Cost Accounting, 15e (Horngren/Datar/Rajan) Chapter 3 Cost-Volume-Profit Analysis
Objective 3.1
1) Managers use cost-volume-profit (CVP) analysis to ________. A) forecast the cost of capital for a given period of time
B) to study the behavior of and relationship among the elements such as total revenues, total costs, and income
C) estimate the risks associated with a given job
D) analyse a firm's profitability and help to decide wealth distribution among its stakeholders Answer: B
Diff: 1
Objective: 1
AACSB: Analytical thinking
2) One of the first steps to take when using CVP analysis to help make decisions is ________. A) calculating the break-even point
B) identifying the variable and fixed costs
C) calculation of the degree of operating leverage for the company D) estimating the volume of sales to make a good profit Answer: B
Diff: 2
Objective: 1
AACSB: Analytical thinking
3) Which of the following is true of cost-volume-profit analysis? A) The theory assumes that all costs are variable.
B) The theory assumes that units manufactured equal units sold.
C) The theory states that total variable costs remain the same over a relevant range. D) The theory states that total costs remain the same over the relevant range. Answer: B
Diff: 1
Objective: 1
AACSB: Analytical thinking
4) The selling price per unit less the variable cost per unit is the ________. A) fixed cost per unit B) gross margin C) margin of safety
D) contribution margin per unit Answer: D
Diff: 1
Objective: 1
AACSB: Analytical thinking
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