a 24. If a company is earning a profit, its fixed costs
a. are less than total contribution margin.
b. are equal to total contribution margin.
c. are greater than total variable costs.
d. can be greater than or less than total contribution margin.
a 25. Per-unit variable cost
a. remains constant within the relevant range.
b. increases as volume increases within the relevant range.
c. decreases as volume increases within the relevant range.
d. decreases if volume increases beyond the relevant range.
d 26. An increase in the income tax rate
a. raises the break-even point.
b. lowers the break-even point.
c. decreases sales required to earn a particular after-tax profit.
d. increases sales required to earn a particular after-tax profit.
b 27. Contribution margin is
a. the same as gross margin.
b. revenue minus variable costs.
c. revenue minus variable costs and fixed costs.
d. the ratio of income to sales.
c 28. Classifying a cost as fixed or variable depends on how it behaves
a. per unit, as the volume of activity changes.
b. in total, as the volume of activity changes.
c. both a and b are correct.
d. none of the above.
d 29. Critical to CVP analysis in a multiproduct company is that
a. the products be complementary.
b. the products be sold to the same kinds of customers.
c. all products have about the same contribution margin percentage.
d. the sales mix is relatively constant.
d. it is impossible to tell without more information.