COST ACCOUNTING -CPV ANALYSIS

to which function of management is CVP analysis most applicable

• planning

• organizing

• directing

• controlling

The systematic examination of the relationships among selling prices, volume of sales and production costs and profit is called

• contribution margin analysis

• cost-volume-profit analysis

• budgetary analysis

• gross profit analysis

The term contribution margin is best defined as the

• difference between fixed cost and variable cost

• difference between revenue and fixed costs

• amount available to cover fixed cost and profit

• amount to cover variable cost

Cost-volume-profit analysis allows management to determine the relative profitability of a product by

• highlighting potential bottlenecks in the production process

• Determining the contribution margin per unit and projected profit at various levels of production

• assigning costs to a product in a manner that maximizes the contribution margin

• keeping fixed cost to an absolute minimum

Cost-volume-profit analysis cannot be used if which of the following occurs?

• cost cannot be properly classified into fixed and variable cost

• the per unit variable costs change

• The total fixed cost change

• per unit sales prices changes

The most useful information derived from a breakeven chart is the

• amount of sales revenue needed to cover enterprise variable cost

• amount of sales revenue needed to cover enterprise fixed cost

• relationship among revenues, variable cost and fixed cost at various levels of activity

• volume or output level at which the enterprise breaks even

Which of the factors is (are ) involved in studying cost-volume-profit relationships

• level of production

• variable cost

• fixed cost

• all of the given answer

at the breakeven point fixed cost is always

• less than contribution margin

• equal to contribution margin

• more than contribution margin

• more than the variable cost

at the break even point

• net income will increase by the unit contribution margin for each additional item sold above break even

• the total contribution margin changes from negative to positive

• fixed cost are greater than contribution margin

• the contribution margin ratio begin to increase

Which of the following is not an assumption underlying C-P-V analysis

• the behavior of total revenue is linear

• unit variable expenses remain unchanged as activity varies

• inventory levels at the beginning and the end of the period are the same

• the number of units produced exceeds the number of units sold