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Exam 11: Cost-Volume-Profit Analysis

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Question 21

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Activities that cause costs to change are called activity bases.

A) True
B) False

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Question 22

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Sales amount to $774,000, variable costs are 59% of sales, and fixed cost is $120,000.What is the contribution margin ratio?

A) 37%
B) 44%
C) 39%
D) 41%

E) B) and C)
F) A) and D)

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Question 23

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Cost behavior refers to the manner in which:

Total fixed costs remain constant as the level of activity changes within the relevant range.

The point where the profit line intersects the horizontal axis on the profit-volume graph represents:

The range of activity over which changes in cost are of interest to management is called the relevant range.

If employees accept a wage contract that decreases the unit contribution margin, the break-even point will decrease.

The relative distribution of sales among the various products sold by a business is termed as:

Calculate the contribution margin ratio of a company with sales of $180,000 and operating income of $37,000.Variable costs of the company are 52% of sales.

Currently, fixed costs are $500,000 and the unit contribution margin is $40.What would be the break-even point in units if fixed costs are reduced by $80,000?

The relevant range is useful for analyzing cost behavior for management decision-making purposes.

Currently, fixed costs are $810,000, the unit selling price is $60, and the unit variable cost is $48.What would be the break-even sales (in units) , if the variable cost is increased by $2?

The electricity expense in a production plant is an example of a:

Which of the following statements is true if the number of units produced decreases?

_____ per unit increases or decreases in inverse proportion to its activity level.

Compute the number of units that must be sold in order to have zero profit when fixed costs are $810,000 and unit contribution margin is $90.

Which of the following costs is an example of a fixed cost?

The difference between the current sales revenue and the sales at the break-even point is called the:

Calculate the number of units that must be sold in order to realize an operating income of $139,000 when fixed costs are $440,000 and unit contribution margin is $20.

A change in fixed costs as a result of increase in yearly insurance premium will decrease the break-even point.