MANAGEMENT ACCOUNTING PART 1: ADVANCED CVP ANALYSIS ODM

COST BEHAVIOR ANALYSIS

1. How many of the following statements is/are true?

S1. All costs can be classified as either fixed or variable
S2. Fixed costs are fixed in total but variable per unit
S3. Variable costs are constant on a per unit basis but fluctuate on an aggregate basis
S4. The higher is the production, the higher is the fixed cost per unit

a. One b. Two c. Three d. Four

2. Which of the following best describes a fixed cost?

a. The total amount will not change irrespective of volume
b. It may change in total within the relevant range
c. It may change in total if related to a change in volume
d. It is only fixed within the relevant range and for a given budget period

3. Which of the following is likely to be a variable cost?

a. Advertising expense c. Interest expense
b. Salary of the general manager d. Cost of battery in a car manufacturer

4. How many of the following statements is/are not false?

S1. Regression analysis is the study of the relationship between two or more variables
S2. Simple regression analysis is the study of the relationship of two variables
S3. Multiple regression analysis is the study of the relationship of two or more variables
S4. Multiple regression analysis is the study of the relationship of three or more variables
a. One b. Two c. Three d. Four

5. Which of the following is the most accurate method for splitting a semi-variable expense?
a. High & low point method c. Scatter graph
b. Method of least squares d. Linear programming

6. Which of the following statements is false?

a. It is possible to have two break-even points when constructing a break-even chart
b. If there is a negative margin of safety, it means there is a net loss
c. A break-even chart cannot be constructed if the company is selling multiple products
d. When using CVP analysis, it is assumed that there is no inventory

7. Which of the following will result in raising the break-even point?

a. A decrease in the variable cost per unit c. An increase in the contribution margin per unit
b. An increase in the semi-variable cost per unit d. A decrease in income tax rates

8. In regression analysis, which of the following correlation coefficients represents the strongest relationships between the
independent and dependent variables?
a. 1.03 c. -0.20
b. -0.89 d. 0.75

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For Questions 9 to 11, refer to the following information:
Magda Company’s fixed cost is ₱200,000 up to a capacity level of 30,000 units or less, and ₱250,000 above 30,000
units. Selling price is ₱18 per unit with unit variable cost of ₱13.

9. What is the break-even point in units?

10. What is the net profit at a capacity level of 25,000 units?
11. What is the required peso sales to realize a profit of ₱20,000?
Questions 12 to 14 are based on the following data:
Proxy Corporation is planning to market a new product. Fixed costs will be ₱800,000 for production of 75,000 units or
less, and ₱1,200,000 if production exceeds 75,000 units. The contribution margin ratio is 40% for the first 75,000 units. This
ratio will increase to 50% for units sold in excess of 75,000 units. Selling price is ₱20 per unit.
12. How many units must be sold to break even?
13. What is the net income if 70,000 units will be sold?
14. What is the net income if 180,000 units will be sold?

15. The total production cost for 20,000 units was ₱P21,000 and the total production cost for making 50,000 units was
₱34,000. Once production exceeds 25,000 units, additional fixed costs of ₱4,000 were incurred. The full production
cost per unit for making 30,000 units is
a. ₱ 0.30 c. ₱ 0.84
b. ₱ 0.68 d. ₱ 0.93

“We entered the race not to start, but to finish”

-anonymous

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