Question : 51.If total fixed costs increase while variable costs and sales : 1257113

 

 

51.If total fixed costs increase while variable costs and sales price are unchanged, what happens to the break-even point?   

A. The break-even point increases, and therefore more units must be sold to break-even.

 

B. The break-even point decreases, and therefore fewer units must be sold to break-even.

 

C. The break-even point remains the same.

 

D. The break-even point decreases and therefore more units must be sold to break-even.

 

 

52.When drawing a cost-volume-profit graph, how would the axes be labeled?   

A. The horizontal axis would be labeled with dollars (of cost or revenue), while the vertical axis would be labeled with number of units (volume or activity).

 

B. The horizontal axis would be labeled with dollars (of total fixed costs), while the vertical axis would be labeled with dollars (of total variable costs).

 

C. The horizontal axis would be labeled with number of units (volume or activity), while the vertical axis would be labeled with dollars (of cost or revenue).

 

D. None of these answers is correct.

 

 

53.Chesterfield Corporation has been operating well above its break-even point. What will happen to Chesterfield’s margin of safety if the variable cost per unit increases?   

A. The break-even point would decrease, and the margin of safety would decrease.

 

B. The break-even point would decrease, and the margin of safety would increase.

 

C. The break-even point would increase, and the margin of safety would decrease.

 

D. The break-even point would increase, and the margin of safety would increase.

 

 

54.When performing sensitivity analysis, which of the following is an example of a variable that management may consider changing to answer “what if” questions?   

A. Variable cost per unit

 

B. Sales price per unit

 

C. Fixed cost per unit

 

D. Both Variable cost per unit and Sales price per unit are correct.

 

 

55.What happens to break-even volume when the contribution margin ratio increases?   

A. Break-even volume increases.

 

B. Break-even volume decreases.

 

C. Break-even volume stays the same.

 

D. Not enough information to answer the question.

 

 

56.Jasper Company has variable costs per unit of $20, fixed costs of $300,000, and a break-even sales volume of 60,000 units. What will be the new break-even volume in units if variable costs decrease by $3 per unit and fixed costs increase by $100,000?   

A. 93,333 units

 

B. 33,333 units

 

C. 50,000 units

 

D. 200,000 units

 

 

57.Company X has variable costs per unit of $20, fixed costs of $300,000, and a break-even sales volume of 60,000 units. What would happen to break-even volume in units if the sales price per unit decreases by $2 and the variable cost per unit decreases by $2?   

A. Break-even volume increases.

 

B. Break-even in dollars decreases.

 

C. Break-even volume stays the same.

 

D. Both Break-even in dollars decreases and Break-even volume stays the same are correct.

 

 

58.What happens to break-even volume when the sales price per unit decreases?   

A. Break-even volume increases.

 

B. Break-even volume decreases.

 

C. Break-even volume stays the same.

 

D. None of these answers is correct.

 

 

59.Assume that the company sells two products, X and Y, with contribution margins per unit of $12 and $10, respectively. What happens to the break-even volume if sales mix shifts to favor product X? (In other words, Y makes up a higher percentage of the sales mix.)   

A. Break-even volume increases.

 

B. Break-even volume decreases.

 

C. Break-even volume stays the same.

 

D. None of these answers is correct.

 

 

60.What is the formula for calculating contribution margin ratio?   

A. Contribution margin/net income

 

B. Contribution margin/fixed costs

 

C. Contribution margin/desired profit

 

D. Contribution margin/sales