Chapter 9

# Chapter 9 - Chapter 9-Break-Even Point and...

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Chapter 9--Break-Even Point and Cost-Volume-Profit Analysis LEARNING OBJECTIVES LO 1 Why is variable costing more useful than absorption costing in determining the break-even point and doing cost-volume-profit analysis? LO 2 How is the break-even point determined using the formula approach, graph approach, and income statement approach? LO 3 How can a company use cost-volume-profit (CVP) analysis? LO 4 How do break-even and CVP analysis differ for single-product and multiproduct firms? LO 5 How are margin of safety and operating leverage concepts used in business? LO 6 What are the underlying assumptions of CVP analysis? QUESTION GRID True/False Difficulty Level Learning Objectives Easy Moderate Difficult LO 1 LO 2 LO 3 LO 4 LO 5 LO 6 1 x x 2 x x 3 x x 4 x x 5 x x 6 x x 7 x x 8 x x 9 x x 10 x x 11 x x 12 x x 13 x x 14 x x 15 x x 16 x x 17 x x 18 x x 19 x x 20 x x 21 x x 22 x x 23 x x 24 x x 25 x x 26 x x 27 x x 28 x x Completion Difficulty Level Learning Objectives Easy Moderate Difficult LO 1 LO 2 LO 3 LO 4 LO 5 LO 6 1 x x 2 x x 3 x x 4 x x 5 x x 6 x x 7 x x Multiple Choice Difficulty Level Learning Objectives 87

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Easy Moderate Difficult LO 1 LO 2 LO 3 LO 4 LO 5 LO 6 1 x x x 2 x x x 3 x x x 4 x x x 5 x x 6 x x 7 x x x 8 x x 9 x x 10 x x 11 x x 12 x x 13 x x 14 x x 15 x x 16 x x 17 x x x 18 x x 19 x x 20 x x x 21 x x x 22 x x 23 x x 24 x x 25 x x 26 x x 27 x x 28 x x 29 x x 30 x x 31 x x 32 x x 33 x x 34 x x 35 x x 36 x x 37 x x 38 x x 39 x x 40 x x 41 x x 42 x x 43 x x 44 x x 45 x x 46 x x 47 x x 48 x x 49 X x 50 x x 51 X x 52 X x 53 X x 54 x x 55 X x 56 x x 88
Difficulty Level Learning Objectives Easy Moderate Difficult LO 1 LO 2 LO 3 LO 4 LO 5 LO 6 57 x x 58 x x 59 x x 60 x x Short Answer Difficulty Level Learning Objectives Easy Moderate Difficult LO 1 LO 2 LO 3 LO 4 LO 5 LO 6 1 x x x 2 x x 3 x x 4 x x Problem Difficulty Level Learning Objectives Easy Moderate Difficult LO 1 LO 2 LO 3 LO 4 LO 5 LO 6 1 x x 2 x x 3 x x 4 x x 5 x x 6 x x 7 x x 8 x x 9 x x 10 x x 11 x x 89

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TRUE/FALSE 1. A company’s break-even point is the level where total revenues equal total costs. ANS: T DIF: Easy OBJ: 9-1 2. Absorption costing is more useful than variable costing in determining a company’s break-even point. ANS: F DIF: Easy OBJ: 9-1 3. Variable costing is more useful than absorption costing in determining a company’s break-even point. ANS: T DIF: Easy OBJ: 9-1 4. Total variable costs vary directly with levels of production. ANS: T DIF: Easy OBJ: 9-1 5. Variable costs per unit vary directly with levels of production. ANS: F DIF: Easy OBJ: 9-1 6. Variable costs per unit remain unchanged with levels of production. ANS: T DIF: Easy OBJ: 9-1 7. Total fixed costs remain unchanged with levels of production. ANS: T
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## This note was uploaded on 03/14/2012 for the course ACCOUNTING 101 taught by Professor None during the Spring '12 term at Yale.

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Chapter 9 - Chapter 9-Break-Even Point and...

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