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10/26/2015

Test: Cost accounting chapter 3 TB | Quizlet

NAME
NAME
11 Written questions F 1. fixed costs increase wh en activity increases INCORRECT: You gave no
11 Written questions
F
1.
fixed costs increase wh en activity increases
INCORRECT: You gave no answer
0%
ANSWER: All of the following are assumed in the above analysis EXCEPT
2.
Cost-volume-profit ana lysis is used primarily by management
INCORRECT: You gave no answer
ANSWER: as a planning tool
3.
only variable costs are subtracted to determine gross margin
INCORRECT: You gave no answer
ANSWER: In the merch andising sector
4.
One of the first steps to take when using CVP analysis to help make decisions is
INCORRECT: You gave no answer
ANSWER: identifying w hich costs are variable and which costs are fixed
5.
If the tax rate is t, it is possible to calculate planned operating income by
INCORRECT: You gave no answer
ANSWER: dividing net i ncome by 1- t
6.
Multiple cost drivers
INCORRECT: You gave no answer
ANSWER: have no unique breakeven point
7.
any factor that affects revenues
INCORRECT: You gave no answer
ANSWER: A revenue driver is defined as

10/26/2015

Test: Cost accounting chapter 3 TB | Quizlet

8. budgeted revenues and breakeven revenues INCORRECT: You gave no answer ANSWER: The margin of safety
8.
budgeted revenues and breakeven revenues
INCORRECT: You gave no answer
ANSWER: The margin of safety is the difference between
9.
variable and fixed costs
INCORRECT: You gave no answer
ANSWER: The contribution income statement highlights
10.
Which of the following items is NOT an assumption of CVP analysis
INCORRECT: You gave no answer
POSSIBLE ANSWERS: When graphed, total costs curve upward. or Unit selling price, unit variable
costs, and unit fixed costs are known and remain constant
11.
The breakeven point is the activity level where
INCORRECT: You gave no answer
ANSWER: revenues equal the sum of variable and fixed costs
11 Matching questions
1.
less risk is assumed than in a highly
leveraged firm
a
________
identify those estimates that are the most critical
is the process of varying key estimates to
INCORRECT: No answer given
b
h
ANSWER: In a company with
low operating l everage
The breakeven point in CVP analysis is defined as
c
2.
A sensitivity analysis
INCORRECT: No answer given
Both total sales revenue exceeds total costs and
there is a profit
d
when demand is low the risk of loss is high
ANSWER:
________
is the process of
varying key est imates to
identify those estimates that
are the most critical
a
e
To determine the effect of income tax on a
decision, managers should evaluate
f
revenues minus variable costs

10/26/2015

Test: Cost accounting chapter 3 TB | Quizlet

3. fixed costs divided by the contribution margin per unit g INCORRECT: No answer given decrease
3.
fixed costs divided by the contribution
margin per unit
g
INCORRECT: No answer given
decrease the fixed costs and increase the
contribution margin
In a company with low operating leverage
b
ANSWER: The breakeven point
in CVP analysis is defined as
h
i
reduce operating income
4.
When a greater propor tion of costs
are fixed costs, then
j
INCORRECT: No answer given
Events, as distinguished from actions, would
include
d
ANSWER: when demand is low
the risk of loss is high
k
increasing variable cost per unit
5.
a financial recession
INCORRECT: No answer given
ANSWER: Events, as
distinguished f rom actions,
would include
j
6.
Which of the following will increase a
company's breakeven point?
INCORRECT: No answer given
k
ANSWER: increasing variable
cost per unit
7.
(CPA adapted, Novemb er 1992) The
strategy most likely to reduce the
breakeven point would be to
INCORRECT: No answer given
ANSWER: decrease the fixed
costs and increase the
contribution margin
g
8.
If unit outputs exceed the breakeven
point

10/26/2015

Test: Cost accounting chapter 3 TB | Quizlet

INCORRECT: No answer given ANSWER: Both total sales revenue exceeds total costs and there is a
INCORRECT: No answer given
ANSWER: Both total sales
revenue exceeds total costs
and there is a profit
c
9.
Contribution margin equals
INCORRECT: No answer given
f
ANSWER: revenues minus
variable costs
10.
target net income
INCORRECT: No answer given
ANSWER: To det ermine the
effect of incom e tax on a
decision, managers should evaluate
e
11.
Assume there is an increase in
advertising expenditures and all other
CVP parameters remain constant. This
change will
INCORRECT: No answer given
i
ANSWER: reduce operating
income
11 Multiple choice questions
1.
Assume only the specified parameters change in a CVP analysis. The contribution margin
percentage increases when
(No Answer)
a.
total fixed costs decrease
b.
CORRECT: variable costs per unit decrease
c.
variable and fixed costs
d.
increasing variable cost per unit

10/26/2015

Test: Cost accounting chapter 3 TB | Quizlet

2. are considered variable costs over the long run (No Answer) a. Gross margin is b.
2.
are considered variable costs over the long run
(No Answer)
a.
Gross margin is
b.
CORRECT: Fixed costs
c.
Breakeven point is
d.
Multiple cost drivers
3.
Breakeven point is
(No Answer)
a.
fixed costs increase when activity increases
b.
CORRECT: fixed costs divided by contribution margin per unit
c.
fixed costs divided by the contribution margin per unit
d.
contribution margin per unit
4.
The breakeven point decreases if
(No Answer)
a.
a financial recession
b.
variable costs per unit decrease
c.
target net income
d.
CORRECT: total fixed costs decrease
5.
reduce operating income
(No Answer)
a.
The breakeven po int is the activity level where
b.
The breakeven po int in CVP analysis is defined as
c.
All of the following are assumed in the above analysis EXCEPT
d.
CORRECT: Assume there is a reduction in the selling price and all other CVP parameters
remain constant. This change will
6.
per unit variable costs increase when activity increases
(No Answer)
a.
CORRECT: All of the following are assumed in the above analysis EXCEPT
b.
Which of the following statements about net income (NI) is true
c.
Which of the following items is NOT an assumption of CVP analysis
d.
The margin of safety is the difference between
10/26/2015 Test: Cost accounting chapter 3 TB | Quizlet 7. the weighted average of the outcomes
10/26/2015
Test: Cost accounting chapter 3 TB | Quizlet
7.
the weighted average of the outcomes with the probability of each outcome serving as the
weight
(No Answer)
a.
The breakeven po int in CVP analysis is defined as
b.
CORRECT: Expected monetary value may be defined as
c.
A revenue driver is defined as
d.
"Uncertainty" may be defined as
8.
If a company would like to increase its degree of operating leverage it should
(No Answer)
a.
CORRECT: increase its fixed costs relative to its variable costs
b.
revenues minus variable costs
c.
increasing variable cost per unit
d.
decrease the fixed costs and increase the contribution margin
9.
Cost-volume-profit ana lysis assumes all of the following EXCEPT
(No Answer)
a.
are considered variable costs over the long run
b.
CORRECT: total variable costs remain the same over the relevant range
c.
per unit variable costs increase when activity increases
d.
variable costs per unit decrease
10.
can be used to predict future profits at different levels of activity
(No Answer)
a.
The contribution income statement highlights
b.
The breakeven po int decreases if
c.
Contribution margin equals
d.
CORRECT: The contribution income statement
10/26/2015 Test: Cost accounting chapter 3 TB | Quizlet 11. "Uncertainty" may be d efined as
10/26/2015
Test: Cost accounting chapter 3 TB | Quizlet
11.
"Uncertainty" may be d efined as
(No Answer)
a.
total variable costs remain the same over the relevant range
b.
less risk is assumed than in a highly leveraged firm
c.
CORRECT: the poss ibility that an actual amount will be either higher or lower than the
expected amount
d.
are considered variable costs over the long run
11 True/False questions
1.
contribution margin per unit → Which of the following will increase a company's breakeven
point?
This is false. You gave no answer.
It should be contribution margin per unit → The selling price per unit less the variable cost per
unit is the.
2.
will not change the breakeven point → Multiple cost drivers
This is false. You gave no answer.
It should be will not change the breakeven point → In CVP analysis, focusing on target net
income rather than operating income.
3.
Which of the following statements about net income (NI) is true → Breakeven revenues equal
fixed costs divided by the variable cost per unit
This is false. You gave no answer.
It should be Which of the following statements about net income (NI) is true → NI = operating
income less income taxes.
4.
If a change is made in one parameter of CVP analysis, it is an example of → sensitivity analysis
This is true. You gave no answer.

10/26/2015

Test: Cost accounting chapter 3 TB | Quizlet

5. sales revenue less cost of goods sold → Contribution margin equals This is false. You
5.
sales revenue less cost of goods sold → Contribution margin equals
This is false. You gave no answer.
It should be sales revenue less cost of goods sold → Gross margin is.
6.
Which of the following statements about determining the breakeven point is FALSE? →
Breakeven revenues equal fixed costs divided by the variable cost per unit
This is true. You gave no answer.
7.
Which of the following is true about the assumptions underlying basic CVP analysis → Only
selling price, variable cost per unit, and total fixed costs are known and constant
This is true. You gave no answer.
8.
Operating income cal culations use → cost of goods sold and operating costs
This is true. You gave no answer.
9.
fixed overhead costs are subtracted to determine gross margin → In the merchandising sector
This is false. You gave no answer.
It should be fixed overhead costs are subtracted to determine gross margin → In the
manufacturing sector.
10.
Which of the following items is NOT an assumption of CVP analysis → Only selling price,
variable cost per unit, and total fixed costs are known and constant
This is false. You gave no answer.
It should be Which of the following items is NOT an assumption of CVP analysis → Unit selling
price, unit variable co sts, and unit fixed costs are known and remain constant.
11.
both variable manufa cturing costs and variable nonmanufacturing costs → Cost-volume-profit
analysis assumes all of the following EXCEPT
This is false. You gave no answer.
It should be both variable manufacturing costs and variable nonmanufacturing costs → To
determine contribution margin use.

10/26/2015

Test: Cost accounting chapter 3 TB | Quizlet