final Exam Flashcards
(20 cards)
A very high degree of operating leverage indicates that a firm
a. Has high variable costs.
b. Has high fixed cost.
c. Is operating close to its breaking point.
d. Has a high net income.
b. Has high fixed costs.
The margin of safety is the
a. Sales dollars needed to cover fixed costs
b. Use of fixed costs to extract higher percentage changes in profits as sales value changes.
c. Amount of unit is expected to be sold above the breakeven level.
d. Number of units that need to be sold to achieve a profit target
c. amount of units expected to be sold above the breakeven level.
assuming all of their things are the same, if there was an increase in the breaking point, contribution margin per unit must have
a. Increased.
b. Remain the same.
c. Increased first, then decreased.
d. Decreased.
d. Decreased.
decrease in the sales price in the basic cost volume profit model would
a. The offset by an increase in unit costs.
b. Require a recomputation of the gross profit per unit.
c. Increase a breakeven volume
d. Decrease the volume.
c. Increase the breakeven volume.
assuming all other things are the same, if there was an increase in the breaking point, variable cost per unit
a. Must’ve increased first, then decreased.
b. Depends on the circumstances.
c. Must have increased.
d. Must have remained the same.
c. Must have increased.
assuming all of the things are equal, if there was a decrease in the breaking point fixed cost must have
a. Decreased.
b. Increase first, then decreased.
c. Remain the same.
d. Increased.
a. Decreased.
which of the following assumptions is not necessary for cost while profit analysis?
a. Inventories are constant.
b. The product sales makes is constant.
c. total variable cost are linear
d. Total revenues increased when total cost increase
d. total revenue increase when total cost increase
which of the following assumptions does not pertain to cost value profit analysis?
a. All classes are classified as fixture variable.
b. Sales makes me vary during the related Period.
c. The units produced what equal the unit sold.
d. Inventory are constant.
b. sales makes my very during the related period
which of the following statements is true of the assumptions made in a class volume profit analysis?
a. The analysis assumes the linear revenue function.
b. The analysis assumes that what is produced is not sold entirely.
c. The analysis assumes that the cost of products cannot be known with certainty
d. The analysis assumes in non-linear cost function.
a. The analysis assumes a linear revenue function.
and a profit volume graph, the slope of the profit line represents the
a. Variable cost per unit.
b. Contribution margin per unit.
c. Selling price per unit.
d. Total contribution margin.
b. Contribution margin per unit.
when a company sells more units and the breaking point,
a. There are no new variable cost incurred.
b. It moves above the relevant range.
c. Profits are positive.
d. Profits are negative.
c. Profits are positive.
and multiple product analysis, direct fix costs are
a. Fixed cost that can be traced to each segment and would remain even if one of the segments were eliminated.
b. Fixed class that are not traceable to the segments and would remain even if one of the segments were eliminated.
c. Fixed cost they can be tries to each segment and would be avoided of the segment did not exist.
d. Fixed costs that are not traceable to the segments and would be avoided if the segment did not exist.
c. Fixed cause that can be traced to each segment and would be avoided if the segment did not exist.
which of the following refers to the relative combination of products being sold by firm?
a. Breakeven sales.
b. Sales mix.
c. Contribution margin.
d. Margin of safety.
b. Sales mix.
which of the following statements about sales mix is true?
a. Profit for main concert with an increase in total dollars of sales if total sales in units remain constant
b. profits may decline with an increase in total dollars of sales of the sales makeshift to sell more of the lower contribution margin product.
c. Profits may decline with an increase in total dollars of sales if the sales makeshifts to sell more of the high contribution margin product.
d. Profits will remain constant with the decrease in total dollars of sales if the sales mix remains constant.
b. Profit may decline with an increase in total dollars of sales of the sales mixed shifts to sell more of the lower contribution margin product.
in the cost value, profit analysis, income taxes
a. Increase the sales volume required to earn a desired profit.
b. Are treated as a variable cost.
c. Increase the sales volume required to break even.
d. Are treated as a fixed cost.
a. Increase the sales volume required to earn a desired profit.
The contribution margin of break-even point
a. equals total fixed costs.
b. Is zero.
c. Plus, total fixed cost equals total revenues.
d. Is greater than variable costs.
a. equals total fixed costs.
total contribution margin is calculated by subtracting
a. Total variable cost from total revenue.
b. Cost of goods sold from total revenues.
c. Total manufacturing cost from total revenues.
d. Fixed cost from total revenues.
a. Total variable cost from total revenue.
The variable class ratio expresses
a. The variable cost in terms of sale dollars.
b. The proportion of sales dollars available to cover fixed cost and provide for a profit.
c. The proportion between fixed cost and variable costs
d. Variable cost a percentage of total costs.
a. Variable cost in terms of sales dollars.
The point of zero profit is called the
a. Contribution margin point.
b. Breakeven point.
c. Target profit point.
d. Profit volume point.
b. Breakeven point.
which of the following formula is used to calculate the breakeven point in units?
a. Breakeven point in units = sales / unit variable cost
b. Break given point in units = total fixed costs / (selling price - unit variable cost
c. Breakeven point in units = sales / fixed costs
d. Break even point in units = total costs / unit contribution margin
b. breakeven point in units = total fixed cost / (selling price - unit variable cost)
