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CVP analysis does not consider |
fixed cost per unit. |
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An example of a mixed cost is |
utility costs. |
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If graphed, fixed costs that behave in a curvilinear fashion resemble a(n) |
stair-step pattern. |
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Why is identification of a relevant range important? |
Cost behavior outside of the relevant range is not linear, which distorts CVP analysis. |
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Cost-volume-profit analysis includes all of the following assumptions except |
the behavior of costs is curvilinear throughout the relevant range. |
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Which is the true statement? |
The CVP income statement shows contribution margin instead of gross profit. |
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Which of the following is not a cost classification? |
Multiple |
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Which of the following is not a mixed cost? |
Depreciation |
|
In CVP analysis, the term "cost" |
includes manufacturing costs plus selling and administrative expenses. |
|
Contribution margin is |
available to cover fixed costs and contribute to income for the company. |
|
Firms operating at 100% capacity |
are the exception rather than the rule. |
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Which of the following is not true about the graph of a mixed cost? |
The variable cost portion of the graph is rectangular in shape. |
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A fixed cost is a cost which |
remains constant in total with changes in the level of activity. |
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A variable cost is a cost that |
varies in total in proportion to changes in the level of activity. |
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Keene, Inc. produces flash drives for computers, which it sells for $20 each. Each flash drive costs $6 of variable costs to make. During March, 1,000 drives were sold. Fixed costs for March were $4.90 per unit for a total of $4,900 for the month. If variable costs decrease by 10%, what happens to the break-even level of units per month for Keene? |
It decreases about 14 units. |
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Which of the following is not a fixed cost? |
Direct materials |
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The equation which reflects a CVP income statement is |
Sales – Variable costs – Fixed costs = Net income. |
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Changes in activity have a(n) _________ effect on fixed costs per unit. |
inverse |
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A CVP graph does not include a |
variable cost line. |
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The contribution margin ratio increases when |
variable costs as a percentage of sales decrease. |
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The break-even point is where |
contribution margin equals total fixed costs. |
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For an activity base to be useful in cost behavior analysis, |
there should be a correlation between changes in the level of activity and changes in costs. |
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Cost behavior analysis applies to |
retailers and wholesalers and manufacturers. "all entities!!!" |
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The amount by which actual or expected sales exceeds break-even sales is referred to as |
target net income. |
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The relevant range of activity refers to the |
levels of activity over which the company expects to operate. |
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Which of the following is not an underlying assumption of CVP analysis |
Beginning inventory is larger than ending inventory. |
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Which of the following would not be an acceptable way to express contribution margin |
Sales minus unit costs |
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To which function of management is CVP analysis most applicable |
Planning |
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CVP analysis is not important in |
calculating depreciation expense |
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