A shift in the sales mix from a product with a high CM ratio toward a product with a low contribution margin ratio will cause the breakeven point to increase How is the unit sales volume necessary to reach a target profit calculated fixed exp target profit unit CM If a company sells one unit above its breakeven sales volume then its operating income would be equal to the unit contribution margin If a per unit cost remains constant over a wide range of volume the cost is most likely a variable cost If the degree of operating leverage is 3 then a 2 change in the number of units sold should result in a 6 change in operating income If the sales price of a product increases while everything else remains the same what happens to the breakeven point the breakeven point will decrease In deciding whether to drop its electronics product line Amazon com would consider all of the above In deciding which product lines to emphasize Amazon com should focus on the product line that has the highest CM per unit of the constraining factor In making short term special decisions you should separate variable from fixed costs The cost per unit decreases as volume increases for which of the following cost behaviors fixed costs and mixed costs Target profit analysis is used to calculate the sales volume that is needed to earn a specific amount of net operating income The only difference between variable costing and absorption costing lies in the treatment of fixed manufacturing overhead costs When a company is operating at its breakeven point its total revenues will be equal to its total expenses The breakeven point on a CVP graph is the intersection of the sales revenue line and the total expense line The number of units to be sold to reach a certain target profit is calculated as fixed exp target profit unit CM What amount represents the TVC component y vx f vx What is the advantage of using regression analysis to determine the cost equation all above are true objective all data points are used to calculate the equation generally be more accurate What is the margin of safety the excess of expected sales over breakeven sales When making decisions managers should consider revenues that differ between alternatives When companies are price setters their products and services tend to be unique When choosing the high point for the high low method how is the high point selected the point with the highest volume of activity is chosen When pricing a product or service managers must consider which of the following all costs When making outsourcing decisions the variable cost of producing the product in house is relevant When deciding whether to sell as is or process a product further managers should ignore which of the follow the costs of processing the product thus far Which of the following costs are irrelevant to business decisions sunk costs Which of the following is relevant to Amazon com s decision to accept a special order at a lower sale price from a large customer in China the cost of shipping the order to the customer Which of the following statements about using regression analysis is true the R2 generated by the regression analysis is a measure of how well the regression analysis cost equation fits the data Which of the following would generally be considered a committed fixed cost lease payments made on the store building Which method is used to see if a relationship between the cost driver and total cost exists scatter plot When performing account analysis managers use their judgment to classify each general ledger account as a variable cost fixed cost or mixed cost Step costs when graphed resemble stair steps Total variable costs change as the cost driver volume changes Regression analysis uses all of the historical data points in estimating the cost equation On cost graphs the vertical axis always shows total costs while the horizontal axis shows the volume of activity Fixed costs are costs that do not change in total despite changes in the level of activity The cost of occupancy are committed fixed costs because the organization is locked into these costs due to management decisions made in the past A statistic R square tell us how well the line fits the data A variable cost is a cost that varies in total in direct proportion to changes in the level of activity The high low method uses only two of the historical data points in determining an estimate of the cost estimation equation The average cost per unit should not be used to predict total costs at different levels of activity because it changes as the volume changes Mixed costs are costs that change in total when the volume changes but not in direct proportion to that change in volume Curvilinear costs are not linear and therefore do not fit into a straight line The total mixed costs line increases as the volume of activity increases but the line does not begin at the origin The slope of the total variable costs line is the variable cost per unit of activity The high low method uses two data points to arrive at a cost equation to describe a mixed cost Account analysis is a method for determining cost behavior that is based on a manager s judgment Step costs are a type of cost behavior that is fixed over a small range of activity and then jumps to a different fixed level with moderate changes in volume The fixed cost per unit is inversely related to the volume of activity An s shaped line would represent a curvilinear cost The R square value is referred to as the goodness of fit statistic As the activity level rises and falls fixed costs remain constant in total Committed fixed costs are fixed costs that management has little or not control over in the short run Total costs is equal to the sum of variable costs fixed costs Average cost per unit is the cost to produce a single unit of production as calculated by dividing the total cost by the total number of units produced The cost equation resulting from using regression analysis is described as the line of best fit When inventories decline operating income under variable costing is higher than operating income under absorption costing Variable Cost total costs increase and per unit costs remain constant as the volume increases y vx Fixed Cost total costs stay the same and the per unit costs decrease as the volume increases y f Mixed Cost total costs are not constant and per unit costs are not constant as the volume increases y vx f relevant price of new machine trade in val of old printer