Question

49. The contribution margin per unit and the contribution margin ratio will remain constant as long as:

                a.            the selling cost remains the same.

                b.            the cost of production and selling price changes.

                c.             the sales revenue varies in direct proportion to volume.

                d.            the volume of sales decreases.

50. The difference between sales and cost of goods sold equals ________.

                a.            net profit

                b.            profit after tax

                c.             gross profit

                d.            operating profit

51. Which of the following will increase the contribution margin?

                a.            Reduction in fixed costs

                b.            Reduction in net income

                c.             Reduction in sales

                d.            Reduction in variable costs

52. Which of the following would decrease variable costs?

                a.            Reduction in wages paid as direct labor

                b.            Reduction in salaries of administrative department

                c.             Reduction in research expenditure

                d.            Reduction in rent expense

53. With reference to cost–volume–profit analysis, identify the correct statement.

                a.            Sales + Variable cost + Fixed cost = Net operating income

                b.            Sales + Variable cost = Fixed cost − Net operating income

                c.             Sales − Variable cost + Fixed cost = Net operating income

                d.            Sales − Variable cost − Net operating income = Fixed cost

54. The break–even point is the level of sales at which the contribution margin covers ________.

                a.            net income before tax

                b.            variable costs

                c.             net income after tax

                d.            fixed costs

55. Which of the following is correct regarding the implication of taxes on profits?

                a.            After–tax profit = Before–tax profit × (tax rate − 1)

                b.            Before–tax profit = After– tax profit × (1 − tax rate)

                c.             Before–tax profit = After–tax profit × (tax rate − 1)

Answer 1

As per Chegg Policy, we are required to answer the first one question if multiple independent questions are given. So we have answered the first one with detailed explanation and only answers for others. Hope you understand as we are to follow the policy.

49	The contribution margin per unit and the contribution margin ratio will remain constant as long as:
Ans:	c. the sales revenue varies in direct proportion to volume.
Explanation:	Contribution margin per unit is the difference between selling price per unit and variable cost per unit. Contribution margin ratio is calculated by dividing contribution by sales. Contribution margin per unit will change if there is change in selling price per unit or variable cost per unit. The increase in volume of sales will not result in any change in the contribution margin per unit and contribution margin ratio. So sales revenue increases with increase in volume, then contribution margin also increases by same percent and contribution margin ratio remains constant. Similarly if sales revenue decreases in direct proportion to decrease in volume, then contribution margin also decreases and results in constant contribution margin ratio.
	Option a is incorrect because the only selling cost does not affects the contribution margin per unit and contribution margin ratio. The other elements like selling price and other componentsof variable cost also have impact on contribution margin per unit and contribution margin ratio.
	Option b is also incorrect because the change in cost of production and selling price will change the contribution margin per unit and contribution margin ratio.
	Option d is also not complete correct
50	The difference between sales and cost of goods sold equals
Ans:	c.    gross profit
51	Which of the following will increase the contribution margin?
Ans:	d. Reduction in variable costs
52	Which of the following would decrease variable costs?
Ans:	a. Reduction in wages paid as direct labor
53	With reference to cost–volume–profit analysis, identify the correct statement.
Ans:	d.   Sales − Variable cost − Net operating income = Fixed cost
54	The break–even point is the level of sales at which the contribution margin covers
Ans:	d.   fixed costs
55	Which of the following is correct regarding the implication of taxes on profits?
Ans:	d. After–tax profit = Before– tax profit × (1 − tax rate)

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