Chapter 4 : Cost Volume Profit

Which of the following is the best definition of REVENUE?

• The total amount of income a business makes from selling products or services
• The amount of money a business has LEFT over after paying for their costs.
• The total amount of money a business spends.
• The amount of money a business loses every month.

Which of the following is the best definition of PROFIT?

• The total amount of income a business makes from selling products or services
• The amount of money a business has left over after paying for their costs.
• The total amount of money a business spends.

Select the correct formulas

• BEP in RM = BEP in unit x p

• NP = px - bx - a

• NP = CM - a

• Margin of safety (RM) = px - BEP in RM

• b = p - CM per unit

The margin of safety is the difference between sales at break-even and sales at a determined activity level.

• true

• false

At break-even point; CM = a

• true

• false

Both variable and fixed costs are included in calculating the contribution margin.

• true

• false

In CVP analysis, the term “cost” includes manufacturing costs, and selling and administrative expenses.

• true

• false

Contribution margin is the amount of revenues remaining after deducting cost of goods sold.

• true

• false

Which of the following is the equation for figuring out PROFIT?

• Profit = Revenue - Cost
• Profit = Cost - Revenue
• Revenue = Profit - Cost
• Costs = Profit - Revenue

Tags

CCSS.HSA.CED.A.4

Your business rents a building on Main Street in Cedar Falls.  Every month you pay exactly $750 to rent the building.  This is an example of a...

• FIXED cost.
• VARIABLE cost.

Tags

CCSS.HSF-LE.A.1B