MULTIPLE CHOICE
1. CVP analysis requires costs to be categorized as _______. (Points : 1)
2. According to CVP analysis, a company could never incur a loss that exceeded its total _______. (Points : 1)
3. CVP analysis is based on concepts from _______. (Points : 1)
4. Which of the following factors is involved in studying cost-volume-profit relationships? (Points : 1)
5. After the level of volume exceeds the break-even point _______. (Points : 1)
6. The method of cost accounting that lends itself to break-even analysis is _______. (Points : 1)
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)
8. To compute the break-even point in units, which of the following formulas is used? (Points : 1)
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)
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)
11. Which of the following is not a characteristic of relevant costing information? It is _______. (Points : 1)
12. Relevant costs are _______. (Points : 1)
13. If a cost is irrelevant to a decision, the cost could not be _______. (Points : 1)
14. A cost is sunk if it _______. (Points : 1)
15. In deciding whether an organization will keep an old machine or purchase a new machine, a manager would ignore the _______. (Points : 1)
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)
17. In a make or buy decision, the opportunity cost of capacity could _______. (Points : 1)
18. When a scarce resource, such as space, exists in an organization, the criterion that should be used to determine production is _______. (Points : 1)
19. Fixed costs are ignored in allocating scarce resources because _______. (Points : 1)
20. The minimum selling price that should be acceptable in a special order situation is equal to total _______. (Points : 1)
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