# 32 a the number of units required to reach the breakeven point tends to be higher as 4302284

32) ______ A) The number of units required to reach the breakeven point tends to be higher (as it incorporates total costs) using this method than when using the Contribution Margin method. B) Operating income in the equation is set equal to nil. C) Operating income in the equation assumes that fixed costs are nil. D) Operating income in the equation is set equal to the target income for the year. E) Revenue in the equation includes only operating revenues plus fixed costs .

33) Which of the following are necessary assumptions when using the contribution margin method of determining the breakeven point?

33) ______ A) Average unit costs must be known. B) Total variable cost must be known. C) There must be an input-related cost driver. D) Fixed costs are irrelevant. E) Unit selling price and unit variable cost must be known.

34) Which of the following formulae is correct when using the contribution margin method to determine the breakeven point?

34) ______ A) revenues less operating income equal variable costs plus fixed costs B) unit contribution margin times the breakeven number of units equals total variable costs C) unit contribution margin times unit variable cost equals the breakeven number of units D) selling price less unit contribution margin equals unit fixed cost for all values below or at the breakeven number of units E) unit contribution margin times the breakeven number of units equals fixed costs

*Use the information below to answer the following question(s):*

Jill Bishop makes homemade soap. She sells it for $100 a case. Her variable costs are $40 per case. She has fixed costs of $600.

35)

What is the breakeven point in cases?

35) ______ A) 10 cases B) 6 cases C) 100 cases D) 20 cases E) 15 cases

36) What is the contribution margin per case?

36) ______ A) $15.00 B) $60.00 C) $10.00 D) $100.00 E) $40.00

37) What is the breakeven point in units for a product line, assuming a unit selling price of $200, total fixed costs are $4,000, unit variable costs are $40, and target operating income is $16,000,000?

37) ______ A) 75 units B) 25 units C) 100,000 units D) 100 units E) 125 units

38) If unit sales exceed the breakeven point when using the graph method,

38) ______ A) operating income is negative ( an operating loss ). B) there is a loss because the total cost line exceeds the total revenue line. C) total sales exceed total costs. D) there is a profit because the total cost line exceeds the total revenue line. E) expenses are extremely high relative to revenues.

39) What would target operating income be when fixed costs equal $6,000, unit contribution margin equals $40.00, and the number of units equals 400?

39) ______ A) $20,000 B) $60,000 C) $10,000 D) $16,000 E) $6,000

40) How many units would have to be sold to yield a target income of $11,000 assuming variable costs are $30 per unit, total fixed costs are $1,000, and the unit selling price is $40?

40) ______ A) 900 units B) 300 units C) 1,000 units D) 1,100 units E) 1,200 units

41) “Uncertainty” may be defined as

41) ______ A) the possibility that an actual amount will be the same as an expected amount. B) the possibility that the budgeted amount will be lower than the estimated amount. C) the possibility that an actual amount will be either higher or lower than the expected amount. D) the possibility that a budgeted amount will be the same as an estimated amount. E) the possibility that the budgeted amount will be either higher or lower than the expected amount.

42) Which of the following statements about sensitivity analysis is FALSE?

42) ______ A) It can be used in CVP to show changes in operating income if variable costs per unit change. B) It shows the impact of a manager's behaviour. C) It examines the relationship between a change in assumptions and the related result. D) It is a technique which is used to answer “what if” questions. E) It is not relevant for determining historical results.

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