of the following factors can cause a company's sale mix to change?
a. Selling price b. Advertising c. Both A and B d. None of the above |
a. Selling price |
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Variable costs a. Are constant per unit b. Vary per unit c. Decrease per unit as volume decreases d. Remain constant in total |
a. Are constant per unit |
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Contribution margin is equal to a. Revenue minus variable costs b. Fixed costs plus profit before tax c. Contribution margin per unit multiplied by the number of units sold d. All of the above |
d. All of the above |
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Fixed costs a. Remain constant in total as volume changes b. Are fixed per unit as volume changes c. Increase per unit as volume increase d. Are always a product cost |
a. Remain constant in total as volume changes |
