Question

1. If the level of activity increases within relevant range:

a. variable cost per unit and total fixed cost stay the same

b. fixed cost per unit and total variable cost increase

c. variable cost per unit and total cost increase

d. total cost will increase and fixed cost per unit stays same

2. Which of the following statements is incorrect about the Cost-Volume-Profit graph?

a. The assumption that volume is the only factor affecting total cost

b. The assumption that selling prices do not change

c. The assumption that variable costs go down as volume goes up

d. The assumption that fixed expenses are constant in total within the relevant range

3. The contribution margin ratio decreases if:

a. the percentage of contribution margin to sales revenue increases

b. the percentage of variable cost to sales revenue increases

c. the percentage of variable cost to sales revenue decreases

d. total fixed costs decrease

4. If company X is operating above its break-even point, which of the following is always true:

a. its total variable costs are less than its total fixed costs

b. its total contribution margin is greater than its total variable costs

c. its total contribution margin is greater than its total fixed costs

d. its selling price is higher than per-unit variable cost

Answer 1