Twani

Question 1

If a company’s total fixed cost rises by $10,000, which of the following will be true?

Answer 1

The contribution margin ratio will be unchanged.

Question 2

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

Answer 2

Less risky than.

Question 3

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

Answer 3

The anticipated change in operating income.

Question 4

The use of high fixed and low variable costs to cause higher percentage changes in operating income as sales increase involves..

Answer 4

Operating leverage.

Question 5

Relevant costs..

Answer 5

Must differ between alternatives.

Question 6

________ is not likely to be relevant in a decision concerning the disposal of obsolete inventory.

Answer 6

Original Cost

Question 7

In a special sales order decision, the special price must exceed the variable cost of filling the order. In other words, the special order must have ________.

Answer 7

A positive contribution margin.

Question 8

An opportunity cost is a..

Answer 8

Value of an opportunity given up by choosing one alternative over another.

Question 9

The potential rental value of space currently used for production activities is an example of..

Answer 9

An opportunity cost of production.