Card 0 of 6
An increase in production levels within a relevant range most likely would result in:
As production levels increase, the total cost would increase as costs are incurred to produce additional output.
Compare your answer with the correct one above
ABC company is using cost volume profit analysis to determine service rates for the upcoming year. Projected costs are: Contribution margin per service performed $1,800, Variable expenses per service performed 1,000, and Total fixed expenses 360,000. Based on these estimates, what is the approximate breakeven point in the number of services performed?
The formula for breakeven point in number is computed by dividing fixed vests by the contribution margin per unit. This would be 360,000/1,800 = 200.
Compare your answer with the correct one above
Several surveys point out that most managers use full product costs, including unit fixed costs and unit variable costs in developing cost-based pricing. Which of the following is least associated with cost-based pricing?
Target pricing is least associated with cost-based pricing. Target pricing takes the perspective of sales rather than looking internally to costs in order to determine a sales price.
Compare your answer with the correct one above
One approach to measuring divisional performance is return on assets. Return on assets is expressed as income:
On a divisional level, return on assets is operating income divided by average total assets.
Compare your answer with the correct one above
Which of the following ratios would be used to evaluate a company's profitability?
The gross margin ratio describes the ratio of gross margin to sales and serves to evaluate a company's profitability.
Compare your answer with the correct one above
Which of the following is not an assumption of CVP analysis?
The correct assumption instead of this would be "Cost behaviors are expected to stay constant over the relevant range of production volume".
Compare your answer with the correct one above