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Cost, volume and profit relationships (CVP analysis) Multiple choice questions (MCQs)
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Information
ABOUT THIS QUIZ:
- Chapter: Cost, volume and profit relationships (CVP analysis)
- Quiz Type: Multiple choice questions (MCQs)
- Number of MCQs: 26
- Total Points: 26
- Approximate Time Required: 15 – 20 minutes
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Question 1 of 26
1. Question
The amount by which an item contributes towards covering fixed cost and providing for profit is known as:
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Question 2 of 26
2. Question
Contribution margin = ?
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Question 3 of 26
3. Question
If the amount of contribution margin is not enough to cover all fixed expenses, the business will
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Question 4 of 26
4. Question
Consider the following information:
- Sales revenue: $12,000
- Variable manufacturing expenses: $3,000
- Variable marketing and admin. expenses: $1,000
- Fixed manufacturing expenses: $1,500
- Fixed marketing and admin. expenses: $500
Based on the above information, the contribution margin is:
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Question 5 of 26
5. Question
A contribution margin income statement is usually used by:
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Question 6 of 26
6. Question
Which of the following is correct about break even point of a company?
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Question 7 of 26
7. Question
Which of the following is a correct formula of break even point?
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Question 8 of 26
8. Question
Which of the following statements is correct about variable costs?
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Question 9 of 26
9. Question
Which of the following statements is correct about fixed costs?
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Question 10 of 26
10. Question
Which of the following is a correct formula to calculate contribution margin ratio (CM ratio)?
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Question 11 of 26
11. Question
If contribution margin ratio is 0.3 then contribution margin percentage will be:
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Question 12 of 26
12. Question
If selling price per unit is $100 and contribution margin percentage is 30% then contribution margin will be:
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Question 13 of 26
13. Question
If the selling price is $32 per unit, the variable cost is $24 per unit, and total fixed cost is $320,000, what will be the break even point in units?
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Question 14 of 26
14. Question
If sales are $500,000, variable costs are $200,000, and fixed costs are $260,000, what is the contribution margin percentage?
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Question 15 of 26
15. Question
The US Company sells product X. Some selected data is given below:
- Selling price per unit of product X: $16
- Variable cost per unit of product X: $12
- Total fixed cost: $160,000
Based on the above information, how many units of product X would be required to sell to earn an operating profit of $20,000?
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Question 16 of 26
16. Question
If contribution margin ratio is 0.4 and total fixed cost is $280,000, the break even point in dollars will be:
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Question 17 of 26
17. Question
If total fixed cost is $8,000 and break even point is 4,000 units, the contribution margin per unit will be:
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Question 18 of 26
18. Question
If contribution margin percentage is 25% and contribution margin per unit is $500, the selling price per unit will be:
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Question 19 of 26
19. Question
If break even point in units is 2,000 units and fixed cost is $50,000, the contribution margin per unit will be:
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Question 20 of 26
20. Question
Margin of safety = ?
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Question 21 of 26
21. Question
If actual sales are $25,000, break even point in dollars is $15,000, and variable cost is $12,000, the margin of safety will be:
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Question 22 of 26
22. Question
If actual sales are $50,000, variable cost is $15,000, and margin of safety is $20,000, the break even sales will be:
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Question 23 of 26
23. Question
If margin of safety is $5,000, break even point is $20,000, and fixed cost is $50,000, the actual sales will be:
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Question 24 of 26
24. Question
Which of the following is a correct formula to compute the degree of operating leverage?
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Question 25 of 26
25. Question
If sales revenue is $300,000, variable cost is $120,000, and fixed cost is $80,000, what is the operating leverage?
Correct
Awesome! Your answer is correct.
Computation:
Operating leverage = Contribution margin/Net operating income
= *$180,000/$100,000**
= 1.8*Contribution margin = Sales – Variable cost
= $300,000 – $120,000
= $180,000**Net operating income = Sales – Variable cost – Fixed cost
= $300,000 – $120,000 – $80,000
= $100,000Incorrect
Your answer is incorrect. The correct answer is “1.8” (option 2).
Computation:
Operating leverage = Contribution margin/Net operating income
= *$180,000/$100,000**
= 1.8*Contribution margin = Sales – Variable cost
= $300,000 – $120,000
= $180,000**Net operating income = Sales – Variable cost – Fixed cost
= $300,000 – $120,000 – $80,000
= $100,000 -
Question 26 of 26
26. Question
If degree of operating leverage is 3, a 15% increase in sales revenue will increase operating income by:
this quiz is so tough and conceptual quiz.