Please answer all of the questions, thank you! 18. For a capital intensive, auto

Question

Please answer all of the questions, thank you!

18. For a capital intensive, automated company the break-even point will tend to be higher and the margin of safety will be lower than for a less capital intensive company with the same sales.

True

False

21. Under variable costing, product costs consist of direct materials, direct labor, and variable manufacturing overhead.

True

False

24. Segment margin is a better measure of the long-run profitability of a segment than contribution margin.

True

False

30. The costs of activities that are classified as unit-level should be fixed respect to the number of units produced.

True

False

38. An unfavorable activity variance for a variable cost occurs because the actual level of activity is higher than expected when the static planning budget was prepared.

True

False

Explanation / Answer

18) The statement is TRUE This is because in a capital intensive company , the fixed cost is high and if fixed costs are high then break even point will be higher because Break even point = Fixed cost / contribution per unit hence , if Fixed cost are high , BEP will be high Margin of sale = Actual Sale - Sale at break even Hence if sale at break even is high then margin of safety will be lower 21) The statement is TRUE 24) The statement is TRUE this is because in the long run the fixed expenses is also a factor to be considered which can only be determined by segment margin and not contribution margin 30) The statement is FALSE The cost of activities classified as unit level are variable , hence they will change with the number of units produced 38) The statement is FALSE An unfavorable activity variance for a variable cost occurs because the actual level of activity is higher than expected when the felxible planning budget was prepared.

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