Reference no: EM132501231

Problem 1: Lucia is using cost-volume-profit analysis to predict profits for a new product line. Which of the following reflect how Lucia's analysis is subject to assumptions? (Check all that apply.)

1. Because it is a new product line and actual cost information is not available, Lucia cannot use cost-volume profit analysis.
2. If costs are not accurately categorized as fixed or variable, the analysis may reflect too low of a break-even point.
3. If the break-even point suggested by the analysis requires additional capacity (and related fixed costs), the analysis lacks validity.
4. If costs are not accurately categorized as fixed or variable, the analysis may reflect too high of a break-even point.

Problem 2: Which of the following is used to calculate the weighted-average contribution margin?

(Check all that apply.)

1. Sales mix
2. Total variable costs
3. Fixed costs for each product
4. Total fixed costs