# Cost, volume and profit relationships (CVP analysis) Multiple choice questions (MCQs) quiz

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• Chapter: Cost, volume and profit relationships (CVP analysis)
• Quiz type: Multiple choice questions (MCQs) quiz
• Number of questions: 26
• Estimated time required: 15 - 20 minutes
• Passing score: 60%

Your result will be displayed at the end of the quiz.

1. The amount by which an item contributes towards covering fixed cost and providing for profit is known as:

2. Contribution margin = ?

3. If the amount of contribution margin is not enough to cover all fixed expenses, the business will:

4. 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:

5. A contribution margin income statement is usually used by:

6. Which one of the following is correct about the break even point of a company?

7. Which of the following is the correct formula of break even point?

8. Which of the following statements is correct about variable costs?

9. Which of the following statements is correct about fixed costs?

10. Which of the following is a correct formula to calculate contribution margin ratio (CM ratio)?

11. If contribution margin ratio is 0.3 then contribution margin percentage will be:

12. If selling price per unit is \$100 and contribution margin percentage is 30% then contribution margin will be:

13. 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?

14. If sales are \$500,000, variable costs are \$200,000, and fixed costs are \$260,000, what is the contribution margin percentage?

15. 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?

16. If contribution margin ratio is 0.4 and total fixed cost is \$280,000, the break even point in dollars will be:

17. If total fixed cost is \$8,000 and break even point is 4,000 units, the contribution margin per unit will be:

18. If contribution margin percentage is 25% and contribution margin per unit is \$500, the selling price per unit will be:

19. If break even point in units is 2,000 units and fixed cost is \$50,000, the contribution margin per unit will be:

20. Margin of safety = ?

21. 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:

22. If actual sales are \$50,000, variable cost is \$15,000, and margin of safety is \$20,000, the break even sales will be:

23. If margin of safety is \$5,000, break even point is \$20,000, and fixed cost is \$50,000, the actual sales will be:

24. Which of the following is a correct formula to compute the degree of operating leverage?

25. If sales revenue is \$300,000, variable cost is \$120,000, and fixed cost is \$80,000, what is the operating leverage?

26. If degree of operating leverage is 3, a 15% increase in sales revenue will increase the operating income by:

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