361-Chapter-9-MC-Solutions

Chapter9—Break-EvenPointandCost-Volume-ProfitAnalysisMULTIPLECHOICE1.CVPanalysisrequirescoststobecategorizedasa.eitherfixedorvariable.b.directorindirect.c.productorperiod.d.standardoractual.ANS:APTS:1DIF:EasyOBJ:9-1NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:DecisionModeling2.Withrespecttofixedcosts,CVPanalysisassumestotalfixedcostsa.perunitremainconstantasvolumechanges.b.remainconstantfromoneperiodtothenext.c.varydirectlywithvolume.d.remainconstantacrosschangesinvolume.ANS:DPTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting3.CVPanalysisreliesontheassumptionsthatcostsareeitherstrictlyfixedorstrictlyvariable.Consistentwiththeseassumptions,asvolumedecreasestotala.fixedcostsdecrease.b.variablecostsremainconstant.c.costsdecrease.d.costsremainconstant.ANS:CPTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting4.CVPanalysisisbasedonconceptsfroma.standardcosting.b.variablecosting.c.jobordercosting.d.processcosting.ANS:BPTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,ReportingChapter925.Cost-volume-profitanalysisisatechniqueavailabletomanagementtounderstandbettertheinterrelationshipsofseveralfactorsthataffectafirm'sprofit.Aswithmanysuchtechniques,theaccountantoversimplifiestherealworldbymakingassumptions.WhichofthefollowingisnotamajorassumptionunderlyingCVPanalysis?a.Allcostsincurredbyafirmcanbeseparatedintotheirfixedandvariablecomponents.b.Theproductsellingpriceperunitisconstantatallvolumelevels.c.Operatingefficiencyandemployeeproductivityareconstantatallvolumelevels.d.Formulti-productsituations,thesalesmixcanvaryatallvolumelevels.ANS:DPTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting6.InCVPanalysis,linearfunctionsareassumedfora.contributionmarginperunit.b.fixedcostperunit.c.totalcostsperunit.d.alloftheabove.ANS:APTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting7.Whichofthefollowingfactorsisinvolvedinstudyingcost-volume-profitrelationships?a.productmixb.variablecostsc.fixedcostsd.alloftheaboveANS:DPTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting8.Cost-volume-profitrelationshipsthatarecurvilinearmaybeanalyzedlinearlybyconsideringonlya.fixedandmixedcosts.b.relevantfixedcosts.c.relevantvariablecosts.d.arelevantrangeofvolume.ANS:DPTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting9.Afterthelevelofvolumeexceedsthebreak-evenpointa.thecontributionmarginratioincreases.b.thetotalcontributionmarginexceedsthetotalfixedcosts.c.totalfixedcostsperunitwillremainconstant.d.thetotalcontributionmarginwillturnfromnegativetopositive.ANS:BPTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,ReportingChapter9310.Whichofthefollowingwilldecreasethebreak-evenpoint?DecreaseinfixedcostIncreaseindirectlaborcostIncreaseinsellingpricea.yesyesyesb.yesnoyesc.yesnonod.noyesnoANS:BPTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting11.Atthebreak-evenpoint,fixedcostsarealwaysa.lessthanthecontributionmargin.b.equaltothecontributionmargin.c.morethanthecontributionmargin.d.morethanthevariablecost.ANS:BPTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting12.Themethodofcostaccountingthatlendsitselftobreak-evenanalysisisa.variable.b.standard.c.absolute.d.absorption.ANS:APTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting13.Giventhefollowingnotation,whatisthebreak-evensaleslevelinunits?SP=sellingpriceperunit,FC=totalfixedcost,VC=variablecostperunita.SP/(FC/VC)b.FC/(VC/SP)c.VC/(SP-FC)d.FC/(SP-VC)ANS:DPTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting14.ConsidertheequationX=Sales-[(CM/Sales)(Sales)].WhatisX?a.netincomeb.fixedcostsc.contributionmargind.variablecostsANS:DPTS:1DIF:ModerateOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,ReportingChapter9415.Ifafirm'snetincomedoesnotchangeasitsvolumechanges,thefirm('s)a.mustbeintheserviceindustry.b.musthavenofixedcosts.c.salespricemustequal$0.d.salespricemustequalitsvariablecosts.ANS:DPTS:1DIF:ModerateOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting16.Break-evenanalysisassumesovertherelevantrangethata.totalvariablecostsarelinear.b.fixedcostsperunitareconstant.c.totalvariablecostsarenonlinear.d.totalrevenueisnonlinear.ANS:APTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting17.Tocomputethebreak-evenpointinunits,whichofthefollowingformulasisused?a.FC/CMperunitb.FC/CMratioc.CM/CMratiod.(FC+VC)/CMratioANS:APTS:1DIF:EasyOBJ:9-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting1