FIN 073: Strategic Cost Management P1 QUIZ

COST-VOLUME-PROFIT ANALYSIS

NAME: ____________________________________________ SCORE: _____________________

INSTRUCTIONS: Write the letter of your answer BEFORE each number. NO ERASURES

_______1. Sanderson sells a single product for P50 that has a variable cost of P30. Fixed costs
amount to P5 per unit when anticipated sales targets are met. If the company sells one unit in
excess of its break-even volume, the bottom-line profit will be:
A. P15. B. P20. C. P50. D. None.

_______2. At a volume of 15,000 units, Boston reported sales revenues of P600,000, variable costs
of P225,000, and fixed costs of P120,000. The company's contribution margin per unit is:
A. P17. B. P25. C. P47. D. P55.

_______3. A recent income statement of Banks Corporation reported the following data:
Sales revenue P8,000,000
Variable costs 5,000,000
Fixed costs 2,200,000
If these data are based on the sale of 20,000 units, the contribution margin per unit would be:
A. P40. B. P150. C. P290. D. P360.

_______4. A recent income statement of Fox Corporation reported the following data:
Sales revenue P3,600,000
Variable costs 1,600,000
Fixed costs 1,000,000
If these data are based on the sale of 10,000 units, the break-even point would be:
A. 2,000 units. B. 2,778 units. C. 3,600 units. D. 5,000 units

_______5. A recent income statement of Yale Corporation reported the following datA
Sales revenue P2,500,000
Variable costs 1,500,000
Fixed costs 800,000
If these data are based on the sale of 5,000 units, the break-even sales would be:
A. P2,000,000. B. P2,206,000. C. P2,500,000. D. P10,000,000.

_______6. Lawton, Inc., sells a single product for P12. Variable costs are P8 per unit and fixed costs
total P360,000 at a volume level of 60,000 units. Assuming that fixed costs do not change,
Lawton's break-even point would be:
A. 30,000 units.
B. 45,000 units.
C. 90,000 units.
D. negative because the company loses P2 on every unit sold.
E. a positive amount other than those given above

_______7. Green, Inc., sells a single product for P20. Variable costs are P8 per unit and fixed costs
total P120,000 at a volume level of 5,000 units. Assuming that fixed costs do not change,
Green's break-even sales would be:
A. P160,000. B. P200,000. C. P300,000. D. P480,000.

_______8. Orion recently reported sales revenues of P800,000, a total contribution margin of
P300,000, and fixed costs of P180,000. If sales volume amounted to 10,000 units, the
company's variable cost per unit must have been:
A. P12. B. P32. C. P50. D. P92.

_______9. Strand has a break-even point of 120,000 units. If the firm's sole product sells for P40 and
fixed costs total P480,000, the variable cost per unit must be:
A. P4. B. P36. C. P44. D. NONE
Page 1 of 5
FIN 073: Strategic Cost Management P1 QUIZ

_______10. Ribco Co., makes and sells only one product. The unit contribution margin is P6 and the
break-even point in unit sales is 24,000. The company's fixed costs are:
A .P4,000. B. P14,400. C .P40,000. D. P144,000.

_______11. At a volume level of 500,000 units, Sullivan reported the following information:
Sales price P60
Variable cost per unit 20
Fixed cost per unit 4
The company's contribution-margin ratio is:
A. 0.33. B. 0.40. C. 0.60. D. 0.67.

_______12. A recent income statement of Oslo Corporation reported the following data:
Units sold 8,000
Sales revenue P7,200,000
Variable costs 4,000,000
Fixed costs 1,600,000

If the company desired to earn a target net profit of P480,000, it would have to sell:
A. 1,200 units. C. 4,00 units.
B. 2,800 units. D. 5,200 unit

_______13. Yellow, Inc., sells a single product for P10. Variable costs are P4 per unit and fixed costs
total P120,000 at a volume level of 10,000 units. What dollar sales level would Yellow have to
achieve to earn a target net profit of P240,000?
A. P400,000. B. P500,000. C. P600,000. D. P750,000.

Use the following to answer questions 14-16

Archie sells a single product for P50. Variable costs are 60% of the selling price, and the company
has fixed costs that amount to P400,000. Current sales total 16,000 units.
_______14. Archie:
A. will break-even by selling 8,000 units.
B. will break-even by selling 13,333 units.
C. will break-even by selling 20,000 units.
D. will break-even by selling 1,000,000 units.
E. cannot break-even because it loses money on every unit sold.

_______15. Each unit that the company sells will:

A. increase overall profitability by P20.
B. increase overall profitability by P30.
C. increase overall profitability by P50.
D. increase overall profitability by some other amount.
E. decrease overall profitability by P5.

_______16. In order to produce a target profit of P22,000, Archie's dollar sales must total:
A. P8,440. C. P1,000,000.
B. P21,100. D .P1,055,000.

_______17. . Maxie's budget for the upcoming year revealed the following figures:
Sales revenue P840,000
Contribution margin 504,000
Net income 54,000
If the company's break-even sales total P750,000, Maxie's safety margin would be:
A. P(90,000). B. P90,000. C. P246,000. D. P336,000
.
_______18. O'Dell sells three products: R, S, and T. Budgeted information for the upcoming
accounting period follows.
Produc Sales Volume (Units) Selling Price Variable Cost
Page 2 of 5
FIN 073: Strategic Cost Management P1 QUIZ

t
R 16,000 P14 P9
S 12,000 10 6
T 52,000 11 8

The company's weighted-average unit contribution margin is:

A. P3.00. B. P3.55. C. P4.00. D. P19.35.

_______19. Wells Corporation has the following sales mix for its three products: A, 20%; B, 35%; and
C, 45%. Fixed costs total P400,000 and the weighted-average contribution margin is P100.
How many units of product A must be sold to break-even?
A. 800. B. 4,000. C. 20,000. D. NONE

Use the following to answer the next four questions

Lamar & Co., makes and sells two types of shoes, Plain and Fancy. Data concerning these products
are as follows:
Plain Fancy
Unit selling price P20.00 P35.00
Variable cost per unit 12.00 24.50

Sixty percent of the unit sales are Plain, and annual fixed expenses are P45,000.
_______20. The weighted-average unit contribution margin is:
A .P4.80. B. P9.00. C. P9.25. D. P17.00.

_______21. Assuming that the sales mix remains constant, the total number of units that the
company must sell to break even is:
A .2,432. B. 2,647. C. 4,737. D. 5,000.

_______22. Assuming that the sales mix remains constant, the number of units of Plain that the
company must sell to break even is:
A. 2,000. C. 3,375. E. 5,625.
B. 3,000. D. 5,000.

_______23. Assuming that the sales mix remains constant, the number of units of Fancy that the
company must sell to break even is:
A. 2,000. C. 3,375. E. 5,625.
B. 3,000. D. 5,000.

_______24. The following information relates to Day Company:

Sales revenue P12,000,000
Contribution margin 4,800,000
Net income 800,000
Day's operating leverage factor is:
A. 0.067. C. 0.400. E. 6.000.
B. 0.167. D. 2.500.

Edco Company produced and sold 45,000 units of a single product last year, with the following
results:
Sales revenue P1,350,000
Manufacturing costs:
Variable 585,000
Fixed 270,000
Selling costs:
Variable 40,500
Fixed 54,000
Administrative costs:
Variable 184,500
Fixed 108,000
Page 3 of 5
FIN 073: Strategic Cost Management P1 QUIZ

_______25. Edco's operating leverage factor was:

A. 4. B. 5. C. 6. D. 7. E. 8.

_______26. If Edco's sales revenues increase 15%, what will be the percentage increase in income
before income taxes?
A. 15%. B. 45%. C. 60%. D. 75%.

_______27. Barney, Inc., is subject to a 40% income tax rate. The following data pertain to the
period just ended when the company produced and sold 45,000 units:
Sales revenue P1,350,000
Variable costs 810,000
Fixed costs 432,000
How many units must Barney sell to earn an after-tax profit of P180,000?
A. 42,000. B. 45,000. C. 51,000. D. 61,000.

_______28. Data concerning Buchenau Corporation's single product appear below:

Selling price per unit................. P150.00
Variable expense per unit......... P34.50
Fixed expense per month......... P466,620
The break-even in monthly unit sales is closest to:
A) 3,111 B) 6,892 C) 4,040 D) 13,525

_______29. Wenstrom Corporation produces and sells a single product. Data concerning that product
appear below:
Selling price per unit................. P130.00
Variable expense per unit......... P41.60
Fixed expense per month......... P109,616

The break-even in monthly dollar sales is closest to:

A) P342,550 B) P204,455 C) P109,616 D) P161,200

_______30. The Saginaw Ice Company had sales of P400,000, with variable expenses of P162,000
and fixed expenses of P98,000. Which of the following is closest to Saginaw's break-even point?
A) P260,000 B) P165,000 C) P140,000 D) P238,000

_______31. The following is Noble Company's contribution format income statement last month:
Sales (12,000 units)....... P600,000
Variable expenses......... 375,000
Contribution margin........ 225,000
Fixed expenses.............. 150,000
Net operating income..... P 75,000

What is the company's margin of safety percentage to the nearest whole percent?
A) 42% B) 38% C) 33% D) 25%

_______32. Mcdale Inc. produces and sells two products. Data concerning those products for the
most recent month appear below:
Product Product
I49V Z50U
Sales.............................. P15,000 P14,000
Variable expenses......... P3,300 P2,790

The fixed expenses of the entire company were P18,460. The break-even point for the entire
company is closest to:
A) P23,367 B) P10,540 C) P24,550 D) P18,460

Page 4 of 5
FIN 073: Strategic Cost Management P1 QUIZ

Page 5 of 5