Which of the following assumptions is closely relevant to cost-volume-profit analysis?Ī. he relevant range is not a consideration. The behavior of total revenue is curvilinear.ĭ. In a multi-product organization, the sales mix varies over time.Ĭ. In manufacturing firms, the beginning and ending inventory levels are the same.ī. Which of the following assumptions is inherent to C-V-P analysis?Ī. The number of units produced exceeds the number of units sold. Inventory levels at the beginning and end of the period are the same.ĭ. Unit variable expenses remain unchanged as activity varies.Ĭ. The behavior of total revenue is linear.ī. Which of the following is not an assumption underlying C-V-P analysis?Ī. The point at which marginal cost and marginal revenue are equal. The production point at which average total revenue exceeds average marginal cost.ĭ. The production point with the lowest marginal cost.Ĭ. One hundred percent at normal productive capacity.ī. In cost-volume-profit analysis, the greatest profit will be earned atĪ. the contribution margin ratio begins to increase Bobadilla fixed costs are greater than contribution marginĭ. the total contribution margin changes from negative to positiveĬ. net income will increase by the unit contribution margin for each additional item soldī. All of these BobadillaĪt the breakeven point, fixed cost is alwaysĪ. Which of the factors is (are) involved in studying cost-volume-profit relationships?ī. Volume or output level at which the enterprise breaks even. Relationship among revenues, variable costs, and fixed costs at various levels of activity.ĭ. Amount of sales revenue needed to cover enterprise fixed costs.Ĭ. Amount of sales revenue needed to cover enterprise variable costs.ī. The most useful information derived from a breakeven chart is theĪ. Costs cannot be properly classified into fixed and variable costs.ĭ.

BobadillaĬost-volume-profit analysis cannot be used if which of the following occurs?Ī. Keeping fixed costs to an absolute minimum. Assigning costs to a product in a manner that maximizes the contribution margin.ĭ.

Determining the contribution margin per unit and projected profits at various levels ofĬ. Highlighting potential bottlenecks in the production process.ī. BobadillaĬost-volume-profit analysis allows management to determine the relative profitability of aĪ. amount available to cover variable costs. amount available to cover fixed costs and profit.ĭ. difference between revenue and fixed costs.Ĭ. difference between fixed costs and variable costs.ī. The term contribution margin is best defined as the:Ī. Production, costs, and profits is termed:Ī. The systematic examination of the relationships among selling prices, volume of sales and To which function of management is CVP analysis most applicable? MODULE 4 COST-VOLUME-PROFIT ANALYSIS THEORIES:

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