Managerial Accounting Ch. 7 Pre-Quizzes

Total contribution margin less total fixed expenses equals

operating income.

The unit contribution margin is computed by

subtracting the variable cost per unit from the sales price per unit.

The contribution margin ratio explains the percentage of each sales dollar that

contributes toward fixed costs and generating a profit.

CVP analysis assumes all of the following except

inventory levels will increase.

To the left of the breakeven point on a CVP graph, the area between the total expense line and the sales revenue line represents which of the following?

Operating loss

To find the number of units that need to be sold in order to breakeven or generate a target profit, the formula used is

(fixed expenses + operating income) / contribution margin per unit

To find the sales revenue (sales in dollars) needed in order to breakeven or generate a target profit, the formula used is

(fixed expenses + operating income) / contribution margin ratio

To find the sales revenue need to breakeven, the formula used could be

fixed expenses / contribution margin ratio

To find the number of units that need to be sold to breakeven, the formula used could be

fixed expenses / contribution margin per unit

The breakeven point may be defined as the number of units a company must sell to do which of the following?

Generate a zero profit

Sales above the breakeven point indicate a ______, whereas sales below the breakeven point indicate a ______.

profit; loss

The horizontal line intersecting the vertical y-axis at the level of total cost on a CVP graph represents

total fixed costs.

Company A has a higher safety of margin while Company B has a lower safety of margin. Company a would be considered _______ Company when considering only margin of safety.

less risky than

A company's margin of safety can be stated

any of the above (in dollars, as a percentage of sales, in units)

A company's margin of safety is computed as

expected sales - sales at breakeven.

All else being equal, a company with high operating leverage will have

relatively high contribution margin ratio.

All else being equal, a company with a low operating leverage will have

relatively high variable costs.

To find a firm's operating leverage factor at a given level of sales, you

divide the contribution margin by operating income.

By multiplying the operating leverage by the anticipated percentage change in volume, one can find

the anticipated change in operating income.

The higher the operating leverage factor, the

greater the impact of volume on operating income.

Managerial Accounting Ch. 7 Pre-Quizzes - Subjecto.com

Managerial Accounting Ch. 7 Pre-Quizzes

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Total contribution margin less total fixed expenses equals

operating income.

The unit contribution margin is computed by

subtracting the variable cost per unit from the sales price per unit.

The contribution margin ratio explains the percentage of each sales dollar that

contributes toward fixed costs and generating a profit.

CVP analysis assumes all of the following except

inventory levels will increase.

To the left of the breakeven point on a CVP graph, the area between the total expense line and the sales revenue line represents which of the following?

Operating loss

To find the number of units that need to be sold in order to breakeven or generate a target profit, the formula used is

(fixed expenses + operating income) / contribution margin per unit

To find the sales revenue (sales in dollars) needed in order to breakeven or generate a target profit, the formula used is

(fixed expenses + operating income) / contribution margin ratio

To find the sales revenue need to breakeven, the formula used could be

fixed expenses / contribution margin ratio

To find the number of units that need to be sold to breakeven, the formula used could be

fixed expenses / contribution margin per unit

The breakeven point may be defined as the number of units a company must sell to do which of the following?

Generate a zero profit

Sales above the breakeven point indicate a ______, whereas sales below the breakeven point indicate a ______.

profit; loss

The horizontal line intersecting the vertical y-axis at the level of total cost on a CVP graph represents

total fixed costs.

Company A has a higher safety of margin while Company B has a lower safety of margin. Company a would be considered _______ Company when considering only margin of safety.

less risky than

A company’s margin of safety can be stated

any of the above (in dollars, as a percentage of sales, in units)

A company’s margin of safety is computed as

expected sales – sales at breakeven.

All else being equal, a company with high operating leverage will have

relatively high contribution margin ratio.

All else being equal, a company with a low operating leverage will have

relatively high variable costs.

To find a firm’s operating leverage factor at a given level of sales, you

divide the contribution margin by operating income.

By multiplying the operating leverage by the anticipated percentage change in volume, one can find

the anticipated change in operating income.

The higher the operating leverage factor, the

greater the impact of volume on operating income.

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