Question 14 of 20 5.0 Points

Theoretical capacity refers to:
A. extra machinery and equipment kept on hand.

B. the maximum productive output possible.

C. an output level that allows for normal work stoppages.

D. the operating capacity that will meet expected sales demand.
Reset Selection

Mark for Review What's This?
Question 15 of 20 5.0 Points

The high-low method:
A. calculates variable costs per unit by dividing the difference in the high and low activity levels by the high and low costs.

B. assumes that the fixed portion of the mixed cost is the lowest monthly cost incurred during the period under consideration.

C. allows differentiation between fixed and variable costs when dealing with mixed costs.

D. combines the fixed and variable portions of a cost to determine the total cost.
Reset Selection

Mark for Review What's This?
Question 16 of 20 5.0 Points

The equation for finding the breakeven point may be written as:
A. S - VC - FC = 0.

B. VC - FC = S.

C. S + FC = VC.

D. S + VC + FC = 0.
Reset Selection

Mark for Review What's This?
Question 17 of 20 5.0 Points

The breakeven point is:
A. where fixed and variable costs reach the upper level of the relevant range.

B. the level of activity where all fixed costs are recovered.

C. where total revenue equals total costs.

D. where fixed costs meet variable costs.
Reset Selection

Mark for Review What's This?
Question 18 of 20 5.0 Points

The equation that will provide the breakeven point in units (SP = selling price) is:
A. BE units = (SP - VC) ÷ FC per unit.

B. VC per unit + FC = SP per unit x BE units.

C. BE units = FC ÷ CM per unit.

D. SP per unit – VC per unit = FC ÷ BE units.
Reset Selection

Mark for Review What's This?
Question 19 of 20 5.0 Points

Contribution margin equals sales minus:
A. cost of goods sold.

B. total costs.

C. fixed costs.

D. variable costs.
Reset Selection

Mark for Review What's This?
Question 20 of 20 5.0 Points

For every unit that a company produces and sells above the breakeven point, its profitability is improved (ignoring taxes) by the unit's:
A. gross margin.

B. selling price minus fixed cost.

C. variable cost.

D. contribution margin.