COST VOLUME PROFIT ANALYSIS

Which cost is NOT subtracted from selling price to calculate contribution margin per unit?

• Variable manufacturing overhead

• Variable selling expenses

• Direct labor

• Fixed manufacturing overhead

Which of the following would decrease unit contribution margin the most?

• A 15% decrease in selling price

• A 15% increase in variable expenses

• A 15% decrease in variable expenses

• A 15% increase in fixed expenses

Once the breakeven point has been reached, operating income will increase by the

• Gross margin per unit for each additional unit sold

• Contribution margin per unit for each additional unit sold

• Fixed costs per unit for each additional unit sold

• Variable costs per unit for each additional unit sold

Which of the following would cause the break-even point to change?

• Sales increased

• Total production decreased

• Total variable costs increased as a function of higher production

• Fixed costs increased owing to additional equipment in physical plant

The present break-even sale of Beng Company is P 550,000 per year. It is computed that if the fixed cost will go up by P 60,000, the sales required to break-even will also increase to P 700,000, without any change in the selling price per unit and on the variable expenses. How much is the total fixed cost after the increase of P 60,000?

• P 200,000

• P 220,000

• P 280,000

• P 330,000

One of the major assumptions limiting the reliability of breakeven analysis is that

• Efficiency and productivity will continually increase

• Total variable costs will remain unchanged over the relevant range

• Total fixed costs will remain unchanged over the relevant range

• The cost of production factors varies with changes in technology

August Company sells Product Rhea for P 5 per unit. The fixed cost is P 210,000 and the variable cost is 60% of the selling price. What amount of sales is needed to realize a profit of 10% of sales?

• P 700,000

• P 525,000

• P 472,500

• 420,000

Chris Company has fixed costs of P 100,000 and breakeven sales of P 800,000. What is its profit at P 1,200,000 sales?

• P 50,000

• P 150,000

• P 200,000

• P 400,000

Delfin Company sells a product to retailers for P 200. The unit variable cost is P 40 plus a selling commission of 10%. Fixed manufacturing cost totals P 1,000,000 per month, while fixed selling and administrative cost equals P 420,000. The income tax rate is 30%. What will be the required sales to achieve an after-tax profit of P 123,200?

• 19,950 units

• 18,750 units

• 15,640 units

• 11,400 units

Cost-volume-profit relationships that are curvilinear may be analyzed linearly by considering only

• Fixed and semi-variable costs

• Relevant fixed costs

• Relevant variable costs

• Relevant range of volume