CVP Analysis

Which of the following equation is not true?

• total costs = variable costs + fixed costs

• contribution = total revenue – variable costs

• contribution = total costs – variable costs

• profit = total revenue – total costs

At the break-even point which of the following relationships does not hold true?

• sales value = fixed costs/contribution to sales ratio%

• profit = contribution + fixed costs

• contribution = fixed costs

• number of units = fixed costs/contribution per unit

A company's telephone bill consisting of a Rs. 200 monthly base amount, plus long distance charges, would be classified as a?

• Variable cost

• Fixed Cost

• Semi variable cost/ Mixed Cost

• Total cost

Which one of the following best describes the margin of safety?

• The extent to which the total sales revenue exceeds the total fixed costs

• The extent to which the total sales revenue exceeds the total variable costs

• The extent to which the total sales revenue exceeds the total fixed and variable costs

• Fixed costs/ (Sales revenue per unit – variable costs per unit)

A variable cost is one which:

• varies directly but not proportionately with output

• varies with the time period

• is constant per unit of output irrespective of the level of output

• varies with the general rate of inflation

Fixed cost per unit increases when?

• Production volume decreases

• Production volume increases

• Variable cost per unit decreases

• None of the above

To find the break-even in dollars, you have to divide the fixed cost by ____________?

• Variable Cost

• Contribution Margin per unit

• Contribution Margin

• Contribution Margin ratio

If actual units produced are lower than the budgeted level of production which of the following types of cost would you expect to be lower than the budget?

• Variable costs per unit

• Total variable costs

• Total fixed costs

• None

The phenomena of spreading the fixed cost over higher volumes is called:

• Total Leverage

• Financial leverage

• Operating Leverage

• None

Which of the following costs would decrease if production levels were increase within the relevant range?

• Total fixed costs

• Variable costs per unit

• Total variable costs

• Fixed costs per unit