Activity Cost Drivers and Break-Even Analysis Quiz
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Questions and Answers

Which of the following is a learning objective of Chapter 2?

  • Calculate break-even sales volume in total dollars and total units (correct)
  • Compute cost-volume-profit relationships on an after-tax basis
  • Differentiate between contribution margin and gross margin
  • Explain the effects of sales mix on profits

What is the purpose of a cost-volume-profit graph?

  • To show how changes in cost driver levels affect variable and fixed costs
  • To calculate sales volume in total dollars and total units to reach a target profit
  • To explain how activity cost drivers affect cost behavior
  • To create a visual representation of the relationships between costs, volume, and profit (correct)

What does the term 'contribution margin' refer to?

  • The difference between variable costs and fixed costs
  • The difference between sales revenue and variable costs (correct)
  • The difference between total costs and total revenue
  • The difference between gross margin and net margin

What is the topic of Appendix 2A?

<p>The effects of sales mix on profits (A)</p> Signup and view all the answers

What is the topic of Appendix 2B?

<p>Cost-volume-profit relationships on an after-tax basis (D)</p> Signup and view all the answers

Flashcards

Break-even sales volume

The amount of sales needed to cover all fixed costs and achieve a profit of zero.

Cost-volume-profit graph

A visual tool that shows the link between costs, sales volume, and profit. It helps businesses see how changes in sales impact profitability.

Contribution margin

The profit earned from each unit sold after deducting variable costs.

Sales mix

How the mix of different products sold impacts the overall profitability.

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Cost-volume-profit relationships after tax

Shows the impact of taxes on cost-volume-profit relationships.

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