This quiz works best with JavaScript enabled. Home > Accounting > Cost Accounting > Cost Volume Profit Analysis > Cost Volume Profit Analysis – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Cost Volume Profit Analysis Quiz 2 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. A company makes a single product which it sells for $ 2 per unit.Fixed costs are $ 13, 000 per month.The contribution/sales ratio is 40%. Sales revenue is $ 62, 500.What is the margin of safety in units? A) 14000. B) 10000. C) 1000. D) 15000. Show Answer Correct Answer: D) 15000. 2. Margin of safety is computed as: A) Actual sales-Break-even sales. B) Contribution margin-Fixed costs. C) Break-even sales-Variable costs. D) Actual sales-Contribution margin. Show Answer Correct Answer: A) Actual sales-Break-even sales. 3. A benefit sacrificed by taking one course of action instead of the most profitable alternative course of action is known as which of the following? A) Opportunity cost. B) Incremental cost. C) Relevant cost. D) Sunk cost. Show Answer Correct Answer: A) Opportunity cost. 4. Which formula is TRUE about break even point in unit? A) (Fixed cost + Profit)/CM ratio. B) Sales = VC + FC + Profit. C) Profit = Sales + VC + FC. D) Profit = Sales + VC + FC. Show Answer Correct Answer: B) Sales = VC + FC + Profit. 5. Contribution margin equals A) Revenue minus period cost. B) Revenue minus product cost. C) Revenue minus variable cost. D) Revenue minus fixed cost. Show Answer Correct Answer: C) Revenue minus variable cost. 6. If contribution margin is not sufficient to cover fixed expenses: A) A loss occurs. B) Contribution margin is negative. C) Variable expenses equal contribution margin. D) Total profit equals total expense. Show Answer Correct Answer: A) A loss occurs. 7. CVP analysis does not assume that A) Selling prices remain constant. B) There is a single revenue and cost driver. C) Total fixed costs vary inversely with the output level. D) Total costs are linear within the relevant range. Show Answer Correct Answer: C) Total fixed costs vary inversely with the output level. 8. Which is the meaning of fixed costs, below is A) Costs that change in proportion to business activity. B) The fee remains the same in total regardless of level. C) Costs that contain fixed costs and variable costs. D) Ongoing costs in business operations. Show Answer Correct Answer: B) The fee remains the same in total regardless of level. 9. Contribution margin goes toward A) Fixed and variable costs. B) Variable costs. C) Only profit. D) Fixed cost and profit. Show Answer Correct Answer: D) Fixed cost and profit. 10. Clariton Company is planning to sell 100, 000 units of Product Q for RM12 per unit. The fixed cost are RM280, 000. In order to realize a profit of RM200, 000, what would be the variable costs? A) RM 480, 000. B) RM 720, 000. C) RM 900, 000. D) RM 920, 000. Show Answer Correct Answer: B) RM 720, 000. 11. The Tulip Company is planning to sell 200, 000 units of Product . The fixed costs are RM400, 000 and variable costs are 60% of selling price. In order to realize a profit of RM100, 000, the selling price per unit would have to be A) RM3.75. B) RM4.17. C) RM5.00. D) RM6.25. Show Answer Correct Answer: D) RM6.25. 12. Each of the following would affect the break-even point except a change in the A) Number of units sold. B) Variable cost per unit. C) Total fixed cost. D) Sales price per unit. Show Answer Correct Answer: A) Number of units sold. 13. If Pantas Railway's fixed costs total RM90, 000 per month, the variable cost per passenger is RM 45, and tickets sell for RM75, how much revenue must the Railway generate to earn RM120, 000 in operating income per month? A) RM350, 000. B) RM210, 000. C) RM7, 000. D) RM525, 000. Show Answer Correct Answer: D) RM525, 000. 14. The margin of safety is the difference between A) Budgeted expenses and breakeven expenses. B) Budgeted revenue and breakeven revenue. C) Actual operating income and budgeted operating income. D) Actual contribution margin and budgeted contribution margin. Show Answer Correct Answer: B) Budgeted revenue and breakeven revenue. 15. In order to calculate Break-even point and Target profit analysis, what equation can be used? A) Sales = Fixed cost + Variable cost. B) Profit + Variable cost-Fixed cost = Sales. C) Sales-Variable cost-Fixed cost = Profit. D) Fixed cost + Variable cost x Profit. Show Answer Correct Answer: C) Sales-Variable cost-Fixed cost = Profit. 16. Which statement refer to contribution margin? A) Sales price per unit minus all fixed cost. B) Sales price per unit add all variable cost per unit. C) Sales price per unit minus all variable cost per unit. D) Sales price per unit add all fixed cost. Show Answer Correct Answer: C) Sales price per unit minus all variable cost per unit. 17. Break-even Point can be calculated using these method except: A) Mathematical Equation method. B) Regression method. C) Graph method. D) Contribution Margin approach. Show Answer Correct Answer: B) Regression method. 18. Assume only the specified parameters change in a CVP analysis. The contribution margin percentage increases when: A) Total fixed costs decrease. B) Variable costs per unit increase. C) Variable costs per unit decrease. D) Total fixed costs increase. Show Answer Correct Answer: C) Variable costs per unit decrease. 19. If fixed cost decrease while variable cost per unit and selling price per unit remain constant, the new contribution margin in relation to old contribution margin will be A) Unchanged. B) Higher. C) Lower. D) None of these. Show Answer Correct Answer: A) Unchanged. 20. A company produces and sells a single product. Budgeted sales are $ 2.4 million, budgeted fixed costs are $ 360, 000 and the margin of safety is $ 400, 000. What are budgeted variable costs? A) $ 1.640 million. B) $ 1.728 million. C) $ 1.968 million. D) $ 2.040 million. Show Answer Correct Answer: C) $ 1.968 million. ← PreviousNext →Related QuizzesCost Accounting QuizzesAccounting QuizzesCost Volume Profit Analysis Quiz 1Cost Volume Profit Analysis Quiz 3Cost Volume Profit Analysis Quiz 4 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books