Which of the following costs are always incremental and relevant in decision analysis? a) Opportunity costs and sunk costs b) Avoidable costs and opportunity costs c) Only avoidable costs d) Avoidable costs and sunk costs Which of the following will increase a company's breakeven point? a) reducing its total fixed costs b) increasing the selling price per unit c) increasing variable cost per unit d) increasing contribution margin per unit

Which of the following costs are always incremental and relevant in decision analysis? a) Opportunity costs and sunk costs b) Avoidable costs and opportunity costs c) Only avoidable costs d) Avoidable costs and sunk costs Which of the following will increase a company's breakeven point? a) reducing its total fixed costs b) increasing the selling price per unit c) increasing variable cost per unit d) increasing contribution margin per unit

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter13: Capital Structure And Leverage

Section: Chapter Questions

Problem 2Q: Would each of the following increase, decrease, or have an indeterminant effect on a firms...

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Would each of the following increase, decrease, or have an indeterminant effect on a firms break-even point (unit sales)? a. The sales price increases with no change in unit costs. b. An increase in fixed costs is accompanied by a decrease in variable costs. c. Variable labor costs decline; other things are held constant.
Which of the following occurs if a company experiences a decrease in its fixed costs? Select one: O a. Income would decrease. O b. The break-even point would decrease. O c. The break-even point would increase. O d. More than one of the answers would occur. e. The contribution margin would decrease.
Which of the following occurs if a company experiences a decrease in its fixed costs? Select one: a. More than one of the answers would occur. b. The break-even point would increase. c. The break-even point would decrease. d. The contribution margin would decrease. e. Income would decrease.
Which of the following statements accurately describes the "relevant range?" a. The operation range in which fixed costs are expected to remain the same. b. The operation range in which the firm can earn a profit. c. The operation range which can satisfy unusual product demand. d. The operation range in which variable costs rise proportionately.
Operating leverage predicts the effects of a given fixed cost on operating income when: Group of answer choices No sales discounts are allowed Sales volume changes Production volume changes Variable costs change
Which of the following statements is true? I. Incremental analysis is an analytical approach that focuses only on those revenues and costs that will not change as a result of a decision. II. When expressed on a per unit basis, fixed costs can mislead decision makers into thinking of them as variable costs. II. To estimate what the profit will be at various levels of sales volume, multiply the number of units to be sold above or below the break-even point by the unit contribution margin. Statements I and III are true. Statements II and III are true. All of the statements are true. None of the statements are true.
Which of the following option shows the rate at which company is earning profit? Select one: a. All options are correct b. Margin of safety c. Contribution margin d. Profit volume ratio
What analysis ensures that the income for the firm will cover its variable costs? a. ratio analysis b. financial analysis c. cost volume profit analysis d. sales analysis
the link between short-run average costs and long-run average costs? Explain the association between return to scale and economies of scale and suggest the potential sources of internal and external economies of scale. Why might firms face diseconomies of scale and shutdown/break-even situations in the long run?
Fixed costs, variable costs, and revenues are all included in profitability analysis? Select one: O True O False
Which of the following occurs if a company experiences an increase in its fixed costs? Select one: O a. Net income would decrease. O b. The contribution margin would increase. Oc The contribution margin would decrease. Od. The break-even point would decra2se, Oe. More than one.of the answers, would.occur.
Consider a situation in which a firm needs to make a decision regarding the resources to allocate between two products. One product makes a significantly larger contribution margin than the other. How might the contribution margin affect the decision that the firm makes? What if both contribution margins were positive or both were negative? Are there other factors when considering the contribution margin you should look for? What makes the contribution margin positive or negative?