Which of the following is an assumption of cost-volume-profit analysis? a. The inventory quantities during the period can change. b. Within the relevant range of operating activity, the efficiency of operations can change.
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- Below is the information on a project that you are evaluating for deciding on its worthiness as an investment. ABC company is considering a new investment whose data are shown below. WACC for the project under consideration Net investment in fixed assets (immediate) Required new working capital (immediate) Working capital from the end of the first year onwards as a Percentage of Sales Straight line deprec. Rate (every year end from the end of year 1} Sales revenues (starting at the end of year 1) Operating cost excluding depreciation, (starting at the end of year 1) 10% 75000 15000 25% 33.33% 75000 25000 Tax Rate Annual increase in Operating Costs each year from year 2 onwards Annual increase in Sales revenue from the end of the year 2 onwards Depreciation: Fixed assets to be fully depreciated in books using the straight line method over 4 years to zero Salvage value of the fixed assets at the end of the project life 35% 6% 97501. Which of the following assumptions is false in a cost-volume-profit analysis? Total sales and total costs can be represented by straight lines. Within the relevant range of operating activity, the efficiency of operations does not change. Costs can be divided into fixed and variable components. There are changes in the inventory quantities during the period. 2. Which of the following charts plot only a profit line rather than sales and cost lines? Cost-volume-profit chart Profit-volume chart Profit-cost chart Cost-volume chartWhich of the following is NOT an assumption of cost-volume-profit analysis? Question 10 options: Inventory levels will change as production levels vary. Managers can classify each cost as either variable or fixed, and mixed costs can be broken down into their variable or fixed component. Revenues are linear throughout the relevant range of volume. The sales mix remains constant.
- Which one of the following is not considered an assumption of cost-volume-profit analysis? a. Costs are linear b. Sales mix of products sold does not change c. Selling price per unit changes with volume d. Costs can be divided into variable and fixed components e. Fixed cost per unit is not constantWhich of the following is not an assumption underlying cost-volume-profit analysis?a. The sales mix is constant.b. The break-even point will be passed during the period.c. Total sales and total costs can be represented by straight lines.d. Costs can be accurately divided into fixed and variable components.Choose the best answer for each of the following multiple-choice questions.1. Cost-volume-profit analysis includes some simplifying assumptions. Which of thefollowing is not one of these assumptions?a. Cost and revenues are predictable.b. Cost and revenues are linear over the relevant range.c. Changes in beginning and ending inventory levels are insignificant in amount.d. Sales mix changes are irrelevant. 2. The term relevant range, as used in cost accounting, means the rangea. over which costs may fluctuateb. over which cost relationships are validc. of probable productiond. over which production has occurred in the past 10 years3. How would the following be used in calculating the number of units that must besold to earn a targeted operating income? Price per unit Targeted operating income Denominator Numerator Numerator Numerator Not used Denominator Numerator Denominator 4. Information concerning Korian Corporation’s product is as follows: Sales $300,000 Variable…
- Which of the following is not an assumption underlying cost-volume-profit analysis? a.The break-even point will be passed during the period. b.Total sales and total costs can be represented by straight lines. c.Costs can be accurately divided into fixed and variable components. d.The sales mix is constant.Which one of the following is not considered an assumption of cost-volume-profit analysis? a. Selling price per unit does not change with volume b. Costs can be divided into variable and fixed components C. Fixed cost per unit is not constant d. Sales mix of products sold does not change O e. Costs are nonlinearCVP analysis makes all of the following assumptions except a change in volume is the only factor that affects costs. revenues are linear throughout the relevant range. the mix of products will not change. inventory levels will increase.
- Which method would produce the same unit cost for Inventory and Cost of Good Sold in periods of rising prices? Select one: a. Weighted Average b. FIFO c. LIFOWhich of the following statements is true? OA. When a large proportion of income is spent on a product or service, the more elastic the supply will be. Percentage change in price OB Elasticity of supply Percentage change in quantity supplied OC. Products or services in which inputs are readily available have a more elastic supply. OD. None of the above is true. hand written otherwise skipWhich of the following performance measures will increase if inventory decreases and all else remains the same? Return on Residual Investment Income A) B) Yes Yes No Yes Yes No D) No No Multiple Choice Choice C Choice D Choice A