Acc300 Chapter 5 Quiz

CHAPTER 5

Cost-Volume-Profit

20 MINUTE QUIZ

CIRCLE THE CORRECT ANSWER.

True/False

1. The range over which a company is expected to operate is called the relevant range of the activity index.

True False

2. A mixed cost contains both selling and administrative cost elements.

True False

3. Variable costs are costs that remain the same per unit at every level of activity.

True False

4. If a salesperson incurs $2,000 of expenses in servicing two customers and $4,000 of

expenses in servicing four customers, the fixed costs are $1,000.

True False

5. If revenue = $80 and variable cost = 40% of revenue, then contribution margin = $48.

True False

6. The contribution margin is the amount of revenue remaining after deducting fixed costs.

True False

7. Sales mix is the percentage that each product represents of total sales.

True False

8. If the unit contribution margin is $300 and fixed costs are $240,000 then the break-even point in units would be 800 units.

True False

9. In a CVP income statement, contribution margin is reported in the body of the statement.

True False

10. Margin of safety is the difference between actual sales and contribution margin.

True False

Multiple Choice

1. Which of the following is a false statement regarding assumptions of CVP analysis?

a. Total fixed costs remain constant over the relevant range.

b. Unit selling prices are constant.

c. Changes in volume or level of activity increase variable costs per unit.

d. All units produced are sold.

2. Mixed costs may be separated into fixed costs and variable costs by using

a. the relevant range method.

b. the high-low method.

c. the contribution margin method.

d. all of the above.

3. If the unit selling price is $500, the unit variable cost is...