5 If total costs remain the same, the smaller the proportion of fixed costs in a firm's cost structurea. the smaller the impact a percentage change in sales volume will have on profit AND the lower the contribution margb. the greater the impact on profit from a percentage change in sales volume.c. the smaller the impact a percentage change in sales volume will have on profit.d. the lower the contribution margin.

Under Marginal costing (variable costing) contribution percentage or contribution per unit of…

If total costs remain the same, the smaller the proportion of fixed costs in a firm's cost structure a. the smaller the impact a percentage change in sales volume will have on profit AND the lower the contribution marg Ob. the greater the impact on profit from a percentage change in sales volume. c. the smaller the impact a percentage change in sales volume will have on profit. d. the lower the contribution margin.

If total costs remain the same, the smaller the proportion of fixed costs in a firm's cost structure a. the smaller the impact a percentage change in sales volume will have on profit AND the lower the contribution marg Ob. the greater the impact on profit from a percentage change in sales volume. c. the smaller the impact a percentage change in sales volume will have on profit. d. the lower the contribution margin.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6MCQ: The use of fixed costs to extract higher percentage changes in profits as sales activity changes...

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The contribution margin is the a. amount by which sales exceed total fixed cost. b. difference between sales and total cost. c. difference between sales and operating income. d. difference between sales and total variable cost. e. difference between variable cost and fixed cost.
The amount of a units sales price that helps to cover fixed expenses is its ____________________. A. contribution margin B. profit C. variable cost D. stepped cost
The use of fixed costs to extract higher percentage changes in profits as sales activity changes involves a. margin of safety. b. unit contribution margin. c. degree of operating leverage. d. sensitivity analysis. e. variable cost reduction.
If a company increases its fixed costs for Product B, then the contribution margin per unit will a. increase. b. decrease. c. remain the same. d. More information needed.
Contribution margin is a.the same as sales revenue b.the excess of sales over variable costs c.another term for volume in the "cost-volume-profit" analysis d.profit
The margin of safety is equal to: a) Sales - (Fixed Costs/Contribution Margin Ratio) b) Sales - Net Income c) Sales - (Variable Costs/Contribution Margin) d) Sales - (Variable Costs + Fixed Costs)
Which of the following statements is true when making decisions using cost-volume-profit (CVP) analysis? Select one: a. As long as the contribution margin is a positive number, net income will be positive b. As long as variable costs are more than fixed costs, net income will be negative c. As long as the contribution margin is greater than fixed costs, net income will be positive d. As long as the sales price per unit is greater than fixed costs per unit, net income will be positive
If both the fixed costs associated with a product and the variable costs (as apercentage of sales dollars) decrease, what will be the effect on the contribution margin ratio and the break-even point, respectively?a. Decrease, increase.b. Increase, decrease.c. Decrease, decrease.d. Increase, increase.
When the total contribution margin is greater than total fixed costs, a company has Select one: a. Higher variable cost and fixed cost. b. A net loss c. Zero profit. d. Net income.
How do costs behave when there is a change in volume?a) ______ increases or decreases in total in direct proportion to increases or decreases in sales volume. b) ______ remains the same in total, regardless of change in sales. c) ______ have both a variable and fixed component. d) Answer the following regarding the high-low method:i) What is the formula for determining the variable costs when using the high low method:ii) Given the following information for the high and low levels, what is the variable cost per unit and the total fixed costs? iii) Based on the information in part ii), what is the relevant range?In MyAccountingLab, complete Try It! 21-1 and S21-1 through S21-3.LO2. What is contribution margin, and how is it used to compute operating income?a) What is the contribution margin if net sales revenue is $100,000 and variable costs are $40,000? b) Based on the information in part a), what is the contribution margin ratio?In MyAccountingLab, complete Try It! 21-2 and S21-4 and…
The measure that reflects an organization's variable and fixed cost relationship and indicates how a percentage change in sale from the current level will impact from the current level will impact profits is called the a. break-even point. b. contribution margin. ç. degree of operating leverage. d gross margin. e. margin of safety.
What effect does an increase in sales price have on contribution margin? An increase in fixed costs? An increase in variable costs?