1. CVP analysis requires costs to be categorized as _______.

(Points: 1) either fixed

or variable fixed, mixed, or variable product or period standard or actual

2. According to CVP analysis, a company could never incur a loss that exceeded its total
_______. (Points: 1 variable costs fixed costs costs contribution margin

3. CVP analysis is based on concepts from _______. (Points: 1) standard costing

variable costing job order costing process costing

4. Which of the following factors is involved in studying cost-volume-profit

relationships? (Points: 1) product mix variable costs fixed costs all of the above

5. After the level of volume exceeds the break-even point _______. (Points: 1) the
contribution margin ratio increases the total contribution margin exceeds the
total fixed costs total fixed costs per unit will remain constant the total contribution
margin will turn from negative to positive

6. The method of cost accounting that lends itself to break-even analysis is _______.
(Points: 1) variable standard absolute absorption

7. Given the following notation, what is the break-even sales level in units? SP = selling
price per unit, FC = total fixed cost, VC = variable cost per unit (Points: 1) SP/(FC/VC)
FC/(VC/SP) VC/(SP - FC) FC/(SP - VC)

8. To compute the break-even point in units, which of the following formulas is used?
(Points: 1) FC/CM per unit FC/CM ratio CM/CM ratio FC+VC)/CM ratio

9. Below is an income statement for Thompson Company. Based on the cost and revenue
structure on the income statement, below, what was Thompson’s break-even point in
dollars? Sales $400,000 Variable costs (125,000) Contribution margin $275,000 Fixed
costs (200,000) Profit before taxes $ 75,000 (Points: 1) $200,000 $325,000 $300,000
$290,909

10. Unique Company manufactures a single product. In the prior year, the company had
sales of $90,000, variable costs of $50,000, and fixed costs of $30,000. Unique expects
its cost structure and sales price per unit to remain the same in the current year, however
total sales are expected to increase by 20 percent. If the current year projections are
realized, net income should exceed the prior year’s net income by _______. (Points: 1)
100 percent 80 percent 20 percent 50 percent

11. Which of the following is not a characteristic of relevant costing information? It is

_______. (Points: 1) associated with the decision under consideration significant to the
decision maker readily quantifiable related to a future endeavor

12. Relevant costs are _______. (Points: 1) all fixed and variable costs all costs that
would be incurred within the relevant range of production past costs that are expected to
be different in the future anticipated future costs that will differ among
various alternatives

13. If a cost is irrelevant to a decision, the cost could not be _______. (Points: 1) a sunk
cost a future cost a variable cost an incremental cost

14. A cost is sunk if it _______. (Points: 1) is not an incremental cost is unavoidable has
already been incurred is irrelevant to the decision at hand

15. In deciding whether an organization will keep an old machine or purchase a new
machine, a manager would ignore the _______. (Points: 1) estimated disposal value of
the old machine acquisition cost of the old machine operating costs of the new
machine estimated disposal value of the new machine

16. The opportunity cost of making a component part in a factory with excess capacity
for which there is no alternative use is _______. (Points: 1) the total manufacturing cost
of the component the total variable cost of the component the fixed manufacturing cost of
the component zero

17. In a make or buy decision, the opportunity cost of capacity could _______. (Points: 1)
be considered to decrease the price of units purchased from suppliers
be considered to decrease the cost of units manufactured by the company be considered
to increase the price of units purchased from suppliers not be considered since
opportunity costs are not part of the accounting records

18. When a scarce resource, such as space, exists in an organization, the criterion that
should be used to determine production is _______. (Points: 1) contribution margin per
unit selling price per unit contribution margin per unit of scarce resource total
variable costs of production

19. Fixed costs are ignored in allocating scarce resources because _______. (Points: 1)
they are sunk they are unaffected by the allocation of scarce resources
there are no fixed costs associated with scarce resources fixed costs only apply to long-
run decisions

20. The minimum selling price that should be acceptable in a special order situation is
equal to total _______. (Points: 1) production cost variable production cost variable
costs production cost plus a normal profit margin