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.

The 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.

Thefollowingdatapertaintolastmonth'soperations:
Sellingprice.....................$20perunit
Variableproductioncost...........$12perunit
Fixedproductioncost..............$3,000
Variableselling&admin.expense..$3perunit
Fixedselling&admin.expenses....$1,500
Thebreakevenpointindollarsis:
a.$18,000.
b.$6,000.
c.$11,250.
d.$7,500.

Thefollowingislastmonth'scontributionformatincome
statement:
Sales(10,000units)................$1,200,000
Lessvariableexpenses..............800,000
Contributionmargin.................400,000
Lessfixedexpenses.................240,000
Netincome..........................$160,000
Whatisthecompany'sbreakevensalesinunits?
a.0units
b.12,000units
c.6,000units
d.8,000units

Atotalof30,000unitsweresoldlastyear.Thecontribution
marginperunitwas$2,andfixedexpensestotaled$20,000for
theyear.Thisyearfixedexpensesareexpectedtoincreaseto
$26,000,butthecontributionmarginperunitwillremain
unchangedat$2.Howmanyunitsmustbesoldthisyeartoearn
thesamenetincomeaswasearnedlastyear?
a.23,000
b.33,000
c.30,000
d.13,000