PVL2602 MCQ EXAM PREP QUESTIONS AND
SOLUTIONS 2026 GRADED A+
◉ Which is NOT an assumption of CVP analysis?
A) TVM is incorporated in the analysis
B) costs can be classified into variable and fixed components
C) the behavior of revs and expo is accurately portrayed as linear over
the relevant range
D) the number of output units is the only driver. Answer: A
◉ Which of the following should not be considered for every option in
the decision process?
A) relevant revenues
B) relevant costs
C) historical costs
D) opportunity costs. Answer: C
◉ What is always the question to ask to determine if revenues or costs
are relevant?
A) what is the time frame for achieving results?
B) what difference will an action make?
C) who will be responsible?
, D) how much will it cost? Answer: B
◉ Which of the following is not a correct use for the term opportunity
cost?
A) opportunity costs are considered period costs rather than
inventoriable costs for acct purposes
B) opportunity costs must be considered by managers when making
decisions
C) opportunity cost plus the incremental future revs and costs equal the
relevant revs and costs of any alternative when capacity is constrained
D) the opportunity cost of holding inventory is the income forgone by
tying up money in inventory and not investing it elsewhere. Answer: A
◉ RCG Services is investigating its profitability relationship with each
of its customers. What is the key question RCG should ask in deciding
to keep or to drop a particular customer?
A) will the customer meet a specific designated gross margin
percentage?
B) will the customer be willing to pay a higher price to insure RCG's
profitablility?
C) will enough customers be found to replace any customers dropped for
lack of profitability?
D) will expected total corporate office costs decrease if decision is made
to drop the customer? Answer: D
SOLUTIONS 2026 GRADED A+
◉ Which is NOT an assumption of CVP analysis?
A) TVM is incorporated in the analysis
B) costs can be classified into variable and fixed components
C) the behavior of revs and expo is accurately portrayed as linear over
the relevant range
D) the number of output units is the only driver. Answer: A
◉ Which of the following should not be considered for every option in
the decision process?
A) relevant revenues
B) relevant costs
C) historical costs
D) opportunity costs. Answer: C
◉ What is always the question to ask to determine if revenues or costs
are relevant?
A) what is the time frame for achieving results?
B) what difference will an action make?
C) who will be responsible?
, D) how much will it cost? Answer: B
◉ Which of the following is not a correct use for the term opportunity
cost?
A) opportunity costs are considered period costs rather than
inventoriable costs for acct purposes
B) opportunity costs must be considered by managers when making
decisions
C) opportunity cost plus the incremental future revs and costs equal the
relevant revs and costs of any alternative when capacity is constrained
D) the opportunity cost of holding inventory is the income forgone by
tying up money in inventory and not investing it elsewhere. Answer: A
◉ RCG Services is investigating its profitability relationship with each
of its customers. What is the key question RCG should ask in deciding
to keep or to drop a particular customer?
A) will the customer meet a specific designated gross margin
percentage?
B) will the customer be willing to pay a higher price to insure RCG's
profitablility?
C) will enough customers be found to replace any customers dropped for
lack of profitability?
D) will expected total corporate office costs decrease if decision is made
to drop the customer? Answer: D
