Final Week

            CVP analysis assumes that costs have been fairly accurately broken down into their fixed and variable elements.

• True

• False

In making decisions using CVP analysis, the only information one ever needs is about sales revenue and fixed and variable costs.

• True

• False

Sales revenue less fixed costs equals contribution margin.

• True

• False

The variable cost percentage can be calculated by dividing the variable cost per unit by the average sales revenue per unit, and multiplying by 100.

• True

• False

In a business with both fixed and variable costs, a 10% decrease in prices can be offset by a 10% increase in number of units sold.

• True

• False

Net income cannot be considered a cost of running a business.

• True

• False

Total guests during the year are 38,460. Rooms sold during the year are 29,840. The double occupancy rate is:

• 22.4%

• 86.2%

• 28.9%

• 77.6%

If, in a restaurant, food cost, labor cost, and other operating costs total 60%, and indirect costs including net income are $42,000, then sales revenue required to provide the desired net income will be:

• $70,000

• $252,000

• $105,000

• $168,000

Forecast annual motel room sales revenue is $642,400. The motel has 40 rooms and an 80% occupancy rate. What is the average room rate?

• $55

• $44

• $55.76

• $50