Chapter 03 Fundamentals of Cost-Volume-Profit Analysis Answer
Key
True / False Questions
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Multiple Choice Questions
25.
The difference between total sales in dollars and total variable costs is called:
26.
The following information pertains to Tiller Co.:
Sales
$800,000
Variable Costs
160,000
Fixed Costs
40,000
What is Tiller’s break-even point in sales dollars? (CPA adapted)
27.
28.
Which of the following would not cause the break-even point to change?
29.
If the fixed costs for a product decrease and the variable costs (as a percentage of sales
dollars) decrease, what will be the effect on the contribution margin ratio and the break–
even point, respectively?
Contribution Margin
Ratio
Break-even
Point
A.
Decreased
Increased
B.
Increased
Decreased
C.
Decreased
Decreased
D.
Increased
Increased
30.
The Skyways Company is currently selling its single product for $15. Variable costs are
estimated to remain at 70% of the current selling price and fixed costs are estimated to be
$4,800 per month. If Skyways increases its selling price by 10%, its variable cost ratio
will:
31.
Cost A is a fixed cost, while B is a variable cost. During the current year, the volume of
output has decreased. In terms of cost per unit of output, we would expect that:
32.
If both the variable cost per unit and the selling price per unit decrease, the new
contribution margin ratio in relation to the old contribution margin ratio will be:
33.
A company’s break-even point will not be increased by:
34.
Which of the following changes to a company’s contribution income statement will
always
lower the break-even point (either in units or in dollars)?