# Product margin is calculated by this equation

1. Product margin is calculated by this equation: total contribution margin – avoidable fixed costs.

True / False

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2. Total contribution margin = total revenue – total variable cost.

True / False

3. In a competitive marketplace “good ethics” is a wonderful idea but an impractical standard. There are simply too few benefits to be gained from maintaining high business ethics.

True / False

4. Cash budgets display all the organization’s projected cash inflows and outflows.

True / False

5. Total variable costs change in proportion to changes in the volume of activity.

True / False

6. Fixed costs on a per unit basis decrease as a result of an increase in volume.

True / False

7. The following is the basic break-even equation: price x volume= variable cost per unit + (fixed cost x volume).

True / False

8. Selling and administrative expenses are normally period costs.

True / False

9. Total fixed costs change in proportion to changes in volume of activity.

True / False

10. Cost-volume-profit analysis is a predictive tool for determining the profit consequences of future cost changes, price changes, and volume of activity changes.

True / False

11. When performing an expense volume variance analysis, a negative value indicates an unfavorable variance.

True / False

12. Contribution margin per unit is the amount by which a product’s unit selling price exceeds its total variable cost per unit.

True / False

13. All of the following factors contribute to the rising cost of healthcare except:

a. Aging population.

b. New and returning consumers in the marketplace.

c. Chronic Disease.

d. Providers embracing lean Six Sigma and other techniques to deliver better care with less resources.

14. A non-avoidable fixed cost will __________ when a service/line of business is discontinued.

a. decrease

b. remain the same

c. increase

d. be avoided

15. Total Revenues can be calculated using the formula: Total Revenues = Price x __________.

a. Quality

b. Quantified

c. Quantity

d. Quagmire

16. A direct cost is a cost that is:

a. Does not change with the volume of activity.

b. Traceable to a single cost object.

c. Traceable to the organization as a whole.

d. Identifiable as controllable.

17. A favorable expense cost variance _________:

a. occurs when the actual cost is more than budgeted.

b. occurs when the actual cost is less than budgeted.

c. occurs when actual volume is less than budgeted.

d. occurs when actual volume is more than budgeted.

18. A cost that changes in proportion to changes in volume of activity is a(n)?

a. Incremental Cost.

b. Product Cost.

c. Variable Cost.

d. Fixed Cost.

19. The “authoritarian approach” to budgeting is often called:

a. Top-down spending.

b. Monopolistic practices.

c. Top-down budgeting.

d. Bottom-up strategizing.

20. A cost that includes both fixed and variable cost components is called a:

a. Step-variable Cost.

b. Curvilinear Cost.

c. Composite Cost.

d. Mixed Cost.

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