TOPIC: Costs for Decision Making and Sales Variance

1. Variable costing enables more efficient: *

Cost-volume-profit (CVP) analysis.

External reporting.

Financial statement analysis.

Physical inventory counts.

2. CVP analysis allows management to determine the relative profitability of a product by *

Keeping fixed costs to an absolute minimum.

Highlighting potential bottlenecks in the production process.

Assigning costs to a product in a manner that maximizes the contribution margin.

Determining the contribution margin per unit and projected profits at various levels of production.

3. If unit outputs exceed the breakeven point: *

There is a loss.

There is a profit.

Total sales revenue exceeds total costs.

Both total sales revenue exceeds total costs and there is a profit.

4. The formula in computing breakeven point per unit is to *

Deduct margin of safety from budgeted sales.

Divide total fixed costs by contribution margin ratio.

Divide total fixed costs by contribution margin per unit

None of the choices.

5. In multiproduct situations, when sales mix shifts toward the product with the highest contribution margin, then: *

Breakeven quantity will decrease.

Operating income will decrease.

Total contribution margin will decrease.

Total revenues will decrease.

6. An organization's executive committee, meeting to solve an important problem, spent 30 minutes analyzing data and debating the cause of the problem. Finally, they agreed and could move onto the next step. Possible steps in the creative problem-solving process are listed below. Which step should the committee perform next? *

Select a solution.

Identify the problem.

Generate alternative solutions.

Consider the reaction of competitors to various courses of action.

7. When there is one scarce resource, the product that should be produced first is the product with the highest: *

Demand

Contribution margin per unit

Sales price per unit of the scarce resource

Contribution margin per unit of the scarce resources

8. Which of the following best describes an opportunity cost? *

It is usually relevant and recorded in the books.

It is usually relevant but is not recorded in the books.

It is usually irrelevant but is not recorded in the books.

It is usually irrelevant and is not recorded in the books.

9. Which of the following qualitative factors favors the buy choice in a make or buy decision for a part? *

quality control is critical

part is critical to product

utilization of idle capacity

maintaining a long-term relationship with suppliers

10. In decision analysis situation, which one of the following costs is not likely to contain a variable cost component? *

labor

overhead

depreciation

selling