Reference no: EM132659463

Question 1: Which of the following is true of the break-even point, assuming all other things are equal?

a.The break-even point changes in the opposite direction as changes in the total fixed costs.

b.The break-even point changes in the opposite direction as changes in the unit selling price.

c.The break-even point changes in the opposite direction as changes in the variable cost per unit.

d.The break-even point changes in the same direction as changes in the unit contribution margin.

Question 2: Managers can vary selling prices, costs, and volume and can observe the effects of each change on the break-even point and profit using _____.

a.net present value analysis

b.sensitivity analysis

c.equity analysis

d.risk analysis

Question 3: Which of the following is an underlying assumption of cost-volume-profit analysis?

a.Total sales and total costs cannot be represented by straight lines.

b.The sales mix is variable.

c.Within the relevant range of operating activity, the efficiency of operations does not change.

d.The inventory quantities change twice during the relevant period.

Question 4: The _____ indicates the percentage of each sales dollar available to cover fixed costs and to provide operating income.

a.contribution margin ratio

b.net profit margin ratio

c.operating profit margin ratio

d.cash flow coverage ratio

Question 5: Activities that cause costs to change are called _____.

a.cost pools

b.activity bases

c.unit activities

d.incremental activities