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    Management Accounting

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    1) If variable costs per unit decrease, sales volume at the break-even point will:
    a. increase
    b. decrease
    c. remain the same
    d. remain the same; however, contribution margin per unit will decrease

    2) A joint product should be processed beyond split-off if additional revenue from further processing exceeds
    a. joint costs
    b. allocated joint costs
    c. allocated joint costs and additional costs of further processing
    d. additional costs of further processing

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    Solution Preview

    1) Answer: B
    The break-even point is the point at which the company has zero profits: Total costs = Total revenues.
    Fixed costs + Break-even volume * Variable costs per unit = Break-even volume * Sales price per unit.
    Break-even volume * (Sales price per unit - Variable costs per unit) = Fixed costs.
    Break-even volume = Fixed costs / (Sales ...

    Solution Summary

    This solution analyzes variable costs and joint products.