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Managerial Accounting 10th Edition Crosson Test Bank 1

This document provides a test bank and solutions manual for the 10th edition of the textbook "Managerial Accounting" by Crosson and Needles. It contains 41 multiple choice questions testing concepts from Chapter 5 on cost-volume-profit analysis, including questions about cost behavior, relevant range, contribution margin, breakeven point, and using CVP analysis for multiple products. The document provides the questions and answers to help students study for exams on this chapter.

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177 views6 pages

Managerial Accounting 10th Edition Crosson Test Bank 1

This document provides a test bank and solutions manual for the 10th edition of the textbook "Managerial Accounting" by Crosson and Needles. It contains 41 multiple choice questions testing concepts from Chapter 5 on cost-volume-profit analysis, including questions about cost behavior, relevant range, contribution margin, breakeven point, and using CVP analysis for multiple products. The document provides the questions and answers to help students study for exams on this chapter.

Uploaded by

josehernandezoimexwyftk
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Managerial Accounting 10th Edition

Crosson Test Bank


Full download at link:

Test Bank: https://testbankpack.com/p/test-bank-for-managerial-accounting-


10th-edition-crosson-needles-1133940595-9781133940593/

Solution Manual: https://testbankpack.com/p/solution-manual-for-managerial-


accounting-10th-edition-crosson-needles-1133940595-9781133940593/

Chapter 5: Cost-Volume-Profit Analysis

Student: ___________________________________________________________________________

1. Costs are not affected by the changes in the volume of production.


True False

2. Cost behavior is defined as the manner in which costs respond to changes in volume or activity.
True False

3. Understanding cost behavior helps managers in planning the optimal mix of services or products to offer.
True False

4. Cost behavior analysis is not useful to a service business.


True False

5. Within the relevant range, total fixed cost and variable cost per unit remain constant.
True False
6. Unit fixed costs will be the same regardless of how many units are produced.
True False

7. Unit variable costs vary with changes in productive output, whereas total variable costs remain constant.
True False

8. The relevant range of activity is the range in which actual operations of a company are likely to occur.
True False

9. Fixed costs remain constant in a relevant range of activity.


True False

10. Unit fixed costs vary inversely with activity or volume.


True False

11. Cost can only be classified as either variable or fixed.


True False

12. An organization’s theoretical operating capacity is the level at which its management expects to operate
during a normal business environment.
True False

13. An organization’s practical capacity is its theoretical or ideal capacity reduced by normal and anticipated
work stoppages, such as machine breakdowns.
True False

14. An organization’s normal capacity is the average annual level of operating capacity needed to meet its
expected sales demand.
True False
15. Costs that change, in total, in direct proportion to changes in productive output, or activity, are called
variable costs.
True False

16. Linear approximation is a method of converting nonlinear variable costs into linear fixed costs.
True False

17. Practical capacity and engineering capacity are synonymous terms.


True False

18. Depreciation calculated using the straight-line method is an example of a fixed cost.
True False

19. Depreciation cost of a controller's computer calculated using the straight-line method is an example of a
variable cost.
True False

20. Electric power charges are an example of a mixed cost.


True False

21. A mixed costs line, plotted on a graph, will start at the Y axis at the amount of fixed cost.
True False

22. The high-low method allows managers to differentiate between fixed and variable costs when dealing with
mixed costs.
True False

23. When using the high-low method, the accountant assumes the fixed portion of mixed costs to be the lowest
fixed amount incurred during the period under review.
True False
24. Contribution margin income statement helps managers to view revenue and cost relationships on a per unit
basis or as a percentage of sales.
True False

25. A contribution margin income statement is formatted to emphasize cost behavior rather than organizational
functions.
True False

26. Contribution margin is calculated by deducting total fixed costs from total sales.
True False

27. All variable costs except manufacturing costs are subtracted from sales to determine the total contribution
margin.
True False

28. Operating income is determined by deducting all fixed costs related to production, selling, and
administration from contribution margin.
True False

29. The contribution margin income statement divides costs into variable and fixed costs.
True False

30. Gross margin and contribution margin are always equal.


True False

31. Regression analysis takes into consideration only the highest and the lowest level of activities to predict cost
behavior.
True False

32. A scatter diagram helps to determine if a linear relationship exists between a cost item and its related
activity measure.
True False
33. The engineering method of separating costs is sometimes called a regression analysis.
True False

34. CVP analysis can also be applied by a company selling multiple products.
True False

35. Cost-volume-profit analysis assumes a constant sales mix.


True False

36. An increase in the unit sales price will increase unit variable price.
True False

37. Cost-volume-profit analysis assumes costs and revenues have a close linear approximation.
True False

38. To find out the breakeven point in dollars, we divide fixed costs by gross margin ratio.
True False

39. The contribution margin equals zero at the breakeven point.


True False

40. Contribution margin is calculated by deducting variable costs from sales.


True False

41. A product line's contribution margin represents its contribution to paying off variable costs and to
generating a profit.
True False

42. Using or not using the contribution margin for cost-volume-profit computations will not change the
resulting amount of breakeven units in a given situation.
True False
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