Cost Account - Multiple Choice Questions

2.Which of the following equations is CORRECT?

a. Sales revenues + Variable expenses + Fixed expenses = Operating income

b. Sales revenues - Fixed expenses = Variable expenses - Operating income

c. Sales revenues = Variable expenses - (Fixed expenses + Operating income)

d. Sales revenues - Variable expenses - Fixed expenses = Operating income

3. Total contribution margin is calculated by subtracting

a. cost of goods sold from total revenues.

b. fixed costs from total revenues.

c. total manufacturing costs from total revenues.

d. total variable costs from total revenues.

4. The contribution margin at the break-even point

a. is zero.

b. equals total fixed costs.

c. plus total fixed costs equals total revenues.

d. is greater than variable costs

5. In the cost-volume-profit analysis, income taxes

a. increase the sales volume required to break even.

b. are not treated as a fixed cost.

c. increase the sales volume required to earn a desired profit.

d. are treated as a fixed cost

6. In a cost-volume-profit graph,

a. an increase in the unit selling price would shift the break-even point in units to the left.

b. the total revenue line crosses the horizontal axis at the break-even point.

c. an increase in unit variable costs would decrease the slope of the total cost line.

d. beyond the break-even sales volume, profits are maximized at the sales volume where total revenues equal total costs.