Do most companies like Netflix try to understand how the costs of the company

behave?

1 2

50%50%1. Yes

2. No

Are there accounting tools to help companies such as Netflix to understand the behavior of costs and the relationship between cost, volume and profit?

1 2

50%50%1. Yes

2. No

Is the analysis of the behavior of costs and the relationship between cost, volume and

profit a function of financial accounting?

1 2

50%50%1. Yes

2. No

Does the analysis of the behavior of costs and the relationship between cost, volume and profit follow

the rules of generally accepted accounting principles?

1 2

50%50%1. Yes

2. No

Should all companies use the analysis of costs to help make decisions for sales mix,

product costing and product pricing?

1 2

50%50%1. Yes

2. No

The activities that relate to the cost incurred are called activity bases or activity drivers.

1 2

50%50%1. True

2. False

A fixed cost is a cost that remains the same in total dollar amount as the level of activity

changes.

1 2

50%50%1. True

2. False

A variable cost varies in total and per unit as the level of activity changes.

1 2

50%50%1. True

2. False

The breakeven point in sales (units) moves in the opposite direction as changes in the

variable cost per unit and fixed costs.

1 2

50%50%1. True

2. False

Cost-volume-profit analysis can be presented graphically as well as in equation

form.

1 2

50%50%1. True

2. False

Operating leverage is computed by dividing net sales by income from operations.

1 2

50%50%1. True

2. False

A company with high operating leverage has a high percentage of fixed costs to total

costs.

1 2

50%50%1. True

2. False

The relevant range of activity refers to the

1 2 3 4

25% 25%25%25%

1. geographical areas where the company plans to sell its products

2. activity range where all costs are fixed

3. activity range over which the change in costs are of interest

4. activity range over which all costs are variable

A variable cost is a cost that

1 2 3 4

25% 25%25%25%1. varies inversely on a

per unit basis

2. management may or may not decide to incur

3. remains constant when changes occur in the level of activity

4. varies in proportion to the changes in the level of activity

Which of the following is not a cost classification in cost behavior and cost-

volume-profit analysis?

1 2 3 4

25% 25%25%25%

1. Combined cost

2. Variable cost

3. Fixed cost

4. Mixed cost

A cost estimation technique that can be used to separate a mixed cost into its

variable and fixed cost components is the

1 2 3 4

25% 25%25%25%

1. straight-line method

2. high-low method

3. effective interest method

4. lower of cost or market method

The systematic examination of relationships among selling prices, sales and production

volume, costs, expenses and profits is called

1 2 3 4

25% 25%25%25%

1. job order costing

2. process costing

3. manufacturing costing

4. cost-volume-profit analysis

Contribution margin is the

1 2 3 4

25% 25%25%25%1. excess of sales revenues over variable costs

2. excess of sales revenues over fixed costs

3. excess of sales revenues over variable and fixed costs

4. excess of sales revenues over the cost of goods sold

The breakeven point is the level of operations at which

1 2 3 4

25% 25%25%25%1. a business’s revenues

are greater than its expired costs

2. a business’s revenues equal its expired costs

3. a business’s revenues are less than its expired costs

4. a business’s revenues equal its contribution margin

Breakeven sales in units can be computed by

1 2 3 4

25% 25%25%25%1. dividing total costs by

the unit contribution margin

2. dividing total costs by the unit variable cost

3. dividing fixed costs by the unit contribution margin

4. dividing fixed costs by the unit variable cost

Which of the following is not an assumption in cost-volume-profit analysis?

1 2 3 4

25% 25%25%25%1. Costs can be accurately divided into fixed and variable components

2. Total sales and total costs can be represented by straight lines

3. There is no change in inventory quantities during the period

4. Sales mix is not constant

The difference between current sales revenue and the sales revenue at the breakeven point is referred to as the

1 2 3 4

25% 25%25%25%

1. margin of safety

2. contribution margin

3. gross profit

4. target net income