Managing Products & Profitability Conceptual Quiz

Total points 10

1.
Question 1
True or false? The managerial approach to profit is the approach designed to share information
outside of the organization.

1 point
True
False
2.
Question 2
Which of the following are true statements about the financial and managerial approaches to profit?
(Check all that apply.)

1 point
The financial approach contains the contribution margin measure.
The managerial approach contains the contribution margin measure.
The financial approach contains the gross margin measure.
The managerial approach contains the gross margin measure.
3.
Question 3
Which of the following is used to calculate contribution margin? (Check all that apply.)

1 point
Fixed costs
Revenues
Variable costs
Cost of goods sold
4.
Question 4
True or false? Cost-volume-profit analysis uses estimates or what we already know to make
predictions about what we want to know.

1 point
True
False
5.
Question 5
Which of following is true about the break-even point? (Check all that apply.)

1 point
Managers usually report the break-even point in units.
It’s the point where contribution margin equals fixed costs.
Managers usually report the break-even point in currency terms.
It’s the point where variable costs equal fixed costs.
6.
Question 6
Jacob is a manager in a bakery. He is considering expanding his dessert line to include gluten-free
options. Which of the following is relevant to Jacob’s use of break-even point information? (Check all
that apply.)

1 point
Jacob knows that demand will only be 100 units per week.
Jacob knows that he currently can only produce 80 units per week.
Jacob knows he can only sustain a loss for two months.
Jacob wants to know projected gross margin.
7.
Question 7
Which of the following statements are accurate about cost-volume-profit analysis? (Check all that
apply.)

1 point
When the variable cost per unit increases, the break-even point increases.
When the total fixed costs increase, the break-even point decreases.
When the sales price increases, the break-even point decreases.
When the variable cost per unit increases, the break-even point decreases.
8.
Question 8
True or false? A limitation of cost-volume-profit analysis is that firms must rely on estimates.

1 point
True
False
9.Question 9
Which of the following are assumptions underlying cost-volume-profit analysis? (Check all that
apply.)

1 point
Costs can be categorized as fixed or variable.
Physical good inventory levels do not change substantially during an accounting period.
Sales revenue and costs are linear over a production volume range.
Revenue and costs information is known, as opposed to estimated.
10.
Question 10
Lucia is using cost-volume-profit analysis to predict profits for a new product line. Which of the
following reflect how Lucia’s analysis is subject to assumptions? (Check all that apply.)

1 point
When costs that are classified as variable actually are fixed costs, the analysis may lack validity.
The analysis lacks validity if the total fixed costs required for the calculated break-even point
generate too low of capacity.
If the inventory changes, the quantity used to calculate total variable costs is different than the
quantity used to calculate total revenues.
Because it is a new product line, and actual cost information is not available, Lucia cannot use
cost-volume profit analysis.