7) Cost-volume-profit analysis is used PRIMARILY by management:
A) as a planning tool.
B) for control purposes.
C) to establish a target net income for next year.
D) to attain extremely accurate financial results.
8) Contribution margin equals revenues minus:
A) product costs.
B) period costs.
C) variable costs.
D) fixed costs.
9) The break-even point is the level at which revenues:
A) equal fixed costs.
B) equal variable costs.
C) equal fixed costs minus flexible costs.
D) equal variable costs plus capacity-related costs.
10) The break-even point in units is:
A) total costs divided by variable costs per unit.
B) contribution margin per unit divided by revenue per unit.
C) fixed costs divided by contribution margin per unit.
D) (fixed costs plus variable costs) divided by contribution margin per unit.
11) Cost-volume-profit analysis assumes all of the following EXCEPT:
A) all costs are purely variable or fixed.
B) units manufactured equal units sold.
C) total variable costs remain the same over the relevant range.
D) total fixed costs remain the same over the relevant range.
12) All of the following are assumed in a cost-volume-profit analysis EXCEPT:
A) a constant product mix.
B) fixed costs increase when activity increases.
C) revenue per unit does not change as volume changes.
D) all costs can be classified as either fixed or variable.
13) In multiproduct situations, when the sales mix shifts toward the product with the highest contribution margin per unit, then:
A) total revenues will decrease.
B) breakeven quantity will increase.
C) total contribution margin will decrease.
D) operating income will increase.
Sanchez & Ryan, Inc, sells a single product. This year, 20,000 units were sold resulting in $130,000 of sales revenue, $60,000 of variable costs, and $17,500 of fixed costs.
14) The contribution margin per unit is:
15) The break-even point in units for a year is:
A) 2,000 units.
B) 3,000 units.
C) 5,000 units.
D) 10,000 units.
16) The number of units that must be sold annually to achieve $52,500 of profits is:
A) 20,000 units.
B) 15,000 units.
C) 10,000 units.
D) 5,000 units.
17) If sales increase by $19,500 in a year, profits will increase by: