PM - CVP , Limited Factor

A company makes and sells product X and product Y. Twice as many units of product Y are

made and sold as that of product X. Each unit of product X makes a contribution of $10 and

each unit of product Y makes a contribution of $4. Fixed costs are $90,000.

What is the total number of units which must be made and sold to make a profit of

$45,000?

• 7,500

• 22,500

• 15,000

• 16,875

Betis Limited is considering changing the way it is structured by asking its employed staff to

become freelance. Employees are currently paid a fixed salary of $240,000 per annum, but

would instead be paid $200 per working day. On a typical working day, staff can produce

40 units. Other fixed costs are $400,000 per annum.

The selling price of a unit is $60 and material costs are $20 per unit.

What will be the effect of the change on the breakeven point of the business and the

level of operating risk?

• The breakeven point reduces by 6,000 units and the operating gearing goes down

• The breakeven point reduces by 4,571 units and the operating gearing goes down

• The breakeven point reduces by 4,571 units and the operating gearing goes up

• The breakeven point reduces by 6,000 units and the operating gearing goes up

An organisation manufactures and sells a single product, the G. It has produced the

following budget for the coming year:
If inventory levels are negligible, what is the breakeven point in units?

• 13,634

• 13,750

• 17,500

• 28,000

A company manufactures and sells a single product with a variable cost per unit of $36. It

has a contribution to sales ratio (C/S ratio) of 25%. The company has weekly fixed costs Of

$18,000.

Which of the following is the weekly breakeven point in units?

• 1,500

• 1,600

• 1,800

• 2 ooo

A company makes a single product with the following data:
In relation to this data, which of the following statements is correct?

• The margin of safety is 40%

• The contribution to sales ratio is 24%

• The volume of sales needed to make a profit of $270,000 is 45,000 units

• If budgeted sales increase to 40,000 units, budgeted profit will increase by $100,000

The management accountant of Caroline plc has calculated the firm's breakeven point from

the following data:
By how much will Caroline's breakeven point for next year change by as a result of these

changes?

• Rise by 9.0%

• Rise by 2.8%

• Fall by 2.8%

• Fall by 9%

Edwards sells two products with selling prices and contributions as follows:
What is Edwards' current breakeven revenue (to the nearest $)?

• $100,000

• $200,000

• $5,600,000

• $5,894,737

Edwards sells two products with selling prices and contributions as follows:
Edwards now anticipates that more customers will buy the cheaper product G and that

budgeted sales will be 150,000 units for each product.

What would be the impact on the break-even revenue if the sales volume of G increases?

• Increase by the extra revenue from G of 50,000 x $20 per unit, or $1,000,000

• Decrease by the extra revenue from G of 50,000 x $20 per unit, or $1,000,000

• Increase by a different amount

• Decrease by a different amount

What does the shaded area on the breakeven chart above represent?

• Loss

• Fixed cost

• Variable cost

• Profit

A company has produced the following Profit/Volume (P/V) chart for its sole product:
What are the total fixed costs for the product?

• $0

• $2,000

• $8,000

• $10,000