Choose the best answer for each of the following multiple choice questions.

1. Cost-volume-earnings analysis includes some inherent, simplifying assumptions. Which of the following is not one of these assumptions?

a. Cost and revenues are predictable and are linear over the relevant range.

b. Variable costs fluctuate proportionally with volume.

c. Changes in beginning and ending inventory levels are insignificant in amount.

d. Sales mix will change as fixed costs increase beyond the relevant range.

2. The term "relevant range" as used in cost accounting means the range

a. Over which costs may fluctuate.

b. Over which cost relationships are valid.

c. Of probable production.

d. Over which relevant costs are incurred.

3. How would the following be used in calculating the expected sales level expressed in units?

4. Information concerning Label Corporations's Product A is as follows:

Assuming that Label increased sales of Product A by 20%, what should the net income from Product A be?

a. $20,000

b. $24,000

c. $32,000

d. $80,000 5. The following data apply to Freim Corporation for a given period:

Freim wants to sell an additional 50,000 units at the same selling price and contribution margin. By how much can fixed costs increase to generate a gross margin equal to 10‘’/o of the sales value of the additional 50,000 units to be sold?

a. $50,000

b. $57,500

c. $67,500

d. $125,000

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Contribution Per Unit Estimated Operating Loss a. b. C. d. Not used Numerator Denominator Numerator Numerator Numerator Denominator Denominator