Accounting chapters 5, 6, 7

CVP analysis allows companies to easily identify the change in profit due to changes in ______. A. costs B. location C. selling price D. volume E. management

A, C, D

CVP is the acronym for __-__-__

Cost Volume Profit

To simplify CVP calculations, it is assumed that ______ will remain constant. A. unit fixed cost B. total contribution margin C. total variable cost D. selling price

D

Simple CVP analysis can be relied on for changes in volume outside the relevant range. (TRUE, FALSE)

FALSE

CVP analysis is based on some _________________ that may be violated in practice, but the tool is still generally useful.

assumptions

NET OPERATEING INCOME = _____________ - ______________

contribution margin, total fixed costs

According to the CVP analysis model and assuming all else remains the same, profits would be increased by a(n) ______. A. decrease in the unit variable cost B. change in sales mix C. decrease in unit selling price D. increase in total fixed cost

A

Users can easily judge the impact on profits of changes in selling price, cost or volume when using an income statement constructed under the ______ approach. A. contribution margin B. traditional C. balance sheet D. gross margin

A

Vivian's Violins has sales of $326,000, contribution margin of $184,000 and fixed costs total $85,000. Vivian's Violins net operating income is ______. A. $99,000 B. $57,000 C. $241,000

A

The contribution margin income statement allows users to easily judge the impact of a change in ______ on profit. (MULTIPLE ANSWERS) A. cost B. selling price C. volume D. organizational structure

A, B, C

CVP analysis focuses on how profits are affected by ______. (multiple answers) a. break-even point b. sales volume c. mix of products sold d. unit variable cost e. selling price f. total fixed costs

B, C, D, E, F

Which of the following are assumptions of cost-volume-profit analysis? (MULTIPLE ANSWERS) A. Variable costs per unit increase over the relevant range of activity. B. Costs are linear and can be accurately divided into variable and fixed elements. C. Fixed costs per unit stay the same within the relevant range. D. In multi-product companies, the sales mix is constant.

B, D

Daisy's Dolls sold 30,000 dolls this year. Each doll sold for $40 and had a variable cost of $19. Fixed expenses were $250,000. Net operating income for the year is ______. A. $630,000 B. $(249,979) C. $380,000 D. $1,520,000

C

Which tool can be used to easily calculate the change in profit resulting from a change in sales price, sales volume, variable costs, or fixed costs? a. Variable expense ratio b. Fixed cost analysis c. CVP analysis d. Return on investment

C