ACC 220 Chp. 18

Which one of the following is a name for the range over which a company expects to operate?

Relevant range

Which of the following is not a plausible explanation of why variable costs often behave in a curvilinear fashion?

Total variable costs are constant within the relevant range

If Qualls Quality Airline cuts its domestic fares by 30%,

a profit can be earned either by increasing the number of passengers or by decreasing variable costs

The amount by which actual or expected sales exceeds break-even sales is referred to as

margin of safety

The primary benefit of ABC is it provides

more accurate product costing

A fixed cost is a cost which

remains constant in total with changes in the level of activity

For an activity base to be useful in cost behavior analysis,

there should be a correlation between changes in the level of activity and changes in costs

Which one of the following is not an assumption of CVP analysis?

All costs are variable costs.

A cost which remains constant per unit at various levels of activity is a

variable cost.

Why is identification of a relevant range important?

Cost behavior outside of the relevant range is not linear, which distorts CVP analysis

Which of the following would not be an acceptable way to express contribution margin?

Sales minus unit costs

Which is true concerning the decision to make or buy?

The company should but if the cost of buying is less than the cost of producing

Contribution margin is

available to cover fixed costs and contribute to income for the company

The break-even point is where

contribution margin equals total fixed costs

The CVP income statement

discloses contribution margin in the body of the statement.

CVP analysis does not consider

fixed cost per unit

Required sales in dollars to meet a target net income is computed by dividing

fixed costs plus target net income by contribution margin ratio

The prescence of any of the following factors would suggeat a switch to ABC except

overhead costs constitute a minor portion of total costs

Which of the following is not a fixed cost

Direct materials