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Multiple Choice Quiz
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1.
A firm sells widgets for $14 each. The variable costs for each unit is $8. The contribution margin per unit is:
A)$ 6
B)$12
C)$14
D)$ 8
2.
Company A's fixed costs were $42,000, its variable costs were $24,000, and its sales were $80,000 for the sale of 8,000 units. The company's break-even point in units is:
A)8,000
B)5,000
C)6,000
D)7,000
3.
Janet sells a product for $6.25. The variable costs are $3.75. Janet's break-even units are 35,000. What is the amount of fixed costs?
A)$ 87,500
B)$ 35,000
C)$131,250
D)$104,750
4.
The current sales price is $25 per unit and the current variable cost is $17 per unit. Fixed costs are $40,000. If the sales price is increased by $2, and all other costs remain unchanged, the break-even point in units will:
A)increase by 1,000 units
B)decrease by 1,000 units
C)decrease by 2,000 units
D)decrease by 119 units (rounded to nearest unit)
5.
Company A's fixed costs were $45,000, its variable costs were $24,000, and its sales were $80,000. The company's break-even point in sales-dollars is:
A)$33,000
B)$64,286
C)$79,000
D)$88,000
6.
Currently, a company has fixed costs of $32,500, a contribution ratio of 65%, and is selling its product for $12 per unit. If the sales price per unit is increased by $4, how much less will the break-even point in sales be when compared to the current condition?
A)$14,411
B)$13,414
C)$17,500
D)$ 5,932
7.
On a cost-volume-profit chart (break-even graph), the total fixed costs are:
A)the point where the sales line intersects the cost line (Y)
B)the point where the sales line crosses the total cost line
C)the point where the total cost line intersects the cost line (Y)
D)the point where the total cost line intersects the volume line (X)
8.
When using conventional cost-volume-profit analysis, some assumptions about costs and sales prices are made. Which one of the following is not one of those assumptions?
A)the costs can be expressed as straight lines in a break-even graph
B)the actual variable cost per unit must vary over the production range
C)the sales price will remain unchanged per unit
D)fixed costs will decrease per unit
9.
A firm's fixed costs are $54,000, and it sold 350 units at $140 each. The total variable costs were $35,000. The net income or loss of the firm was:
A)$40,000 loss
B)$40,000 income
C)$14,000 income
D)$ 9,000 loss
10.
With a tax rate of 25%, fixed costs of $34,000, and a contribution ratio of 45%, how much revenue is required to achieve a desired after-tax profit of $36,000?
A)$111,111
B)$182,222
C)$149,091
D)$ 83,636
11.
The dollar sales necessary to achieve a target income of $21,000 after taxes of 30% is $450,000. The fixed costs are $240,000. What is the contribution ratio (to the nearest tenth)?
A)53.3%
B)65.0%
C)58.0%
D)60.0%
12.
If a firm's margin of safety is 35% on sales of $200,000, then its margin of safety on sales of $300,000 will be (assume fixed costs, the variable cost per unit, and the sales price per unit do not change):
A)$105,000
B)$170,000
C)$100,000
D)$ 35,000
13.
Let:
BES = break-even sales, R = revenue per unit, F = fixed costs, V = variable cost per unit, CMR = contribution ratio, CM = contribution margin per unit, S x R = sales dollars, S = sales in units
(S x R) - (F / CMR) is the:
A)break-even point in units
B)break-even point in dollars
C)margin of safety
D)sales mix composite
14.
If the margin of safety is 40% of sales, which are $400,000, the break-even point:
A)is greater than $400,000
B)is $160,000
C)is $240,000
D)is less than $160,000
15.
The sales mix for Emory's Hardware is as follows:Product A: 4 units @ $8 sales price; $6 variable cost per unit.
Product B: 6 units @ $7 sales price; $4 variable cost per unit.
Product C: 8 units @ $5 sales price; $3 variable cost per unit.
Emory's fixed costs are $42,000. The composite break-even units are:
A)10,000
B)100
C)1,000
D)2,000
16.
The sales mix of a company’s two products, A and B is 5:2. Unit sales prices for A and B are $10 and $8, and unit variable cost for A and B are $4 and $5, respectively. What is the contribution margin per composite unit?
A)$9.
B)$66.
C)$36.
D)$30
17.
If the contribution margin ratio decreases from 60% to 30%, what are the unit sales needed to achieve a target income level?
A)Unit sales need to decrease by half.
B)Unit sales need to increase by 2 times.
C)Unit sales need to increase by 30%.
D)Unit sales need to decrease by 30%.
18.
Which of the following is not the basic assumption used in CVP analysis?
A)Selling price per unit is constant.
B)Variable costs per unit are constant.
C)Total fixed costs are constant.
D)Selling price per unit varies.
19.
Which of the following statements is INCORRECT?
A)Fixed costs remain unchanged in total amount.
B)Fixed cost per unit decreases as volume increases.
C)Variable costs remain unchanged in proportion to changes in activity volume.
D)Variable costs per unit remain unchange
20.
Data from a company's last period of operations shows sales of 2,000 units, total contribution margin of $50,000, and income after subtracting fixed costs of $30,000 is $20,000. Should the company experience sales of 2,400 units (within the relevant range, no sales price increase), net income will be:
A)$40,000
B)$30,000
C)$10,000
D)$20,000





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