To maximize profits, firms produce the level of output that: O a. equates total revenue and total cost. O b. equates marginal revenue with marginal cost. O C. minimizes costs. O d. maximizes revenues.
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- On a cost-volume-profit graph, when the Total Cost line is higher than the Total Revenue line, the difference represents Select one: O A. a positive return on the investment O B. a net loss O C. net income O D. not enough information is presentedWhat analysis ensures that the income for the firm will cover its variable costs? a. ratio analysis b. financial analysis c. cost volume profit analysis d. sales analysis1) Cost-volume relationship states that maximum profit is reached by maximizing revenue. Select one: True O False
- Which of the following is the indicator of the rate at which company is earning profit? Select one: a. Margin of safety b. All options are correct c. Contribution margin d. Profit volume ratioThe three most common cost behavior classifications are a. variable costs, product costs, and sunk costs b. variable costs, period costs, and differential costs c. variable costs, sunk costs, and opportunity costs d. fixed costs, variable costs, and mixed costs The contribution margin ratio is a. the portion of equity contributed by the stockholders b. the same as profit c. the same as the profit-volume ratio d. the same as the variable cost ratioWhich 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
- Is there a point in a cost-volume-profit analysis when the company is expected to profit?Which of the following would be considered as a limiting factor to maximize the profit? O a. Book value O b. Fixed cost Oc. Contribution d. SalesThe mathematical equation for computing required sales to obtain target net income is: Required Sales Revenue = a. Total Fixed Costs + Target Net income b. Total Variable Costs + Total Fixed Cost + Target Net Income c. Total Contribution – Total Fixed Costs d. Total Variable Costs + Target Net Income
- THE MAIN DIFFERENCE BETWEEN EX-ANTE AND EX-POST ECONOMIC PROFIT a. Representing the opportunity cost of captial b. Is calledbthe hold-up problem c. Are the sunk costs d. Is immaterial in managerial decisionsWhat concept relates to the proportionate savings in costs gained when levels of production are increased: A) Accounting profit. B) Economies of scale. C) Marginal costs. D) Barriers to entry. E) Economic profit. The benefit lost when choosing one option precludes receiving the benefits from an alternative option was referred to as: A) Irrelevant costs. B) Lost costs. C) Alternative costs. D) Opportunity costs. E) Sunk costs.A Cost-Volume-Profit graph contains an "Area of Loss" and an "Area ofProfitability". Which of the following best explains the difference between thetwo points on the graph? A. The area of loss represents the difference between Sales and Variable Cost.B. The area of loss begins with the concept that fixed costs have to be recovered priorto sales contributing to profit.C. The area of profit represents the difference between Sales and Variable Cost.D. The area of profit begins with the concept that no company would have any level ofsales below the break-even point.