Question 1

Total contribution margin is calculated by subtracting

Accepted Answer

A)   cost of goods sold from total revenues.
B)   fixed costs from total revenues.
C)   total manufacturing costs from total revenues.
D)   total variable costs from total revenues.

Question 2

The following diagram is a cost-volume-profit graph for a manufacturing company:  The formula to determine the Y-axis value ($)  at point D on the graph is

Accepted Answer

A)   Fixed costs + (Variable costs per unit × Number of units) .
B)   ΣXY - bΣX.
C)   Fixed costs/Unit contribution margin.
D)   Fixed costs/Contribution margin ratio.

Question 3

Sales × Contribution Margin is a short-cut of what formula?

Accepted Answer

A)   Sales - (Variable cost ratio × Sales) 
B)   Sales - (Fixed Costs + Variable Costs) 
C)   Sales / Fixed Costs
D)   Fixed Costs / Unit Contribution Margin

Question 4

On a profit-volume graph, the intersection of the profit line with the vertical axis provides a

Accepted Answer

A)   profit of $1,000.
B)   profit equal to zero.
C)   profit equal to fixed costs.
D)   loss equal to fixed costs.

Question 5

A decrease in the sales price in the basic cost-volume-profit model would

Accepted Answer

A)   require a recomputation of the gross profit per unit.
B)   be offset by an increase in unit costs.
C)   decrease the break-even volume.
D)   increase the break-even volume.

Question 6

Nonesuch Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60 percent of sales and fixed expenses are $30,000. Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales. What is the contribution margin ratio when the selling price is reduced to $6 per unit?

Accepted Answer

A)   40%
B)   25%
C)   75%
D)   60%

Question 7

Which of the following is NOT a use of CVP (Cost-Volume-Profit)  analysis?

Accepted Answer

A)   the ability to conduct sensitivity analysis of cost or price changes
B)   the identification of price and efficiency variances
C)   how many units must be sold to break even
D)   what is the impact on the break-even point of an increase or decrease in fixed costs

Question 8

The DesMaris Company had the following income statement for the month of November 2016: DesMaris Company Income Statement
For the Month of November 2016

Accepted Answer

A)   7,000 units.
B)   20,000 units.
C)   11,211 units.
D)   10,000 units.

Question 9

Biscuit Company sells its product for $50. In addition, it has a variable cost ratio of 45 percent and total fixed costs of $6,875. What is the break-even point in sales dollars for Biscuit Company?

Accepted Answer

A)   $2,750
B)   $3,125
C)   $6,875
D)  $12,500

Question 10

Summersville Production Company had the following projected information for 2016:  What is the profit when one unit more than the break-even point is sold?

Accepted Answer

A)   $60
B)   $150
C)   $1,500,150
D)   $600,060

Question 11

In the Cost-Volume-Profit analysis, what are two ways management can deal with risk and uncertainty?

Accepted Answer

Two concepts that are considered measure...

Question 12

The term net income is used to mean operating income before income taxes.

Accepted Answer

A) True 
 B)False

Question 13

On a profit-volume graph, the profit line intersects the horizontal axis at

Accepted Answer

A)   the origin.
B)   the break-even point.
C)   a volume of 1,000 units.
D)   a point where profit is greater than zero.

Question 14

On a profit-volume graph, the line intersects the horizontal axis at the break-even point.

Accepted Answer

The answer of On a profit-volume graph, the line intersects...

Question 15

Uncertainty regarding costs, prices, and sales mix affect the break-even point.

Accepted Answer

A) True 
 B)False

Question 16

In a cost-volume-profit graph,

Accepted Answer

A)   the total revenue line crosses the horizontal axis at the break-even point.
B)   beyond the break-even sales volume, profits are maximized at the sales volume where total revenues equal total costs.
C)   an increase in unit variable costs would decrease the slope of the total cost line.
D)   an increase in the unit selling price would shift the break-even point in units to the left.

Question 17

The use of fixed costs to increase the percentage changes in profits as sales activities change is called the
__________ leverage.

Accepted Answer

The answer of The use of fixed costs to increase...

Question 18

Jamie Quinn, a sole proprietor, has the following projected figures for next year: Selling price per unit $150.00
Contribution margin per unit $45.00
Total fixed costs $630,000
How many units must be sold to obtain a target before-tax profit of $270,000?

Accepted Answer

A)   6,000 units
B)   20,000 units
C)   8,572 units
D)   14,000 units

Question 19

Product 1 has a contribution margin of $6.00 per unit, and Product 2 has a contribution margin of $7.50 per unit. Total fixed costs are $300,000. Sales mix and total volume varies from one period to another. Which of the following is TRUE?

Accepted Answer

A)   At a sales volume in excess of 25,000 units of 1 and 25,000 units of 2, operations will be profitable.
B)   The ratio of net profit to total sales for 2 will be larger than the ratio of net profit to total sales for 1.
C)   The contribution margin per unit of direct materials is lower for 1 than for 2.
D)   The ratio of contribution to total sales always will be larger for 1 than for 2.

Question 20

The income statement for Symbiosis Manufacturing Company for 2016 is as follows:  What is the contribution margin per unit?

Accepted Answer

A)   $7.20
B)   $1.20
C)   $4.80
D)   $120,000

Exam 16: Cost-Volume-Profit Analysis

Sales × Contribution Margin is a short-cut of what formula?

Correct Answer
verified

On a profit-volume graph, the intersection of the profit line with the vertical axis provides a

Correct Answer
verified

Uncertainty regarding costs, prices, and sales mix affect the break-even point.

Correct Answer
verified

Product 1 has a contribution margin of $6.00 per unit, and Product 2 has a contribution margin of $7.50 per unit. Total fixed costs are $300,000. Sales mix and total volume varies from one period to another. Which of the following is TRUE?

Correct Answer
verified

On a profit-volume graph, the line intersects the horizontal axis at the break-even point.

Correct Answer
verified

Which of the following is NOT a use of CVP (Cost-Volume-Profit) analysis?

Correct Answer
verified

Jamie Quinn, a sole proprietor, has the following projected figures for next year: Selling price per unit $150.00 Contribution margin per unit $45.00 Total fixed costs $630,000 How many units must be sold to obtain a target before-tax profit of $270,000?

Correct Answer
verified

The income statement for Symbiosis Manufacturing Company for 2016 is as follows: What is the contribution margin per unit?

Correct Answer
verified

A decrease in the sales price in the basic cost-volume-profit model would

Correct Answer
verified

The use of fixed costs to increase the percentage changes in profits as sales activities change is called the __________ leverage.

Correct Answer
verified

The term net income is used to mean operating income before income taxes.

Correct Answer
verified

The following diagram is a cost-volume-profit graph for a manufacturing company: The formula to determine the Y-axis value ($) at point D on the graph is

Correct Answer
verified

On a profit-volume graph, the profit line intersects the horizontal axis at

Correct Answer
verified

In a cost-volume-profit graph,

Correct Answer
verified

Summersville Production Company had the following projected information for 2016: What is the profit when one unit more than the break-even point is sold?

Correct Answer
verified

The DesMaris Company had the following income statement for the month of November 2016: DesMaris Company Income Statement For the Month of November 2016

Correct Answer
verified

In the Cost-Volume-Profit analysis, what are two ways management can deal with risk and uncertainty?

Correct Answer
verified
Two concepts that are considered measure...
View Answer

Total contribution margin is calculated by subtracting

Correct Answer
verified

Correct Answer
verified

Biscuit Company sells its product for $50. In addition, it has a variable cost ratio of 45 percent and total fixed costs of $6,875. What is the break-even point in sales dollars for Biscuit Company?

Correct Answer
verified

Exam 16: Cost-Volume-Profit Analysis

Sales × Contribution Margin is a short-cut of what formula?

Correct AnswerverifiedShow Answer

On a profit-volume graph, the intersection of the profit line with the vertical axis provides a

Correct AnswerverifiedShow Answer

Uncertainty regarding costs, prices, and sales mix affect the break-even point.

Correct AnswerverifiedShow Answer

Product 1 has a contribution margin of $6.00 per unit, and Product 2 has a contribution margin of $7.50 per unit. Total fixed costs are $300,000. Sales mix and total volume varies from one period to another. Which of the following is TRUE?

Correct AnswerverifiedShow Answer

On a profit-volume graph, the line intersects the horizontal axis at the break-even point.

Correct AnswerverifiedShow Answer

Which of the following is NOT a use of CVP (Cost-Volume-Profit) analysis?

Correct AnswerverifiedShow Answer

Jamie Quinn, a sole proprietor, has the following projected figures for next year: Selling price per unit $150.00 Contribution margin per unit $45.00 Total fixed costs $630,000 How many units must be sold to obtain a target before-tax profit of $270,000?

Correct AnswerverifiedShow Answer

The income statement for Symbiosis Manufacturing Company for 2016 is as follows: What is the contribution margin per unit?

Correct AnswerverifiedShow Answer

A decrease in the sales price in the basic cost-volume-profit model would

Correct AnswerverifiedShow Answer

The use of fixed costs to increase the percentage changes in profits as sales activities change is called the __________ leverage.

Correct AnswerverifiedShow Answer

The term net income is used to mean operating income before income taxes.

Correct AnswerverifiedShow Answer

The following diagram is a cost-volume-profit graph for a manufacturing company: The formula to determine the Y-axis value ($) at point D on the graph is

Correct AnswerverifiedShow Answer

On a profit-volume graph, the profit line intersects the horizontal axis at

Correct AnswerverifiedShow Answer

In a cost-volume-profit graph,

Correct AnswerverifiedShow Answer

Summersville Production Company had the following projected information for 2016: What is the profit when one unit more than the break-even point is sold?

Correct AnswerverifiedShow Answer

The DesMaris Company had the following income statement for the month of November 2016: DesMaris Company Income Statement For the Month of November 2016

Correct AnswerverifiedShow Answer

In the Cost-Volume-Profit analysis, what are two ways management can deal with risk and uncertainty?

Correct AnswerverifiedTwo concepts that are considered measure...View AnswerShow Answer

Total contribution margin is calculated by subtracting

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Biscuit Company sells its product for $50. In addition, it has a variable cost ratio of 45 percent and total fixed costs of $6,875. What is the break-even point in sales dollars for Biscuit Company?

Correct AnswerverifiedShow Answer

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Two concepts that are considered measure...
View Answer

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