Learning Objective 3-7

1) For any given total quantity of units sold, as the sales mix shifts toward units with lower contribution margins, operating income will be:

A) lower.

B) higher.

C) consistent.

D) parallel.

E) does not change.

2) When there is a shift in the sales mix to lower-contribution-margin products, the breakeven quantity:

A) levels.

B) increases.

C) decreases.

D) is not applicable.

E) does not change.

3) The computation used to calculate the breakeven point (BEP) in bundles is:

A) direct costs / contribution margin.

B) fixed costs / contribution margin in bundles.

C) mixed costs / contribution point in bundles.

D) variable costs / contribution margin.

E) variable costs / contribution margin in bundles.

4) Acme Chimney Service reported the following information:

Required:

Fixed costs$4,000

Variable costs100

Contribution margin per bundle250

Required:

Compute the breakeven point in bundles.

A) 8

B) 16

C) 4,250

D) 4,350

E) 6,000

5) When managers refer to the sales mix, they refer to the quantities of various products that constitute the total sales within the organization

6) Managers always focus on the changing sales mix to lower the breakeven point without taking into account the consumer preference of the products and services.

7) An important point that managers should always consider is many different combinations of cost drivers never result in a given contribution margin.

8) Managers believe that it is never convenient to use the contribution margin percentage formula when there are multiple products

9) The quantities (or proportion) of various products (or services) that constitute total unit sales of a company is known as the sales mix.

10) Write a short essay and discuss how managers in organizations choose their sales mix.

11) Do managers apply CVP analysis to a company that produces products in the sales mix (multiple products) or is it restricted to single-unit analysis?

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