Which of the following is NOT true regarding an income statement organized according to the contribution margin approach? Question 6 options: The contribution margin income statement is organized by cost behavior. Operating income will always be the same as operating income in a traditional income statement regardless of changes in inventory levels. All fixed costs, including fixed MOH, are expensed below the contribution margin line. The contribution margin is equal to sales revenue minus variable expenses.

Which of the following is NOT true regarding an income statement organized according to the contribution margin approach? Question 6 options: The contribution margin income statement is organized by cost behavior. Operating income will always be the same as operating income in a traditional income statement regardless of changes in inventory levels. All fixed costs, including fixed MOH, are expensed below the contribution margin line. The contribution margin is equal to sales revenue minus variable expenses.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 4MCQ

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Which of the following does not represent a cost-volume-profit analysis equation? a. Sales - fixed expenses - variable expenses = 0 O b. Profit = contribution margin fixed expenses O c. Sales = total expenses + profit O d. Sales + fixed expenses + profit = contribution margin + sales Ое. Contribution margin - fixed expenses + profit = 0 O
Which of the following does not represent a cost-volume-profit analysis equation? O a. Contribution margin - fixed expenses-profit = 0 b. Profit = contribution margin + fixed expenses Sales + fixed expensas + profit = contribution margin + sales O d. Sales = total expenses + profit O e. Sales - fixed expenses - variable expenses = 0 %D CLEAR MY CHOICE AGE
Which one of the following is not considered an assumption of cost-volume-profit analysis? a. Costs are linear b. Sales mix of products sold does not change c. Selling price per unit changes with volume d. Costs can be divided into variable and fixed components e. Fixed cost per unit is not constant
Which of the following statements about profit measurement under absorption and marginal costing is not true (assuming that unit variable costs and fixed costs are constant)? O A. If inventory levels increase then profits measured using absorption costing will be higher than profits measured using marginal costing. O B. If inventory levels decrease then profits measured using marginal costing will be higher than profits measured using absorption costing. OC. Profits measured using absorption costing will be either lower or higher than profits measured using marginal costing. O D. Profits measured using absorption costing may be the same as, or lower than, or higher than profits measured using marginal costing.
In a CVP income statement, cost of goods sold is generally completely a variable cost. completely a fixed cost. neither a variable cost nor a fixed cost. O broken down into its variable and fixed cost components.
What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit? A. Margin of safety ratioB. Contribution margin ratioC. Costs and expenses ratioD. Profit ratio
A Cost-Volume-Profit graph contains an "Area of Loss" and an "Area ofProfitability". Which of the following best explains the difference between thetwo points on the graph? A. The area of loss represents the difference between Sales and Variable Cost.B. The area of loss begins with the concept that fixed costs have to be recovered priorto sales contributing to profit.C. The area of profit represents the difference between Sales and Variable Cost.D. The area of profit begins with the concept that no company would have any level ofsales below the break-even point.
Which of the following does not represent a cost -volume -profit analysis equation a. Sales = totale expenses + profit b. Sales + fixed expenses profit = contribi argin + sales c. Profit = contrib contribution margin - fixed expenses d. Contribution margin- fixed expenses - profit 0 e. Sales - fixed expenses - variable expenses ses = 0
?Which of the following does not represent a cost-volume-profit analysis equation Sales + fixed expenses + profit = contribution margin + sales .a O Contribution margin - fixed expenses - profit = 0.b O Sales - fixed expenses - variable expenses = 0 .c O Profit = contribution margin + fixed expenses d O Sales = total expenses + profit .e O
Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. ( Hint: One way to find the missing amounts would be to prepare a contribution format income statement for each case, enter the known data, and then compute the missing items.)a. Assume that only one product is being sold in each of the four following case situations:Contribution Net OperatingUnits Variable Margin Fixed IncomeCase Sold Sales Expenses per Unit Expenses (Loss)1 .......... 15,000 $180,000 $120,000 ? $50,000 ?2 .......... ? $100,000 ? $10 $32,000 $8,0003 .......... 10,000 ? $70,000 $13 ? $12,0004 .......... 6,000 $300,000 ? ? $100,000 $(10,000)
How do costs behave when there is a change in volume?a) ______ increases or decreases in total in direct proportion to increases or decreases in sales volume. b) ______ remains the same in total, regardless of change in sales. c) ______ have both a variable and fixed component. d) Answer the following regarding the high-low method:i) What is the formula for determining the variable costs when using the high low method:ii) Given the following information for the high and low levels, what is the variable cost per unit and the total fixed costs? iii) Based on the information in part ii), what is the relevant range?In MyAccountingLab, complete Try It! 21-1 and S21-1 through S21-3.LO2. What is contribution margin, and how is it used to compute operating income?a) What is the contribution margin if net sales revenue is $100,000 and variable costs are $40,000? b) Based on the information in part a), what is the contribution margin ratio?In MyAccountingLab, complete Try It! 21-2 and S21-4 and…
Statement 1. Selling cost is treated as expenses under variable costing. Statement 2. If sales for a period exceed production, then variable costing income will be higher than absorption costing income. A. Both statements are True B. Both statements are False C. Statement 1 is true. Statement 2 is false D. Statement 1 is false. Statement 2 is true

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	The contribution margin income statement is organized by cost behavior.
	Operating income will always be the same as operating income in a traditional income statement regardless of changes in inventory levels.
	All fixed costs, including fixed MOH, are expensed below the contribution margin line.
	The contribution margin is equal to sales revenue minus variable expenses.