BUSI 601 test 2 Review questions (1)

BUSI 601 test 2 Review questions
✅✅
Passages,such as james 4:13-17, discuss business and the pursuit of profits -
-true

Which of the following statements regarding CVP analysis is true - ✅✅-It is a
short-term profit-planning tool

CVP analysis with multiple products assumes that sales will continue at the same

✅✅
mix of products, expressed in either sales units or sales dollars. This assumption is
essential , because a change in the product mix will probably change: - -The
weighted-average contribution margin (per unit or ratio).


✅✅
Which of the following illustrates how the level of operating profit changes over
different levels of output/sales volume? - -Profit-volume graph.


✅✅
The degree of operating leverage (DOL) at any given sales volume, X, is useful as -
-A measure of risk in conjunction with a CVP model


✅✅
Which one of the following is defined, at any given sales volume, as the ratio of the
total contribution margin to operating profit at that sales volume - -Degree of
operating leverage (DOL)


✅✅
I f the coefficient of correlation between two variables i s nearly zero, how might a
graph of these variables appear? - -Random points.


✅✅
Regression analysis is better than the high-low method of cost estimation because
regression analysis - -Can provide greater precision and reliability


✅✅
From a strategic management perspective,the primary reason a firm performs CVP
analysis is to find the level of sales that: - -Produces a desired (or targeted)
level of profit for the firm


✅✅
The difference between sales price per unit and variable cost per unit is the: -
-Contribution margin per unit


✅✅
High-low and regression cost estimation methods are alike in that they both: -
-Have an intercept term and a slope term


✅✅
The most effective basis for cost allocation exists when which one of the following
can be determined? - -Cause and effect relationship


✅✅
Dual allocation is a cost allocation approach that separates direct and indirect costs,
tracing the direct costs directly to the cost object that - -Caused the cost

, ✅✅
The reciprocal method of departmental cost allocation is preferred over the step
method because it takes into account all the reciprocal flows between: - -The
service departments


✅✅
The mathematical technique that underlines the reciprocal cost allocation method is:
- -Simultaneous equations

The reciprocal method can be solved using the Excel function - ✅✅-Solver
✅✅
Joint costs may be allocated in more than one way (e.g. weight versus resale value).
- -true


✅✅
According to the study guide, even if managers properly determine how to allocate
costs, they will not be able to properly estimate future costs. - -true


✅✅
Cost volume profit analysis can be used to find the breakeven point in dollars as well
as in units. - -false

Analyzing relevant costs is an important consideration for managers. Based on this

✅✅
premise, one could then surmise that Noah was given all of the relevant information
necessary by God to build the ark. - -true

Which of the following is not one of the objectives of cost allocation? - ✅✅-Identify
production constraints


✅✅
A key ethical issue in cost allocation involves costing in an international context,
because the choice of a cost allocation method can affect: - -Taxes in domestic
and foreign countries.


✅✅
Which of the following is not a "production" department in a service firm? -
-Factory engineering and maintenance.

Which of the following statements best describes a by-product? - ✅✅
-A product
that usually produces a small amount of revenue when compared to the main
product's revenue.

By-product costing approaches include: - ✅✅-Asset recognition approach.
Which of the four types of cost drivers-activity-based, volume-based, structural and

✅✅
executional-are often best related to linear cost estimation methods? -
-Activity-based and volume-based.