Test_ Cost Accounting Chapter 3 TB _ Quizlet

10/26/2015 Test: Cost accounting chapter 3 TB | Quizlet

https://quizlet.com/16888060/test?written=on&matching=on&mult_choice=on&tf=on&promptwith=2&limit=44 1/9

11 Written questions

1. fixed costs increase when activity increases

INCORRECT: You gave no answer

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

0%F

NAME



h

a

1. less risk is assumed than in a highlyleveraged firm

INCORRECT: No answer given

ANSWER: In a company withlow operating leverage

2. A sensitivity analysis


ANSWER: ________ is the process of

varying key estimates toidentify those estimates that

are the most critical

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


POSSIBLE ANSWERS: When graphed, total costs curve upward. or Unit selling price, unit variablecosts, and unit fixed costs are known and remain constant

11. The breakeven point is the activity level where


ANSWER: revenues equal the sum of variable and fixed costs

11 Matching questions

a

________ is the process of varying key estimates toidentify those estimates that are the most critical

b

The breakeven point in CVP analysis is defined as

c

Both total sales revenue exceeds total costs andthere is a profit

d when demand is low the risk of loss is high

e

To determine the effect of income tax on adecision, managers should evaluate

f revenues minus variable costs



b

d

j

k

g

3. fixed costs divided by the contributionmargin per unit


ANSWER: The breakeven pointin CVP analysis is defined as

4. When a greater proportion of costsare fixed costs, then


ANSWER: when demand is lowthe risk of loss is high

5. a financial recession


ANSWER: Events, asdistinguished from actions,

would include

6. Which of the following will increase acompany's breakeven point?


ANSWER: increasing variablecost per unit

7. (CPA adapted, November 1992) Thestrategy most likely to reduce thebreakeven point would be to


ANSWER: decrease the fixedcosts and increase the

contribution margin

8. If unit outputs exceed the breakevenpoint

g

decrease the fixed costs and increase thecontribution margin

h In a company with low operating leverage

i reduce operating income

j

Events, as distinguished from actions, wouldinclude

k increasing variable cost per unit



c

f

e

i


ANSWER: Both total salesrevenue exceeds total costs

and there is a profit

9. Contribution margin equals


ANSWER: revenues minusvariable costs

10. target net income


ANSWER: To determine theeffect of income tax on a

decision, managers should evaluate

11. Assume there is an increase inadvertising expenditures and all otherCVP parameters remain constant. Thischange will


ANSWER: reduce operatingincome

11 Multiple choice questions

1. Assume only the specified parameters change in a CVP analysis. The contribution marginpercentage 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



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 parametersremain 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



7. the weighted average of the outcomes with the probability of each outcome serving as theweight

(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



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 theexpected 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 breakevenpoint?

This is false. You gave no answer.

It should be contribution margin per unit → The selling price per unit less the variable cost perunit 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 netincome rather than operating income.

3. Which of the following statements about net income (NI) is true → Breakeven revenues equalfixed costs divided by the variable cost per unit


It should be Which of the following statements about net income (NI) is true → NI = operatingincome 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.



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 → Onlyselling 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 themanufacturing 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 sellingprice, unit variable costs, and unit fixed costs are known and remain constant.

11. both variable manufacturing costs and variable nonmanufacturing costs → Cost-volume-profitanalysis assumes all of the following EXCEPT


It should be both variable manufacturing costs and variable nonmanufacturing costs → Todetermine contribution margin use.

Test_ Cost Accounting Chapter 3 TB _ Quizlet

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