ACCT 472.21 Ch 19 – Flashcards
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CVP analysis does not consider
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fixed cost per unit.
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An example of a mixed cost is
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utility costs.
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If graphed, fixed costs that behave in a curvilinear fashion resemble a(n)
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stair-step pattern.
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Why is identification of a relevant range important?
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Cost behavior outside of the relevant range is not linear, which distorts CVP analysis.
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Cost-volume-profit analysis includes all of the following assumptions except
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the behavior of costs is curvilinear throughout the relevant range.
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Which is the true statement?
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The CVP income statement shows contribution margin instead of gross profit.
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Which of the following is not a cost classification?
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Multiple
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Which of the following is not a mixed cost?
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Depreciation
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In CVP analysis, the term "cost"
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includes manufacturing costs plus selling and administrative expenses.
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Contribution margin is
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available to cover fixed costs and contribute to income for the company.
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Firms operating at 100% capacity
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are the exception rather than the rule.
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Which of the following is not true about the graph of a mixed cost?
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The variable cost portion of the graph is rectangular in shape.
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A fixed cost is a cost which
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remains constant in total with changes in the level of activity.
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A variable cost is a cost that
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varies in total in proportion to changes in the level of activity.
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Keene, Inc. produces flash drives for computers, which it sells for $20 each. Each flash drive costs $6 of variable costs to make. During March, 1,000 drives were sold. Fixed costs for March were $4.90 per unit for a total of $4,900 for the month. If variable costs decrease by 10%, what happens to the break-even level of units per month for Keene?
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It decreases about 14 units.
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Which of the following is not a fixed cost?
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Direct materials
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The equation which reflects a CVP income statement is
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Sales - Variable costs - Fixed costs = Net income.
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Changes in activity have a(n) _________ effect on fixed costs per unit.
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inverse
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A CVP graph does not include a
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variable cost line.
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The contribution margin ratio increases when
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variable costs as a percentage of sales decrease.
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The break-even point is where
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contribution margin equals total fixed costs.
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For an activity base to be useful in cost behavior analysis,
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there should be a correlation between changes in the level of activity and changes in costs.
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Cost behavior analysis applies to
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retailers and wholesalers and manufacturers. "all entities!!!"
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The amount by which actual or expected sales exceeds break-even sales is referred to as
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target net income.
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The relevant range of activity refers to the
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levels of activity over which the company expects to operate.
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Which of the following is not an underlying assumption of CVP analysis
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Beginning inventory is larger than ending inventory.
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Which of the following would not be an acceptable way to express contribution margin
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Sales minus unit costs
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To which function of management is CVP analysis most applicable
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Planning
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CVP analysis is not important in
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calculating depreciation expense
