7. Bella Corporation has the following data: Variable costs are 60% of the unit selling price. The contribution margin ratio is 40%. The unit contribution margin is $500. The fixed costs are $500,000. Which of the following does not express the break-even point (X)? a. $500,000+ .60X = X b. $500,000+ .40X = X c. $500,000+ $500 = X d. $500,000.40 = X 8. 9. Cost-volume-profit analysis includes all of the following assumptions except a. the behavior of costs is curvilinear throughout the relevant range. b. costs can be classified accurately as either variable or fixed. c. changes in activity are the only factors that affect costs. d. all units produced are sold. A shift from low-margin sales to high-margin sales a. may increase net income, even though there is a decline in total units sold. b. will always increase net income. c. will always decrease net income. d. will always decrease units sold. 10. Cost structure a. refers to the relative proportion of fixed versus variable costs that a company incurs. b. generally has little impact on profitability. c. cannot be significantly changed by companies. d. refers to the relative proportion of operating versus nonoperating costs that a company incurs. 11. 12. 13. Outsourcing production will a. reduce fixed costs and increase variable costs. b. reduce variable costs and increase fixed costs. c. make the company more susceptible to economic swings. d. none of the above. Hofmann Inc., is considering the following alternatives: Alternative 1 Revenues $100,000 Variable costs 40,000 25,000 Alternative 2 $100,000 50,000 25,000 Fixed costs Which of the following are relevant in choosing between the alternatives? a. Variable costs. b. Revenues. c. Fixed costs. d. Variable costs and fixed costs. Which of the following is not a capital budgeting decision? a. Constructing new plants b. Replacing old equipment c. Scrapping obsolete inventory d. Remodeling an office building