# 202 7.2

15 Questions | Total Attempts: 295  Settings  Cost-Volume-Profit Analysis

• 1.
The Sweet Factory produces and sells specialty fudge.  The selling price per pound is \$20, variable costs are \$12 per pound, and total fixed costs are \$6,000.  How many pounds of fudge must The Sweet Factory sell to breakeven?
• A.

15,000

• B.

300

• C.

750

• D.

188

• 2.
Which of the following statements is TRUE if the sales price per unit increases while the variable cost per unit and total fixed costs remain constant?
• A.

The contribution margin increases and the breakeven point decreases.

• B.

The contribution margin decreases and the breakeven point decreases.

• C.

The contribution margin increases and the breakeven point increases .

• D.

The contribution margin decreases and the breakeven point increases.

• 3.
Which of the following statements is TRUE if the variable cost per unit decreases while the sales price per unit and total fixed costs remain constant?
• A.

The contribution margin increases and the breakeven point decreases.

• B.

The contribution margin decreases and the breakeven point decreases.

• C.

The contribution margin increases and the breakeven point increases.

• D.

The contribution margin decreases and the breakeven point increases.

• 4.
Which of the following statements is TRUE if the fixed costs increase while the sales price per unit and variable costs per unit remain constant?
• A.

The contribution margin increases and the breakeven point decreases.

• B.

The contribution margin decreases and the breakeven point increases.

• C.

The contribution margin stays the same and the breakeven point decreases.

• D.

The contribution margin stays the same and the breakeven point increases.

• 5.
If the sale price per unit decreases and variable costs remain the same, what will be the effect on the contribution margin ratio?
• A.

It will increase.

• B.

It will decrease.

• C.

It will remain the same.

• D.

It is impossible to determine with the given information.

• 6.
Which of the following statements is TRUE if the variable cost per unit increases while the sale price per unit and total fixed costs remain constant?
• A.

Breakeven point in units increases.

• B.

Breakeven point in units decreases.

• C.

Breakeven point in units remains the same.

• D.

Contribution margin ratio increases.

• 7.
Which of the following statements is TRUE if total fixed costs decrease while the sale price per unit and variable costs per unit remain constant?
• A.

Contribution margin increases.

• B.

Contribution margin decreases.

• C.

Breakeven point in units decreases.

• D.

Breakeven point in units increases.

• 8.
Which of the following statements is TRUE if both fixed expenses and the sale price per unit increase while variable costs per unit are unchanged?
• A.

Breakeven point in units could increase, decrease, or remain the same.

• B.

Breakeven point in units increases.

• C.

Breakeven point in units decreases.

• D.

Breakeven point in units remains unchanged.

• 9.
Fixed costs divided by weighted-average contribution margin per unit equals:
• A.

Contribution margin ratio.

• B.

Margin of safety ratio.

• C.

Break-even sales in dollars.

• D.

Break-even sales in units.

• 10.
Contribution margin less fixed costs yields:
• A.

Operating income.

• B.

Sales.

• C.

Variable costs.

• D.

None of the above.

• 11.
Vango Industries sells two products, Basic models and Deluxe models. Basic models sell for \$40 per unit with variable costs of \$30 per unit. Deluxe models sell for \$48 per unit with variable costs of \$40 per unit. Total fixed costs for the company are \$76,000. Vango Industries typically sells three Basic models for every Deluxe model. What is the breakeven point in total units?
• A.

6,909 units

• B.

8,000 units

• C.

13,818 units

• D.

4,000 units

• 12.
Reynold Coffee sells three large coffees for every two small ones. A small coffee sells for \$4 per cup, with a variable cost of \$2 per cup. A large coffee sells for \$5 per cup with a variable cost of \$3 per cup. What is the weighted- average contribution margin?
• A.

\$2.00

• B.

\$0.40

• C.

\$7.20

• D.

\$0.50

• 13.
A company’s margin of safety can be stated:
• A.

In units.

• B.

In dollars.

• C.

As a percentage of sales.

• D.

As any of the above.

• 14.
A company’s margin of safety is computed as:
• A.

Expected sales – actual sales.

• B.

Actual sales – expected sales.

• C.

Expected sales – sales at breakeven.

• D.

Sales at breakeven – expected sales.

• 15.
Total predicted sales (in units) minus total break-even sales in units divided by total predicted sales (in units) yields:
• A.

Contribution margin ratio.

• B.

Contribution margin per unit.

• C.

Margin of safety percentage.

• D.

Percent of sales mix.

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