The document discusses key concepts in cost-volume-profit (CVP) analysis. It provides 30 multiple choice questions about CVP, including questions about separating fixed and variable costs, using CVP for multi-product analysis, assumptions of CVP, revenue drivers, calculating contribution margin, breakeven point analysis using graphs, calculating target operating income, sensitivity analysis, and margin of safety. The document advertises purchasing a tutorial with more questions on ACC 350 course concepts.

1. ACC 350 WK 4 Quiz 3 Chapter 3
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1)
To perform cost-volume-profit analysis, a company must be able to separate costs into fixed and
variable components.
Answer:
2)
Cost-volume-profit analysis may be used for multi-product analysis when the proportion of different
products remains constant.
Answer:
3)
It is assumed in CVP analysis that the unit selling price, unit variable costs, and unit fixed costs are
known and constant.
Answer:
4)
In CVP analysis, the number of output units is the only revenue driver.
Answer:
5)
Many companies find even the simplest CVP analysis helps with strategic and long-range planning.
Answer:
6)
In CVP analysis, total costs can be separated into a fixed component that does not vary with output and
a component that is variable with output level.

2. Answer:
7)
In CVP analysis, variable costs include direct variable costs, but do not include indirect variable costs.
Answer:
8)
In CVP analysis, an assumption is made that the total revenues are linear with respect to output units,
but that total costs are non-linear with respect to output units.
Answer:
9)
A revenue driver is defined as a variable that causes changes in prices.
Answer:
10)
If the selling price per unit is $20 and the contribution margin percentage is 30%, then the variable cost
per unit must be $6.
Answer:
11)
Total revenues less total fixed costs equal the contribution margin.
Answer:
12)
Gross margin is reported on the contribution income statement.
Answer:

3. 13)
If the selling price per unit of a product is $30, variable costs per unit are $20, and total fixed costs are
$10,000 and a company sells 5,000 units, operating income would be $40,000.
Answer:
14)
The selling price per unit is $30, variable cost per unit $20, and fixed cost per unit is $3. When this
company operates above the breakeven point, the sale of one more unit will increase net income by $7.
Answer:
15)
A company with sales of $100,000, variable costs of $70,000, and fixed costs of $50,000 will reach its
breakeven point if sales are increased by $20,000.
Answer:
16)
Breakeven point is not a good planning tool since the goal of business is to make a profit.
Answer:
17)
Breakeven point is that quantity of output where total revenues equal total costs.
Answer:
18)
In the graph method of CVP analysis, the breakeven point is the (X-axis) quantity of units sold for which
the total revenues line crosses the total costs line.
Answer:
19)

4. In the graph method of CVP analysis, the total revenue line can be calculated by determining the total
revenue at only one real output level because the starting point of the line is always the intersection of
the X and Y axes.
Answer:
20)
A profit-volume graph shows the impact on operating income from changes in the output level.
Answer:
21)
If the selling price per unit of a product is $50, variable costs per unit are $40, and total fixed costs are
$50,000, a company must sell 6,000 units to make a target operating income of $10,000.
Answer:
22)
An increase in the tax rate will increase the breakeven point.
Answer:
23)
When making net income evaluations, CVP calculations for target income must be stated in terms of
target operating income instead of target net income.
Answer:
24)
If operating income is $70,000 and the income tax rate is 30%, then net income will be $49,000.
Answer:
25)
If planned net income is $21,000 and the tax rate is 30%, then planned operating income would be

5. $27,300.
Answer:
26)
Sensitivity analysis is a "what-if" technique that managers use to examine how a result will change if the
originally predicted data are not achieved or if an underlying assumption changes.
Answer:
27)
Margin of safety measures the difference between budgeted revenues and breakeven revenues.
Answer:
28)
If a company's breakeven revenue is $100 and its budgeted revenue is $125, then its margin of safety
percentage is 25%.
Answer:
29)
Sensitivity analysis helps to evaluate the risk associated with decisions.
Answer:
30)
If contribution margin decreases by $1 per unit, then operating profits will increase by $1 per unit.
Answer:
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assignment 1 Cost Accounting and Management Decisions