1. Which of the following items would a service company least likely have on its financial statements?

a)Expenses

b)Long-term debt

c)Cost of goods sold

d)Sales revenue

2. Common activity bases used by an airline are the number of __________ and the number of __________.

a)units produced; passengers

b)passengers; miles flown

c)airline seats; miles flown

d)None of these choices are correct.

3. Under absorption costing, increasing finished goods inventory can cause

a) operating income to increase.

b) operating income to decrease.

c) per-unit product costs to increase.

d) None of these choices are correct.

4. When units manufactured are __________ the number of units sold, the variable costing income from operations will be greater than that of absorption costing.

a) less than

b) greater than

c) equal to

d) All of these choices (variable costing income is always greater) are correct.

5. Markets can be divided into market segments by

a) sales territories.

b) product lines.

c) salespersons.

d) All of these choices are correct.

6. The contribution margin ratio is computed by

a) contribution margin multiplied by sales.

b) contribution margin divided by sales.

c) contribution margin less sales, divided by sales.

d) None of these choices are correct.