Reference no: EM132784136

Problem 1: The equation which reflects a CVP income statement is

a. Sales + Fixed costs = Variable costs + Net income.

b. Sales - Variable costs + Fixed costs = Net income.

c. Sales - Variable costs - Fixed costs = Net income.

d. Sales = Cost of goods sold + Operating expenses + Net income.

Problem 2: An increase in the level of activity will have the following effects on unit costs for variable and fixed costs:

a. Unit Variable Cost          Unit Fixed Cost
Decreases                       Remains constant

b. Unit Variable Cost        Unit Fixed Cost
Remains constant           Remains constant

c. Unit Variable            Cost Unit Fixed Cost
Remains constant          Decreases

d. Unit Variable                Cost Unit Fixed Cost
Increases                            Decreases