Saudi Electronic University

HCM 213

Chapter 9

Multiple Choice

1)Total Revenues can be calculated using the formula: Total Revenues = Price x                                       .

1. 1. Quality
   2. Quantified
   3. Quantity
   4. Quagmire

2. Major error(s) that must be avoided when using fixed cost information to make decisions are:
   1. Using fixed costs per unit derived at all levels to forecast costs
   2. Assuming that cost per unit does not change when volume changes
   3. Both a & b
   4. None of the above
3. Relevant range is the range of activity over which total fixed costs or per unit variable cost

                        .

3. 1. Vary
   2. Do not vary
   3. Always vary
   4. Can vary
4. Break-even point is where total revenues equal total                              .
   1. Expected cash flows
   2. Total costs
   3. Industry averages
   4. CEO’s salary
5. Total contribution margin is total revenues -                                       .
   1. Total fixed costs
   2. Total units
   3. Fixed variable costs
   4. Total variable costs
6. Common costs benefit                                          .
   1. Everyone in an organization
   2. No one
   3. A select few
   4. None of the above
7. Product margin = total contribution margin -                                            .
   1. Voided fixed costs
   2. Avoidable fixed costs
   3. Fixed costs
   4. Total variable costs

8. Per unit contribution margin= per unit revenues -                                 .
   1. Variable cost
   2. Total fixed cost
   3. Per unit variable cost
   4. Per unit fixed cost
9. Controlling costs or decreasing profit margins to meet or beat a predetermined price or reimbursement rate is                                              .
   1. Transfer cost pricing
   2. Variable costing
   3. Targeted pricing
   4. Target costing
10. Additional costs incurred solely as a result of an action or activity or a particular set of actions or activities are                                                                  .
    1. Incurred costs
    2. Incremental costs
    3. Infallible costs
    4. Incredible costs

True or False

1. Incremental costs are always unforeseen. True or False?

2. The basic break-even equation is: price x volume= variable cost per unit + (fixed cost x volume). True or False?

3. Product margin is calculated by this equation: total contribution margin – avoidable fixed costs. True or False?

4. A break-even chart shows the break-even point. True or False?

5. Variable costs vary per unit over the relevant range. True or False?