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ACCT 2023 Chapter 6
ACCT 2023
| Question | Answer |
|---|---|
| Cost Volume Profit (CVP) focuses on how profits are affected by | Selling Prices, Sales Value, Unit Variable Cost, Total Fixed Cost, Mix of products sold |
| Contribution margin is used to cover____expenses. Once the break-even point has been reached, contributed margin becomes _____ | FIXED PROFIT |
| Marjorie's Mugs sold 300 mugs last year for $20 each. Variable costs were $7 per mug and total fixed costs were $1,700. Marjorie's Mugs' profit was ______ | Profit = (Sales - Variable expenses) - Fixed Expenses Sales = Selling price per Unit * Quantity sold Variable expenses= Variable expenses per unit * Quantity sold |
| Company A has a contribution margin ratio of 35%. For each dollar in sales, contribution margin will increase by ______. | $0.35 |
| Which of the following items are found above the contribution margin on a contribution margin format income statement? Multiple select question. Fixed expenses Net operating income Sales Variable expenses | Sales Variable expenses Example: Sales -Variable Expenses =Contribution Margin |
| When constructing a CVP graph, the vertical axis represents: Multiple choice question. dollars. variable costs. fixed costs. unit volume. | Dollars |
| Without knowing the future, it is not obvious which cost structure is better: a structure with higher fixed costs and lower variable costs or a structure with lower fixed costs and higher variable costs. True/False | True. Without knowing the future, it is not obvious which cost structure is better. Both have advantages and disadvantages. |
| CVP analysis focuses on how profits are affected by ______. Multiple select question. total fixed costs selling price sales volume unit variable cost mix of products sold break-even point | Selling Prices, Sales volume, Unit variable cost, Total fixed costs, Mix of products sold. |
| Estimating the fixed and variable components of a mixed cost using the _______ approach involves a detailed analysis of what cost behavior should be. | Engineering approach |
| Daisy's Dolls sold 30,000 dolls this year. Each doll sold for $40 and had a variable cost of $19. Fixed expenses were $250,000. Net operating income for the year is ______. Multiple choice $630,000 $(249,979) $380,000 $1,520,000 | =$380,000 Sales -Variable Expenses =Contribution Margin -Fixed Cost =Net operating income |
| It makes sense to perform a high-low or regression analysis if a scattergraph plot reveals ______. ______ behavior. | Linear Cost |
| When using the high-low method, the slope of the line equals the ______ cost per unit of activity. | Variable |
| The calculation of contribution margin (CM) ratio is ______. Multiple choice net operating income ÷ total contribution margin contribution margin ÷ total expenses contribution margin ÷ sales variable expenses ÷ contribution margin | CM ratio= Contribution margin / Sales |
| A company's current sales are $300,000 and fixed expenses total $85,000. The contribution margin ratio is 30%. The company has decided to expand production which is exp. to increase sales by $70,000 and fixed expenses by $15,000. Net operating income will | CM = Sales * CM ratio = (300,00)*(.30)= 90,000 -Fixed Income -85,000 =5,000 (370,000)*(.30)= 111,000 -100,,000 =11,,000 =$6,000 increase |
Created by:
linnette02
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