Question 1.21

Breakeven analysis adjusted for a targeted profit

a. is a difficult computation that is not normally employed.

b. decreases the number of units required to breakeven.

c. is excellent for performing what-if analysis.

d. is a poor basis for evaluating the profitability of a venture.

1 point

Question 1.22

At production levels below the breakeven point,

a. fixed costs are recovered.

b. profit is negative.

c. variable costs are zero.

d. fixed costs are zero.

1 point

Question 1.23

Speed Zone Inc., dealers in automobiles, pays its employees a commission of 5 percent on each sale. What is the proper classification of the cost of sales commissions?

a. Scattered cost

b. Variable cost

c. Mixed cost

d. Fixed cost

1 point

Question 1.24

Which of the following best describes the typical relationship between variable costs and volume?

a. Total variable costs increase in an erratic, unpredictable fashion with changes in volume.

b. Total variable costs stay constant with changes in volume.

c. Unit variable costs increase with changes in volume up to a certain point and then remain constant.

d. Total variable costs increase in direct proportion to increases in volume.

1 point

Question 1.25

Which of the following activities would be part of the value chain of a manufacturer?

a. Inventory control

b. Product design

c. Cost accounting

d. Materials storage