361 Chapter 9 MC Solutions.docx

Chapter 9— Break-Even Point and Cost-Volume-Profit Analysis MULTIPLE CHOICE 1. CVP analysis requires costs to be categorized as a. either fixed or variable. b. direct or indirect. c. product or period. d. standard or actual. ANS: A PTS: 1 DIF: Easy OBJ: 9-1 NAT: AACSB: Reflective Thinking LOC: AICPA petencies: Decision Modeling 2. With respect to fixed costs, CVP analysis assumes total fixed costs a. per unit remain constant as volume changes. b. remain constant from one period to the next. c. vary directly with volume. d. remain constant across changes in volume. ANS: D PTS: 1 DIF: Easy OBJ: 9-2 NAT: AACSB: Reflective Thinking LOC: AICPA petencies: Measurement, Reporting 3. CVP analysis relies on the assumptions that costs are either strictly fixed or strictly variable. Consistent with these assumptions, as volume decreases total a. fixed costs decrease. b. variable costs remain constant. c. costs decrease. d. costs remain constant. ANS: C PTS: 1 DIF: Easy OBJ: 9-2 NAT: AACSB: Reflective Thinking LOC: AICPA petencies: Measurement, Reporting 4. CVP analysis is based on concepts from a. standard costing. b. variable costing. c. job order costing. d. process costing. ANS: B PTS: 1 DIF: Easy OBJ: 9-2 NAT: AACSB: Reflective Thinking LOC: AICPA petencies: Measurement, Reporting Chapter 9 2 5. Cost-volume-profit analysis isa technique available to management to understand better the interrelationships of several factors that affect a firm's profit. As with many such techniques, the accountant oversimplifies the real world by making assumptions. Which of the following is not a major assumption underlying CVP analysis? a. All costs incurred bya firm can be separated into their fixed and ponents. b. The product selling price per unit is constant at all volume levels. c. Operating efficiency and employee productivity are constant at all volume levels. d. For multi-product situations, the sales mix can vary at all volume levels. ANS: D PTS: 1 DIF: Easy OBJ: 9-2 NAT: AACSB: Ref