Cvp Analysis

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Chapter 8: Cost-Volume-Profit Analysis
MULTIPLE CHOICE QUESTIONS 1. CVP analysis can be used to study the effect of: A. changes in selling prices on a company's profitability. B. changes in variable costs on a company's profitability. C. changes in fixed costs on a company's profitability. D. changes in product sales mix on a company's profitability. E. all of the above. Answer: E LO: 1 Type: RC 2. The break-even point is that level of activity where: A. total revenue equals total cost. B. variable cost equals fixed cost. C. total contribution margin equals the sum of variable cost plus fixed cost. D. sales revenue equals total variable cost. E. profit is greater than zero. Answer: A LO: 1 Type: RC 3. The unit contribution margin is
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If sales volume amounted to 10,000 units, the company's variable cost per unit must have been: A. $12. B. $32. C. $50. D. $92. E. an amount other than those above. Answer: C LO: 1 Type: A 18. Strand has a break-even point of 120,000 units. If the firm's sole product sells for $40 and fixed costs total $480,000, the variable cost per unit must be: A. $4. B. $36. C. $44. D. an amount that cannot be derived based on the information presented. E. an amount other than those in choices "A," "B," and "C" but one that can be derived based on the information presented. Answer: B LO: 1 Type: A 19. Ribco Co., makes and sells only one product. The unit contribution margin is $6 and the breakeven point in unit sales is 24,000. The company's fixed costs are: A. $4,000. B. $14,400. C. $40,000. D. $144,000. E. an amount other than those above. Answer: D LO: 1 Type: A

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20. The contribution-margin ratio is: A. the difference between the selling price and the variable cost per unit. B. fixed cost per unit divided by variable cost per unit. C. variable cost per unit divided by the selling price. D. unit contribution margin divided by the selling price. E. unit contribution margin divided by fixed cost per unit. Answer: D LO: 2 Type: RC 21. At a volume level of 500,000 units, Sullivan reported the following information: Sales price Variable cost per unit Fixed cost per

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