Lecture 4 - Warm-up questions

Lecture 4 - Warm-up questions - 6. Operating income...

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Lecture 4: Worm-up questions: True/False 1. If a company increases fixed costs, then the breakeven point will be lower. 2. For merchandising firms, contribution margin will always be a lesser amount than gross margin. 3. If Johnson’s Manufacturing presented a Financial Accounting Income Statement emphasizing gross margin showing operating income of $18,000, a Contribution Income Statement emphasizing contribution margin would show a different operating income. 4. An expected value is the weighted average of the outcomes, with the probability of each outcome serving as the weight. MCQs: 5. Cost-volume-profit analysis assumes all of the following EXCEPT: a. all costs are 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
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Unformatted text preview: 6. Operating income calculations use: a. net income b. income tax expense c. cost of goods sold and operating costs d. nonoperating revenues and nonoperating expenses 7. The Tessmer Company has fixed costs of $400,000 and variable costs are 75% of the selling price. To realize profits of $100,000 from sales of 500,000 units, the selling price per unit: a. must be $1.00 b. must be $1.33 c. must be $4.00 d. is indeterminable Answers 1. False 2. True, because all variable costs are subtracted to compute contribution margin, but only COGS is subtracted to compute gross margin. 3. False If Johnsons Manufacturing presented a Financial Accounting Income Statement emphasizing gross margin showing operating income of $18,000, a Contribution Income Statement emphasizing contribution margin would show the same operating income. 4. True 5. C, 6. C, 7. C...
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This note was uploaded on 07/07/2009 for the course ACCT 2102 taught by Professor Unknown during the Three '08 term at Queensland.

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Lecture 4 - Warm-up questions - 6. Operating income...

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