Question;ACC 350 WK 4 Quiz 3 Chapter 3;1) To perform cost-volume-profit analysis, a company must be able to separate costs into fixed and variable components. Answer;2) Cost-volume-profit analysis may be used for multi-product analysis when the proportion of different products remains constant. Answer;3) It is assumed in CVP analysis that the unit selling price, unit variable costs, and unit fixed costs are known and constant. Answer;4) In CVP analysis, the number of output units is the only revenue driver. Answer;5) Many companies find even the simplest CVP analysis helps with strategic and long-range planning. Answer;6) In CVP analysis, total costs can be separated into a;fixed component that does not vary with output and a component that is;variable with output level. Answer: 7) In CVP analysis, variable costs include direct variable costs, but do not include indirect variable costs. Answer;8) In CVP analysis, an assumption is made that the total;revenues are linear with respect to output units, but that total costs;are non-linear with respect to output units. Answer;9) A revenue driver is defined as a variable that causes changes in prices. Answer;10) If the selling price per unit is $20 and the contribution margin percentage is 30%, then the variable cost per unit must be $6. Answer;11) Total revenues less total fixed costs equal the contribution margin. Answer;12) Gross margin is reported on the contribution income statement. Answer: 13) If;the selling price per unit of a product is $30, variable costs per unit;are $20, and total fixed costs are $10,000 and a company sells 5,000;units, operating income would be $40,000. Answer;14) The selling price per unit is $30, variable cost per;unit $20, and fixed cost per unit is $3. When this company operates;above the breakeven point, the sale of one more unit will increase net;income by $7. Answer;15) A company with sales of $100,000, variable costs of;$70,000, and fixed costs of $50,000 will reach its breakeven point if;sales are increased by $20,000. Answer;16) Breakeven point is not a good planning tool since the goal of business is to make a profit. Answer;17) Breakeven point is that quantity of output where total revenues equal total costs. Answer: 18) In;the graph method of CVP analysis, the breakeven point is the (X-axis);quantity of units sold for which the total revenues line crosses the;total costs line. Answer;19) In the graph method of CVP analysis, the total;revenue line can be calculated by determining the total revenue at only;one real output level because the starting point of the line is always;the intersection of the X and Y axes. Answer: 20) A profit-volume graph shows the impact on operating income from changes in the output level. Answer;21) If the selling price per unit of a product is $50;variable costs per unit are $40, and total fixed costs are $50,000, a;company must sell 6,000 units to make a target operating income of;$10,000. Answer;22) An increase in the tax rate will increase the breakeven point. Answer;23) When making net income evaluations, CVP calculations;for target income must be stated in terms of target operating income;instead of target net income. Answer;24) If operating income is $70,000 and the income tax rate is 30%, then net income will be $49,000. Answer;25) If planned net income is $21,000 and the tax rate is 30%, then planned operating income would be $27,300. Answer;26) Sensitivity analysis is a "what-if" technique that;managers use to examine how a result will change if the originally;predicted data are not achieved or if an underlying assumption changes. Answer: 27) Margin of safety measures the difference between budgeted revenues and breakeven revenues. Answer;28) If a company's breakeven revenue is $100 and its budgeted revenue is $125, then its margin of safety percentage is 25%. Answer;29) Sensitivity analysis helps to evaluate the risk associated with decisions. Answer;30) If contribution margin decreases by $1 per unit, then operating profits will increase by $1 per unit. Answer;More Questions are Included.
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