Test - Cost Accounting Chapter 3 TB - Quizlet

10/26/2015
Test:Costaccountingchapter3TB|Quizlet
NAME
11 Written questions
1.
fixed costs increase when activity increases

INCORRECT: You gave no answer
0%
ANSWER: All of the following are assumed in the above analysis EXCEPT
2.
Cost-volume-profit analysis is used primarily by management

ANSWER: as a planning tool
3.
only variable costs are subtracted to determine gross margin

ANSWER: In the merchandising sector
4.
One of the first steps to take when using CVP analysis to help make decisions is
ANSWER: identifying which costs are variable and which costs are fixed
5.
If the tax rate is t, it is possible to calculate planned operating income by

ANSWER: dividing net income by 1- t
6.
Multiple cost drivers

ANSWER: have no unique breakeven point
7.
any factor that affects revenues

ANSWER: A revenue driver is defined as
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8.
budgeted revenues and breakeven revenues

ANSWER: The margin of safety is the difference between
9.
variable and fixed costs

ANSWER: The contribution income statement highlights
10.
Which of the following items is NOT an assumption of CVP analysis

When graphed, total costs curve upward. or Unit selling price, unit variable
costs, and unit fixed costs are known and remain constant
POSSIBLE ANSWERS:
11.
The breakeven point is the activity level where

ANSWER: revenues equal the sum of variable and fixed costs
11 Matching questions
1.
less risk is assumed than in a highly

leveraged firm
INCORRECT: No answer given
ANSWER: In a company with
low operating leverage
________ is the process of varying key estimates to

identify those estimates that are the most critical
b
The breakeven point in CVP analysis is defined as

c
2.
A sensitivity analysis
ANSWER: ________ is the process of
varying key estimates to

identify those estimates that
are the most critical
a
Both total sales revenue exceeds total costs and

there is a profit
d
when demand is low the risk of loss is high
To determine the effect of income tax on a

decision, managers should evaluate
f
revenues minus variable costs
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3.
fixed costs divided by the contribution

margin per unit
4.
ANSWER: The breakeven point
in CVP analysis is defined as
When a greater proportion of costs

are fixed costs, then
5.
ANSWER: when demand is low
the risk of loss is high
decrease the fixed costs and increase the

contribution margin
h
In a company with low operating leverage
reduce operating income
Events, as distinguished from actions, would

include
k
increasing variable cost per unit
a financial recession
ANSWER: Events, as
distinguished from actions,

would include
6.
Which of the following will increase a

company's breakeven point?
7.
ANSWER: increasing variable
cost per unit
(CPA adapted, November 1992) The

strategy most likely to reduce the
breakeven point would be to
ANSWER: decrease the fixed
costs and increase the

contribution margin
8.
If unit outputs exceed the breakeven

point
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ANSWER: Both total sales
revenue exceeds total costs

and there is a profit
9.
Contribution margin equals

10.
ANSWER: revenues minus
variable costs
target net income

ANSWER: To determine the
effect of income tax on a

decision, managers should evaluate
11.
Assume there is an increase in

advertising expenditures and all other
CVP parameters remain constant. This
change will
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
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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 point is the activity level where
b. The breakeven point 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
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7.
the weighted average of the outcomes with the probability of each outcome serving as the
weight
(No Answer)
a. The breakeven point 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 analysis 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 point decreases if
c. Contribution margin equals
d. CORRECT: The contribution income statement
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11.
"Uncertainty" may be defined 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 possibility 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

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
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.
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5.
sales revenue less cost of goods sold Contribution margin equals

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
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
8.
Operating income calculations use cost of goods sold and operating costs
9.
fixed overhead costs are subtracted to determine gross margin In the merchandising sector
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
It should be Which of the following items is NOT an assumption of CVP analysis Unit selling
price, unit variable costs, and unit fixed costs are known and remain constant.
11.
both variable manufacturing costs and variable nonmanufacturing costs Cost-volume-profit

analysis assumes all of the following EXCEPT
It should be both variable manufacturing costs and variable nonmanufacturing costs To
determine contribution margin use.
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Test - Cost Accounting Chapter 3 TB - Quizlet

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10/26/2015

fixed costs increase when activity increases

Cost-volume-profit analysis is used primarily by management

only variable costs are subtracted to determine gross margin

If the tax rate is t, it is possible to calculate planned operating income by

Multiple cost drivers

any factor that affects revenues

budgeted revenues and breakeven revenues

variable and fixed costs

Which of the following items is NOT an assumption of CVP analysis

The breakeven point is the activity level where

less risk is assumed than in a highly

ANSWER: In a company with

low operating leverage

________ is the process of varying key estimates to

The breakeven point in CVP analysis is defined as

varying key estimates to

Both total sales revenue exceeds total costs and

when demand is low the risk of loss is high

To determine the effect of income tax on a

revenues minus variable costs

fixed costs divided by the contribution

ANSWER: The breakeven point

in CVP analysis is defined as

When a greater proportion of costs

ANSWER: when demand is low

the risk of loss is high

decrease the fixed costs and increase the

In a company with low operating leverage

reduce operating income

Events, as distinguished from actions, would

increasing variable cost per unit

distinguished from actions,

Which of the following will increase a

ANSWER: increasing variable

cost per unit

(CPA adapted, November 1992) The

ANSWER: decrease the fixed

costs and increase the

If unit outputs exceed the breakeven

INCORRECT: No answer given

ANSWER: Both total sales

revenue exceeds total costs

Contribution margin equals

ANSWER: revenues minus

target net income

ANSWER: To determine the

effect of income tax on a

Assume there is an increase in

ANSWER: reduce operating

11 Multiple choice questions

are considered variable costs over the long run

The breakeven point decreases if

reduce operating income

remain constant. This change will

per unit variable costs increase when activity increases

If a company would like to increase its degree of operating leverage it should

Cost-volume-profit analysis assumes all of the following EXCEPT

can be used to predict future profits at different levels of activity

"Uncertainty" may be defined as

will not change the breakeven point Multiple cost drivers

income rather than operating income.

income less income taxes.