1. Gross profit is defined as:
a. Sales receipts less total costs of goods sold.
b. Sales receipts less variable costs.
c. Sales receipts plus total cost of goods sold.
d. Sales receipts plus total cost of production.
2. Which if the following is not an example of a fixed cost?
a. Machinery
b. Factories
c. Labor
d. Land
3. The CVP analysis focuses on the relationship between a firm's:
a. Profit, volume of sales, and cost of sales.
b. Profit, volume of production, and cost of production.
c. Profit, volume of production, and cost of labor.
d. Profit, volume of raw materials used, and cost of production.
4. If the total contribution margin is $42,000 and total sales revenue is $84,000, what is the contribution margin ratio?
a. 200%
b. 100%
c. 33%
d. 50%
5. Which of the following could be done to reduce variable costs?
a. Find a less expensive supplier of raw materials.
b. Reduce the amount of labor used in the production process.
c. Use lower wage employees in the production process.
d. All of these choices are correct.
6. Costs that remain the same in total dollar amount as the activity base changes are called
a. variable costs.
b. fixed costs.
c. mixed costs.
d. None of these choices are correct.
7. Costs that vary in proportion to changes in the activity base are called
a. variable costs.
b. fixed costs.
c. mixed costs.
d. None of these choices are correct.
8. Costs that have characteristics of both a variable cost and a fixed cost are called
a. variable costs.
b. fixed costs.
c. mixed costs.
d. None of these choices are correct.
9. All of the following are ways cost-volume-profit analysis may be used except
a. analyzing the effects of changes in costs on profits.
b. analyzing the effects of changes in volume on profits.
c. setting selling prices.
d. None of these choices are correct.
10. Contribution margin equals
a. sales minus fixed costs.
b. sales minus mixed costs.
c. sales minus variable costs.
d. None of these choices are correct.
11. Break-even in sales units is computed as
a. Fixed Costs ÷ Unit Contribution Margin.
b. Mixed Costs ÷ Unit Contribution Margin.
c. Variable Costs ÷ Unit Contribution Margin.
d. None of these choices are correct.
12. Increases in fixed costs
a. decrease the break-even point.
b. increase the break-even point.
c. do not affect the break-even point.
d. decrease the variable costs.
13. If the unit selling price goes up, then
a. the break-even point goes down.
b. the break-even point goes up.
c. the break-even point is not affected.
d. fixed costs go up.