Which of the following statement(s) is/are false? (A) Residual income can be used to compare divisions that are cost centers. (B) Residual income can be used to compare divisions that are profit centers. Multiple Choice Only (B) is false. Both of these are false. Neither of these is false. Only (A) is false.

Which of the following statement(s) is/are false? (A) Residual income can be used to compare divisions that are cost centers. (B) Residual income can be used to compare divisions that are profit centers. Multiple Choice Only (B) is false. Both of these are false. Neither of these is false. Only (A) is false.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 4MCQ

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An advantage of the residual income measure over the return on investment measure is: residual income promotes goal congruence in decision making. comparability of divisions is enhanced with residual income. residual income uses net assets rather than gross assets as the investment base. residual income uses operating income before interest and taxes rather than net income. Both 1 and 2 are correct.
1.-Joint cost can be allocated using physical- measure-based data such as weights or volume. II.- Joint cost can be allocated using using market-based data such as revenues Both statements are false Both statements are true O Only statement II is true ) Only statement I is true
Which of the following statements is false? Multiple Choice In general, the term expense is used for managerial purposes, while the term cost refers to external financial reports. An opportunity cost is the benefit forgone by selecting one alternative over another. An outlay cost is a past, present, or future cash outflow. A cost is a sacrifice of resources.
Create an example showing how residual income is calculated. What information is used in computing residual income that is not used in computing ROI?
Which of the following statements about CVP analysis is false ? a. Total revenues and total costs are linear in relation to output units . b. Managers use (CVP ) analysis to study the behavior of and relationship among the elements such as total revenues , total costs , and income c. All of the given answers are true . d. Unit selling price , unit variable costs , and total fixed costs are known and remain constant . e. Operating income calculations in CVP analysis are based on contribution margin not gross margin .
In your own words explain the meaning of:a. differential revenue, b. differential cost, and c. differential income.
In the cost-volume-profit graph,a. the break-even point is found where the total revenue curve crosses the x-axis.b. the area of profit is to the left of the break-even point.c. the area of loss cannot be determined.d. both the total revenue curve and the total cost curve appear.e. neither the total revenue curve nor the total cost curve appear.
Which of the following statements about CVP analysis is false? O a. Operating income calculations in CVP analysis are based on contribution margin not gross margin. O b. Unit selling price, unit variable costs, and total fixed costs are known and remain constant. O c. Managers use (CVP) analysis to study the behavior of and relationship among the elements such as total revenues, total costs, and income O d. Total revenues and total costs are linear in relation to output units. O e. All of the given answers are true. OUS PAGE FINISH ATTEMPT ... F1 F2 F3 F4 F5 F6 F7 F8 F10 23 % & 2 3 4 7 8. V Q W T A F K 13 C V BYNI M 24 S
Which of the following statements is true? (You may select more than one answer.)a. A common cost is one type of direct cost.b. A sunk cost is usually a differential cost.c. Opportunity costs are not usually recorded in the accounts of an organization.d. A particular cost may be direct or indirect depending on the cost object.
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“RI is not identical to ROI, although both measures incorporate income and investment into their computations.” Do you agree? Explain.
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.