Acctg II Chp 16 : Cost-Volume-Profit Analysis

If one unit of a product costs $5.00 and ten units of that product cost $50.00, the cost is a variable cost. (p. 470)

• True

• False

Variable costs plotted on a graph become a straight line parallel with the base of the graph. (p. 470)

• True

• False

Fixed costs plotted on a graph become a straight line parallel with the base of the graph. (p. 470)

• True

• False

Total variable costs increase as sales increase. (p. 470)

• True

• False

Total fixed costs increase as sales increase. (p. 470)

• True

• False

Net sales less selling and administrative expenses equals marginal income. (p. 471)

• True

• False

Net sales less fixed costs equals contribution margin. (p. 471)

• True

• False

The point at which no net income is earned and no net loss is incurred is called the gross profit point. (p. 474)

• True

• False

CVP analysis can be used to calculate the dollar and unit sales needed to earn a specified amount of a planned net income. (p. 479)

• True

• False

Changes in sales volume will not affect net income. (p. 480)

• True

• False