Principles of Accounting II | Module 10 - Chapter 20

Which of the following conditions would cause the break-even point to increase?

• total fixed costs increase

• unit selling price increases

• unit variable cost decreases

• total fixed costs decrease

Which of the following types of cost is shown in this table of cost data?

• mixed cost

• variable cost

• fixed cost

• period cost

The difference between the current sales revenue and the sales at the break-even point is called the

• contribution margin

• margin of safety

• price factor

• operating leverage

Cost behavior refers to the manner in which a cost

• changes as a related activity changes

• is allocated to products

• is used in setting selling prices

• is estimated

Variable costs are costs that remain constant on a per-unit basis as the level of activity changes.

• True

• False

If direct costs per unit increases, the break even point will increase

• True

• False

A mixed cost has characteristics of both variable and a fixed costs.

• True

• False

Variable costs are costs that vary in total in direct proportion to changes in the activity level

• True

• False

The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed to contribution margin ratio

• True

• False

A low operating leverage is normal for highly automated industries.

• True

• False