ch06 - CHAPTER 6 Cost-Volume-Profit Analysis: Additional...

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CHAPTER 6 Cost-Volume-Profit Analysis: Additional Issues ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Exercises A Problems B Problems 1. Describe the essential features of a cost-volume-profit income statement. 1, 2, 3, 4 1, 2, 3, 4, 5, 6 1A, 2A 1B, 2B 2. Apply basic CVP concepts. 2, 4, 5, 6 1, 2, 3, 4, 5, 6 1, 2, 3, 4, 5 1A, 2A, 4A 1B, 2B, 4B 3. Explain the term sales mix and its effects on break-even sales. 7, 8, 9 7, 8, 9, 10 6, 7, 8, 9, 10 4A 4B 4. Determine sales mix when a company has limited resources. 10, 11 11, 15 11, 12, 13 3A 3B 5. Understand how operating leverage affects profitability. 12, 13, 14, 15, 16 12, 13, 14 14, 15, 16 5A 5B *6. Explain the difference between absorption costing and variable costing. 17 16, 17, 18 17, 18, 19 6A, 7A 6B, 7B *7. Discuss net income effects under absorption costing versus variable costing. 19, 20, 21, 22 19 18 6A, 7A 6B, 7B *8. Discuss the merits of absorption versus variable costing for management decision making. 18 7A 7B © 2008 For Instructor Use Only 6-1
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ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Compute break-even point under alternative courses of action. Moderate 20–30 2A Compute break-even point and margin of safety ratio, and prepare a CVP income statement before and after changes in business environment. Moderate 20–30 3A Determine sales mix with limited resources. Simple 10–15 4A Determine break-even sales under alternative sales strategies and evaluate results. Moderate 20–30 5A Compute degree of operating leverage and evaluate impact of operating leverage on financial results. Moderate 20–30 *6A Prepare income statements under absorption costing and variable costing for a company with beginning inventory, and reconcile differences. Moderate 20–30 *7A Prepare absorption and variable costing income statements and reconcile differences between absorption and variable costing income statements when sales level and production level change. Discuss relative usefulness of absorption costing versus variable costing. Moderate 20–30 1B Compute break-even point under alternative courses of action. Moderate 20–30 2B Compute break-even point and margin of safety ratio, and prepare a CVP income statement before and after changes in business environment. Moderate 20–30 3B Determine sales mix with limited resources. Simple 10–15 4B Determine break-even sales under alternative sales strategies and evaluate results. Moderate 20–30 5B Compute degree of operating leverage and evaluate impact of operating leverage on financial results. Moderate 20–30 *6B Prepare income statements under absorption costing and variable costing for a company with beginning inventory, and reconcile differences. Moderate
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ch06 - CHAPTER 6 Cost-Volume-Profit Analysis: Additional...

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