{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chapter 6 Cost-Volume-Profit Relationships

Chapter 6 Cost-Volume-Profit Relationships - Chapter 6...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 6 Cost-Volume-Profit Relationships 258 Garrison, Managerial Accounting, 12th Edition True/False Questions 1. To estimate what the profit will be at various levels of activity, a manager can simply take the number of units to be sold over the break-even point and multiply that number by the unit contribution margin. Answer: True Level: Medium LO: 1 2. Incremental analysis is generally the simplest and most direct approach to decision making. Answer: True Level: Easy LO: 1 3. To facilitate decision-making, fixed expenses should be expressed on a per-unit basis. Answer: False Level: Medium LO: 1 4. One assumption in CVP analysis is that inventories do not change. Answer: True Level: Easy LO: 1 5. On a CVP graph for a profitable company, the total expense line will be steeper than the total revenue line. Answer: False Level: Medium LO: 2 6. If sales volume increases, and all other factors remain unchanged, the contribution margin ratio will decrease. Answer: False Level: Medium LO: 3 7. The break-even point for a capital intensive, automated company will tend to be higher than for a less capital intensive company while the margin of safety will tend to be lower. Answer: True Level: Medium LO: 5,7 8. An increase in the number of units sold will decrease a company's break-even point. Answer: False Level: Medium LO: 5
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon