Sample quiz on CVP

Sample quiz on CVP

1.The break-even in units sold will decrease if there is an increase in:

a. unit sales volume.

b. total fixed expenses.

c. unit variable expenses.

d. selling price.

2.The break-even point in unit sales increases when variable expenses:

a. increase and the selling price remains unchanged.

b. decrease and the selling price remains unchanged.

c. decrease and the selling price increases.

d. remain unchanged and the selling price increases.

3.

T FThe total volume in sales dollars that would be required to attain a given target profit is determined by dividing the sum of the fixed expenses and the target profit by the contribution margin ratio.

4The following data pertain to last month's operations:

Selling price ..................... $20 per unit

Variable production cost ........... $12 per unit

Fixed production cost .............. $3,000

Variable selling & admin. expense .. $3 per unit

Fixed selling & admin. expenses .... $1,500

The break-even point in dollars is:

a. $18,000.

b. $6,000.

c. $11,250.

d. $7,500.

5The following is last month's contribution format income statement:

Sales (10,000 units) ................ $1,200,000

Less variable expenses .............. 800,000 Contribution margin ................. 400,000

Less fixed expenses ................. 240,000 Net income .......................... $ 160,000What is the company's break-even sales in units?

a. 0 units

b. 12,000 units

c. 6,000 units

d. 8,000 units

6A total of 30,000 units were sold last year. The contribution margin per unit was $2, and fixed expenses totaled $20,000 for the year. This year fixed expenses are expected to increase to $26,000, but the contribution margin per unit will remain unchanged at $2. How many units must be sold this year to earn the same net income as was earned last year?

a. 23,000

b. 33,000

c. 30,000

d. 13,000