Chapter 7- Cost-Volume-Profit Analysis
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Cost-volume-profit analysis can be extended to determine the effect on profit of other changes, such as
______. - (correct Answer) - changes in income tax rates
True or false: The first step in any cost-volume-profit analysis is to analyze whether costs are product or
period related. - (correct Answer) - False
The break-even point is __. - (correct Answer) - where revenues equal expenses
Contribution margin is sales minus __. - (correct Answer) - variable expenses
Fixed expenses divided by unit contribution margin is the formula for break-even in ______. - (correct
Answer) - units
CVP analysis is used to determine the effects of ______. - (correct Answer) - -activity changes on
revenues
-activity changes on costs
-cost changes on profits
-selling price changes on profits
Prior to beginning CVP analysis, an organization's ______ should be analyzed. - (correct Answer) - cost
behavior
The break-even point in sales dollars may be calculated as ______. - (correct Answer) - break-even units
x sales price per unit
The volume of activity where the company's revenues and expenses are equal is the __. - (correct
Answer) - break-even point
Sales revenue minus variable expenses is called... - (correct Answer) - contribution margin
Break-even in units is calculated as ______. - (correct Answer) - fixed expenses/unit contribution margin
, Break-even point in units x selling price per unit is the calculation for ______. - (correct Answer) - break-
even sales
A company has no profit or loss at the... - (correct Answer) - break-even point
Given the following information, calculate the contribution margin ratio.
Sales $250,000 $5.00
Variable costs $3.00
Contribution margin
Fixed costs - (correct Answer) - 40.0%
$5-$3=$2 unit contribution margin
$2/$5 = .400 = 40.0%
Break-even in sales dollars is calculated as ______. - (correct Answer) - fixed expenses/contribution
margin ratio
True or false: The profit equation approach to break-even calculates the break-even point in units of
sales. - (correct Answer) - True
Sales revenue minus variable expenses is called __. - (correct Answer) - contribution margin
To use the profit equation to find the break-even point, profit must be set to equal ______. - (correct
Answer) - zero
On the CVP graph, the fixed-expense line is ______. - (correct Answer) - parallel to the horizontal axis
Contribution margin is sales minus __.The intersection of the total cost line and total revenue line in a
CVP graph is the... - (correct Answer) - break-even point
The area between the total revenue and total cost lines, but above their intersection is called the... -
(correct Answer) - profit area
In a traditional CVP graph, the total revenue line intercepts the vertical axis at ______. - (correct
Answer) - the origin
True or false: A CVP graph can be used to direct management's attention to issues that may need
correction. - (correct Answer) - True
The intersection of the total cost line and total revenue line in a CVP graph is the ______ point. - (correct
Answer) - break-even
Save
Cost-volume-profit analysis can be extended to determine the effect on profit of other changes, such as
______. - (correct Answer) - changes in income tax rates
True or false: The first step in any cost-volume-profit analysis is to analyze whether costs are product or
period related. - (correct Answer) - False
The break-even point is __. - (correct Answer) - where revenues equal expenses
Contribution margin is sales minus __. - (correct Answer) - variable expenses
Fixed expenses divided by unit contribution margin is the formula for break-even in ______. - (correct
Answer) - units
CVP analysis is used to determine the effects of ______. - (correct Answer) - -activity changes on
revenues
-activity changes on costs
-cost changes on profits
-selling price changes on profits
Prior to beginning CVP analysis, an organization's ______ should be analyzed. - (correct Answer) - cost
behavior
The break-even point in sales dollars may be calculated as ______. - (correct Answer) - break-even units
x sales price per unit
The volume of activity where the company's revenues and expenses are equal is the __. - (correct
Answer) - break-even point
Sales revenue minus variable expenses is called... - (correct Answer) - contribution margin
Break-even in units is calculated as ______. - (correct Answer) - fixed expenses/unit contribution margin
, Break-even point in units x selling price per unit is the calculation for ______. - (correct Answer) - break-
even sales
A company has no profit or loss at the... - (correct Answer) - break-even point
Given the following information, calculate the contribution margin ratio.
Sales $250,000 $5.00
Variable costs $3.00
Contribution margin
Fixed costs - (correct Answer) - 40.0%
$5-$3=$2 unit contribution margin
$2/$5 = .400 = 40.0%
Break-even in sales dollars is calculated as ______. - (correct Answer) - fixed expenses/contribution
margin ratio
True or false: The profit equation approach to break-even calculates the break-even point in units of
sales. - (correct Answer) - True
Sales revenue minus variable expenses is called __. - (correct Answer) - contribution margin
To use the profit equation to find the break-even point, profit must be set to equal ______. - (correct
Answer) - zero
On the CVP graph, the fixed-expense line is ______. - (correct Answer) - parallel to the horizontal axis
Contribution margin is sales minus __.The intersection of the total cost line and total revenue line in a
CVP graph is the... - (correct Answer) - break-even point
The area between the total revenue and total cost lines, but above their intersection is called the... -
(correct Answer) - profit area
In a traditional CVP graph, the total revenue line intercepts the vertical axis at ______. - (correct
Answer) - the origin
True or false: A CVP graph can be used to direct management's attention to issues that may need
correction. - (correct Answer) - True
The intersection of the total cost line and total revenue line in a CVP graph is the ______ point. - (correct
Answer) - break-even
