TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1) When expressed on a per unit basis, fixed costs can mislead decision makers into
thinking of them as variable costs.
1)
2) If the v
...
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1) When expressed on a per unit basis, fixed costs can mislead decision makers into
thinking of them as variable costs.
1)
2) If the variable expense per unit decreases, and all other factors remain the same, the
contribution margin ratio will increase.
2)
3) The break-even point in units can be obtained by dividing total fixed expenses by the
unit contribution margin.
3)
4) The total volume in sales dollars that would be required to attain a given target profit is
determined by dividing the target profit by the contribution margin ratio.
4)
5) Two companies with the same margin of safety in dollars will also have the same total
contribution margin.
5)
6) Fawn Company's margin of safety is $90,000. If the company's sales drop by $80,000,
it will still have positive net operating income.
6)
7) The margin of safety is the amount by which sales can decrease before losses are
incurred by the company.
7)
8) The margin of safety percentage is equal to the margin of safety in dollars divided by
total contribution margin.
8)
9) A shift in the sales mix from products with high contribution margin ratios toward
products with low contribution margin ratios will raise the break-even point for the
company as a whole.
9)
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
10) If the contribution margin is not sufficient to cover fixed expenses:
A) contribution margin is negative.
B) total profit equals total expenses.
C) a loss occurs.
D) variable expenses equal contribution margin.
10)
1
11) If a company increases its selling price by $2 per unit due to an increase in its variable
labor cost of $2 per unit, the break-even point in units will:
A) decrease.
B) not change.
C) increase.
D) change but direction cannot be determined.
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