1. For a company selling multiple products, the break-even point in
dollars is computed by dividing fixed costs by the
a. contribution margin per unit.
b. contribution margin ratio.
c. weighted-average contribution margin per unit.
d. weighted-average contribution margin ratio.
2. In order to maximize net income a company should produce and sell the product with the highest.
a. contribution margin ratio.
b. contribution margin per unit.
c. contribution margin per unit of limited resource.
d. weighted-average unit contribution margin.
3. Operating leverage refers to the extent to which a company's net income reacts to a given change in
a. fixed costs.
d. variable costs
*4. Under variable costing, all of the following are considered product costs except
a. direct materials.
b. direct labor.
c. variable manufacturing overhead.
d. variable selling and administrative expenses.
*5. All of the following are potential advantages of variable costing except that
a. its use is consistent with cost-volume-profit and incremental analysis.
b. variable costing net income is affected by changes in production levels.
c. variable costing net income is closely tied to changes in sales levels.
d. the presentation of fixed and variable cost components makes it easier
to identify these costs.
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