4-14-2026-CVP

Multiple Choice

Which of the following factors does cost-volume-profit analysis examine as changes occur?

• Output level

• Employee satisfaction

• Market share

• Advertising budget

Open Ended

Why is understanding cost-volume-profit analysis important for businesses?

Open Ended

Explain the importance of the 'relevant range' in the context of CVP analysis.

Multiple Choice

Which of the following is NOT an assumption made in CVP (Cost-Volume-Profit) analysis according to the slides?

• Total costs can be divided into fixed and variable components.

• Changes in costs and revenues only arise from changes in the number of units sold.

• The time value of money is considered in all calculations.

• The unit selling price, unit variable costs, and fixed costs are known and constant.

Multiple Select

Select all statements that correctly describe how operating income is calculated in CVP analysis.

• Operating income is calculated as Revenue minus Total Operating Costs.

• Operating income is calculated as Units sold multiplied by Contribution Margin per unit minus Fixed Costs.

• Operating income is calculated as Units sold multiplied by Selling Price minus Units sold multiplied by Variable Cost per unit minus Fixed Costs.

• Operating income is calculated as Total Variable Costs minus Total Fixed Costs.

Open Ended

Based on the example, what would be the operating income or loss if Mrs. Merkel sells 2,500 dresses?

Multiple Select

Which of the following numbers change in CVP analysis when the number of units sold changes?

• Total revenues

• Total variable costs

• Fixed costs

• Contribution margin per unit

Multiple Choice

What is Mrs. Merkel’s contribution margin per unit?

• $28

• $42

• $70

• $112

Multiple Choice

What is Mrs. Merkel’s contribution margin percentage?

• 40%

• 28%

• 60%

• 70%

Open Ended

If Mrs. Merkel sells 3,000 dresses, what will be the total revenue and the contribution margin?

Multiple Choice

Which of the following equations can be used to calculate the breakeven sales in units?

• (Units sold x Selling Price) – (Units sold x VC/unit) – FC = 0

• (Units sold x Selling Price) + (Units sold x VC/unit) – FC = 0

• (Units sold x Selling Price) – (Units sold x VC/unit) + FC = 0

• (Units sold x Selling Price) – (Units sold x VC/unit) – FC = 1

Open Ended

Using the equation approach, compute the breakeven quantity for Dresses by Mrs Merkel.

Multiple Choice

What is the formula for calculating the units sold to break-even using the contribution margin method?

• Units sold to break-even = FC / (Selling Price - VC /unit)

• Units sold to break-even = FC / CM ratio

• Units sold to break-even = FC / Budgeted Sales

• Units sold to break-even = FC / (Fixed Cost per unit)

Open Ended

Explain how the contribution margin ratio is used to determine sales to breakeven in dollars.

Multiple Choice

Which formula should be used to calculate the sales necessary to reach a target operating income?

• (FC + TOI) / CM ratio or CM per unit

• FC / (Selling Price - VC /unit)

• FC / CM ratio

• (FC + TOI) / Budgeted Sales

Multiple Select

Select all that apply: Which of the following are ways the Margin of Safety (MOS) can be expressed?

• As a dollar amount

• As a percentage

• As a ratio to fixed costs

• As a ratio to budgeted sales

Multiple Select

Which changes can be examined using CVP analysis? Select all that apply.

• Change in sales price

• Change in sales volume

• Change in variable costs per unit

• Change in fixed costs

Open Ended

How do you think changes in output level, selling price, variable costs per unit, or fixed costs can impact a company's operating income?

Multiple Choice

Which of the following factors does cost-volume-profit (CVP) analysis examine as changes occur?

• Total revenues, total costs, and operating income

• Only total revenues

• Only fixed costs

• Only variable costs