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Multiple Choice

1. The level of sales at which revenues equal expenses and net income is zero is called the:
a)margin of safety
b)contribution margin
c)break-even point
d)marginal income point

2. The ________ is the change in total results under a new condition, in comparison with some given or known condition.
a)incremental effect
b)detrimental effect
c)conditional effect
d)comparability effect

3. Ankeny Company wishes to earn after-tax net income of $18,000. Total fixed costs are $84,000, and the contribution margin per unit is $6.00. Ankeny's tax rate is 40%. The number of units that must be sold to earn the targeted net income is:
a)14,000 units
b)17,000 units
c)19,000 units
d)21,500 units

4. As the level of activity decreases within the relevant range:
a)total fixed costs increase
b)fixed costs per unit decreases
c)total variable costs increase
d)variable costs per unit remain unchanged

Solution Preview

1. c) breakeven point
At breakeven point total revenues = total costs

2. a) incremental effect

3. First calculate ...

Solution Summary

The solution explains some multiple choice questions in accounting