Question 1

The margin of safety indicates the amount by which sales volume could fall before the entity starts making a loss.

Accepted Answer

A) True 
 B)False  True

Question 2

A product's weighted average contribution margin per unit is calculated by multiplying the contribution margin per unit by the % sales mix for that product.

Accepted Answer

A) True 
 B)False  True

Question 3

If fixed costs are $75,000 and the CM per unit is $20 then breakeven point is 3,750 units.

Accepted Answer

A) True 
 B)False  True

Question 4

Oasia Ltd sells ceramic gifts sets. Each gift set has a selling price of $54. Variable costs per set are $28. The contribution margin per set is:

Accepted Answer

A)  $54 
B)  $26 
C)  $28 
D)  Unable to be determined from the information provided. 
A)  $54 
B)  $26 
C)  $28 
D)  Unable to be determined from the information provided.

Question 5

CVP analysis can assist in helping managers understand the required of levels of sales to avoid making a loss.

Accepted Answer

A) True 
 B)False

Question 6

The margin of safety can be calculated using actual or estimated sales.

Accepted Answer

A) True 
 B)False

Question 7

The margin of safety percentage is calculated by the margin of safety divided by the actual or estimated sales.

Accepted Answer

A) True 
 B)False

Question 8

Echo Ltd sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows:   Point A is best described as:

Accepted Answer

A)  fixed cost. 
B)  margin of safety. 
C)  estimated profit at actual volume. 
D)  breakeven point. 
A)  fixed cost. 
B)  margin of safety. 
C)  estimated profit at actual volume. 
D)  breakeven point.

Question 9

Echo Ltd sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows:   Area D is best described as:

Accepted Answer

A)  fixed cost. 
B)  margin of safety. 
C)  estimated profit at actual volume. 
D)  breakeven point. 
A)  fixed cost. 
B)  margin of safety. 
C)  estimated profit at actual volume. 
D)  breakeven point.

Question 10

How many units of Micro must be sold at the breakeven point? Diamantine has the following unit and mix data:
$$\begin{array} { | l | c | c | c | } 
\hline & \text { Micro } & \text { Nano } & \text { Total } \
\hline \text { Urit Sales Price } & \$ 5 & \$ 4 & \
\hline \text { Unit Contribution Margin } & 0.75 & 1.20 & \
\hline \text { Sales Mix } \$ & \mathbf { 8 0 \% } & \mathbf { 2 0 \% } & \
\hline \text { Fixed Costs } & & & \$ 84,000 \
\hline \text { Target Profit } & & & \$ 42,000 \
\hline
\end{array}$$

Accepted Answer

A)  100,000 
B)  80,000 
C)  20,000 
D)  40 615 
A)  100,000 
B)  80,000 
C)  20,000 
D)  40 615

Question 11

Operating leverage is the degree to which an organisation's cost function is made up of Fixed Costs.

Accepted Answer

A) True 
 B)False

Question 12

The breakeven equation can be expressed as:

Accepted Answer

A)  Fixed Costs / Contribution Margin per unit. 
B)  Fixed Costs / (Sales Price per unit - Variable costs per unit). 
C)  Fixed Costs / Profit. 
D)  a and b 
A)  Fixed Costs / Contribution Margin per unit. 
B)  Fixed Costs / (Sales Price per unit - Variable costs per unit). 
C)  Fixed Costs / Profit. 
D)  a and b

Question 13

The breakeven point can be expressed in number of units or revenue dollars.

Accepted Answer

A) True 
 B)False

Question 14

Nickelby sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows:   Which of the following actions will move Point B lower on the y axis?

Accepted Answer

A)  An increase in the price of materials. 
B)  A decrease in the number of units sold. 
C)  Paying sales staff a commission instead of salary. 
D)  An increase in variable overhead cost. 
A)  An increase in the price of materials. 
B)  A decrease in the number of units sold. 
C)  Paying sales staff a commission instead of salary. 
D)  An increase in variable overhead cost.

Question 15

The profit equation can be expressed as:

Accepted Answer

A)  Profit = [Selling Price - Fixed Costs) * Q] - Variable Costs * Q 
B)  Profit = [Selling Price + Fixed Costs) * Q] - Variable Costs 
C)  Profit = [Selling Price - Variable Costs) * Q] - Fixed Costs 
D)  Profit = [Selling Price - Variable Costs *Q] - Fixed Costs 
A)  Profit = [Selling Price - Fixed Costs) * Q] - Variable Costs * Q 
B)  Profit = [Selling Price + Fixed Costs) * Q] - Variable Costs 
C)  Profit = [Selling Price - Variable Costs) * Q] - Fixed Costs 
D)  Profit = [Selling Price - Variable Costs *Q] - Fixed Costs

Question 16

The breakeven point can be defined as:

Accepted Answer

A)  the point at which revenue equal variable costs. 
B)  the point at which revenue equal fixed costs. 
C)  the level of operations at which the firm earns a profit. 
D)  the point at which revenue equals total fixed and variable costs. 
A)  the point at which revenue equal variable costs. 
B)  the point at which revenue equal fixed costs. 
C)  the level of operations at which the firm earns a profit. 
D)  the point at which revenue equals total fixed and variable costs.

Question 17

Use the following information for following questions

Bijoux Ltd manufactures and sells a single product. This product has the following operational data:

$\begin{array}{lr}
\text { Unit sales price } & 50 \
\text { Variable manufacturing cost per unit } & 25 \
\text { Fixed manufacturing costs } & 72,000 \
\text { Variable selling cost per unit } & 2 \
\text { Fixed selling costs } & 57,000 \
\text { Marginal tax rate } & 20 \%
\end{array}$
-Calculate the number of units required to achieve a pre-tax profit of $125 000.

Accepted Answer

A)  7 479 
B) 10 160 
C)  5 435 
D)  11 044 
A)  7 479 
B) 10 160 
C)  5 435 
D)  11 044

Question 18

Eve's Emporium sells three products which have the following characteristics: $\begin{array}{c}
\begin{array}{ll}
\
\text { Product } & \text { Sales Mix } \
\text { P }& 60,000 \text { units } \
\text {Q} & 40,000 \text { units } \
\text {R} & 20,000 \text { units }
\end{array}
\begin{array}{cc}
\text { Unit} &\text { Unit Variable }\
\underline{\text { Price }}&
\underline{\text { Cost }}\
\$40&\$ 20 \
60 & 30 \
30 & 15
\end{array}
\end{array}$ If Eve can change the sales mix from 60,000 P, 40,000Q, and 20,000 R to 70,000 P, 45,000 Q, and 20,000 R, pre-tax profit will be:

Accepted Answer

A)  lower. 
B)  higher. 
C)  unchanged. 
D)  cannot be determined. 
A)  lower. 
B)  higher. 
C)  unchanged. 
D)  cannot be determined.

Question 19

When sales are $2,000, the contribution margin is $1,200 and a pre-tax loss of $120 occurs. What is the breakeven point in dollars?

Accepted Answer

A)  $2,200 
B)  $1,100 
C)  $1,320 
D)  $1,750 
A)  $2,200 
B)  $1,100 
C)  $1,320 
D)  $1,750

Question 20

The formula for determining the required number of units to achieve a targeted pre-tax profit is (Fixed Costs + Target Profit) / Contribution Margin per unit.

Accepted Answer

A) True 
 B)False

The margin of safety indicates the amount by which sales volume could fall before the entity starts making a loss.

A product's weighted average contribution margin per unit is calculated by multiplying the contribution margin per unit by the % sales mix for that product.

If fixed costs are $75,000 and the CM per unit is $20 then breakeven point is 3,750 units.

Oasia Ltd sells ceramic gifts sets. Each gift set has a selling price of $54. Variable costs per set are $28. The contribution margin per set is:

CVP analysis can assist in helping managers understand the required of levels of sales to avoid making a loss.

The margin of safety can be calculated using actual or estimated sales.

The margin of safety percentage is calculated by the margin of safety divided by the actual or estimated sales.

Echo Ltd sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: Point A is best described as:

Echo Ltd sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: Area D is best described as:

How many units of Micro must be sold at the breakeven point? Diamantine has the following unit and mix data: Micro Nano Total Urit Sales Price \ 5 \ 4 Unit Contribution Margin 0.75 1.20 Sales Mix \ Fixed Costs \ 84,000 Target Profit \ 42,000

Operating leverage is the degree to which an organisation's cost function is made up of Fixed Costs.

The breakeven equation can be expressed as:

The breakeven point can be expressed in number of units or revenue dollars.

Nickelby sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: Which of the following actions will move Point B lower on the y axis?

The profit equation can be expressed as:

The breakeven point can be defined as:

When sales are $2,000, the contribution margin is $1,200 and a pre-tax loss of $120 occurs. What is the breakeven point in dollars?

The formula for determining the required number of units to achieve a targeted pre-tax profit is (Fixed Costs + Target Profit) / Contribution Margin per unit.

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Planning Budgeting and Behaviour

Operational Budgets

Job and Process Costing Systems

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters

Exam 4: Costvolumeprofit Cvp Analysis

The margin of safety indicates the amount by which sales volume could fall before the entity starts making a loss.

A product's weighted average contribution margin per unit is calculated by multiplying the contribution margin per unit by the % sales mix for that product.

If fixed costs are $75,000 and the CM per unit is $20 then breakeven point is 3,750 units.

Oasia Ltd sells ceramic gifts sets. Each gift set has a selling price of $54. Variable costs per set are $28. The contribution margin per set is:

CVP analysis can assist in helping managers understand the required of levels of sales to avoid making a loss.

The margin of safety can be calculated using actual or estimated sales.

The margin of safety percentage is calculated by the margin of safety divided by the actual or estimated sales.

Echo Ltd sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: Point A is best described as:

Echo Ltd sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: Area D is best described as:

How many units of Micro must be sold at the breakeven point? Diamantine has the following unit and mix data: Micro Nano Total Urit Sales Price \ 5 \ 4 Unit Contribution Margin 0.75 1.20 Sales Mix \ Fixed Costs \ 84,000 Target Profit \ 42,000

Operating leverage is the degree to which an organisation's cost function is made up of Fixed Costs.

The breakeven equation can be expressed as:

The breakeven point can be expressed in number of units or revenue dollars.

Nickelby sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: Which of the following actions will move Point B lower on the y axis?

The profit equation can be expressed as:

The breakeven point can be defined as:

When sales are $2,000, the contribution margin is $1,200 and a pre-tax loss of $120 occurs. What is the breakeven point in dollars?

The formula for determining the required number of units to achieve a targeted pre-tax profit is (Fixed Costs + Target Profit) / Contribution Margin per unit.

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Planning Budgeting and Behaviour

Operational Budgets

Job and Process Costing Systems

Flexible Budgets, Standard Costs and Variance Analysis

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters