8. In performing short-term CVP analysis for a new product or service, the decision-maker would: A..

 
   

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8.
In performing short-term
CVP analysis for a new product or service, the decision-maker would:

A.
Include all current and
future fixed costs.

B.
Include only current
fixed costs.
C.
Include only future
fixed costs.
D.
Include only incremental
fixed costs.
E.
Include only allocated
fixed costs.

9.
In measuring the variable cost per unit,
CVP analysis includes:
A.
Only variable production
costs.

B.
Only variable
distribution and selling costs.
C.
Both variable production
and variable selling/distribution costs.
D.
Only variable and
semi-variable production costs.

10.
The difference between sales price per
unit and variable cost per unit is the:
A.
Contribution margin per
unit (cm).

B.
Total contribution margin
(CM).
C.
Contribution margin
ratio.
D.
Margin of safety (MOS).
E.
Breakeven point.

11.
The contribution margin per unit
multiplied by the number of units sold is the:
A.
Segment margin.

B.
Total contribution
margin (CM).
C.
Contribution margin
ratio.
D.
Margin of safety (MOS).
E.
Breakeven point.

12.
Which one of the
following is the most useful measure for comparing the risk of two
alternative products?

A.
Contribution margin ratio.
B.
Margin of safety ratio
(MOS%).

C.
Financial leverage.
D.
Breakeven point.
E.
Regression analysis.

16. Which
one of the following is defined, at any given sales volume, as the ratio of the
total contribution margin to operating profit at that sales volume?

A.
Contribution margin
ratio.
B.
Margin of safety ratio
(MOS%).
C.
Degree of operating
leverage (DOL).
D.
Breakeven point.
E.
Margin of safety (MOS).

17.
Which one of the following is not
included as a factor in CVP analysis?
A.
Total fixed costs.

B.
Variable cost per unit.
C.
Desired (targeted)
profit.
D.
Selling price per unit.
E.
Expected production
level.

18.
Which of the following is not an
underlying assumption of a conventional CVP analysis?

A.
Learning-curve effects (i.e.,
productivity gains with experience)
B.
Fixed costs, in total,
do not change as sales mix or total sales volume change.
C.
Selling price per unit
is unrelated to assumed sales volume.
D.
Inputs to the
profit-planning model are known with certainty.
E.
Variable costs per unit
are unrelated to changes in volume.

Grant’s
Western Wear is a retailer of western hats located in Atlanta, Georgia.
Although Grant’s carries numerous styles of western hats, each hat has
approximately the same price and invoice purchase cost, as shown below. Sales
personnel receive large commissions to encourage them to be more aggressive in
their sales efforts. Currently the economy of Atlanta is really humming, and
sales growth at Grant’s has been great. However, the business is very
competitive, and Grant has relied on its knowledgeable

and courteous staff to
attract and retain customers, who otherwise might go to other western wear
stores. Also, because of the rapid growth in sales, Grant is finding it more
difficult to manage certain aspects of the business, such as restocking of
inventory and hiring and training new salespeople.
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19.
The annual breakeven point in unit sales
is calculated to be:
A.
15,000 units.
B.
14,000 units.
C.
16,000 units.
D.
13,000 units.
E.
17,000 units.

20.
The annual breakeven point in dollar
sales is calculated to be:
A.
$504,000.

B.
$576,000.
C.
$468,000.
D.
$612,000.
E.
$540,000.