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Advanced Multiple Choice Quiz
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Questions 1-5 and 7-8 in this section are based on the following information. A Bike Company manufactures 100 motorbikes per month. Fixed overhead costs per month are £36,250 and the variable cost per motorbike is £3,900. The bikes sell for £4,650 each.



1Contribution per motorbike is:
(Learning Objective 1 Ch 7)
A)£600
B)£750
C)£387.50
D)£575


2Expected profit per month will be:
(Learning Objective 1 Ch 7)
A)£38,750
B)£45,000
C)£48,750
D)£30,250


3The contribution margin ratio for the motorbikes is
(Learning Objective 2 Ch 7)
A)8.3%
B)12.8%
C)16.1%
D)19.2%


4If variable costs reduced by 10% and fixed costs increased by 40%, the revised profit would be:
(Learning Objective 3 Ch 7)
A)£59,750
B)£31,750
C)£70,750
D)£63,250


5Going back to the original costs, how many bikes does the company need to sell to break even?
(Learning Objective 4 Ch 7)
A)8
B)9
C)49
D)94


6On a CVP graph for a profitable company, the total revenue line will be steeper than the total expense line.
(Learning Objective 5 Ch 7)
A)True
B)False


7Going back to the bike company, here are the original details again: A Company manufactures 100 motorbikes per month. Fixed overhead costs per month are £36,250 and the variable cost per motorbike is £3,900. The bikes sell for £4,650 each. How many bikes would the company need to sell to achieve a profit of £100,000?
(Learning Objective 6 Ch 7)
A)182
B)134
C)35
D)29


8If the bike company sells 100 bikes per month, what is the margin of safety?
(Learning Objective 7 Ch 7)
A)49%
B)94%
C)100%
D)104%


9The degree of operating leverage is computed by dividing sales by the contribution margin
(Learning Objective 8 Ch 7)
A)True
B)False


10If the sales mix of products changes, then the break even point in sales revenue will also change
(Learning Objective 9 Ch 7)
A)True
B)False





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