The basic form of cost-volume-profit analysis is often called break-even analysi

Question

The basic form of cost-volume-profit analysis is often called break-even analysis True False To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and sales price. True False The contribution margin ratio is the percent by which the margin of safety exceeds the break-even point. True False A graphic depiction of the break-even point is known as a cost-volume-profit (CVP) chart. True False A cost-volume-profit (CVP) chart is a graph that plots number of units produced on the horizontal axis and dollars of costs and sales on the vertical axis. True False On a typical cost-volume-profit graph, unit sales arc shown on the horizontal axis and both dollars of sales and dollars of costs are represented on the vertical axis. True False Cost-volume-profit analysis cannot be used when a firm produces and sells more than one product. True False The proportion of sales volumes for various products in a multiproduct company is known as the composite mix. True False Using a traditional costing approach, which of the following manufacturing costs are assigned to products? Direct materials and direct labor. Direct labor and variable manufacturing overhead. Fixed manufacturing overhead, direct materials, and direct labor. Variable manufacturing overhead, direct materials, and direct labor. Variable manufacturing overhead, direct materials, direct labor, and fixed manufacturing overhead. Under absorption costing, which of the following statements is not true? Over production and inventory buildup can occur because of how managers are evaluated and rewarded. The fixed costs per unit decline as more units are produced. Variable inventory costs are treated in the same manner as they are under variable costing. Fixed inventory costs are treated in the same manner as they are under variable costing. All manufacturing costs are assigned to products.

Explanation / Answer

Ans 53. True. Break even is subset of CVP analysis.

Ans 54. False. Formula is =   Total fixed expenses
Average contribution margin per unit

Ans 55. False. It is defind as is the difference between a company's sales and variable expenses, expressed as a percentage

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