PRICOS Online Quiz #3

Scenario: A company sells a product for P20 per unit. The variable cost per unit is P12, and the fixed costs are P30,000 per year.

Question: The contribution margin per unit for the given scenario is P8.

• TRUE

• FALSE

Fixed costs are costs that remain constant regardless of the level of sales.

• TRUE

• FALSE

The break-even point can be calculated by dividing the fixed costs by the contribution margin per unit.

• TRUE

• FALSE

If the selling price per unit increases, the break-even point in units will decrease.

• TRUE

• FALSE

If the variable cost per unit increases, the contribution margin per unit will decrease.

• TRUE

• FALSE

The margin of safety represents the amount of sales above the break-even point.

• TRUE

• FALSE

If the actual sales revenue is equal to the break-even sales revenue, the margin of safety is zero.

• TRUE

• FALSE

The target profit is the amount of profit a company desires to earn after deducting fixed and variable costs.

• TRUE

• FALSE

If the fixed costs increase, the break-even point in units will decrease.

• TRUE

• FALSE

If the contribution margin per unit decreases, the break-even point in units will decrease.

• TRUE

• FALSE