202 7.2

15 Questions | Total Attempts: 295

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Management Quizzes & Trivia

Cost-Volume-Profit Analysis


Questions and Answers
  • 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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