Cost-Volume-Profit Analysis Quiz

Fixed costs remain constant regardless of the volume of production.

• True

• False

The contribution margin is the amount left after deducting fixed costs.

• True

• False

Break-even point decreases if variable costs per unit decrease.

• True

• False

CVP analysis assumes which of the following?

• Fixed costs change with production levels.

• Selling price remains constant within the relevant range.

• Variable costs per unit vary with production levels.

• Total costs and total revenue curves are nonlinear.

Which of these statements about the break-even point is correct?

• It occurs when total revenue equals total variable costs.

• It is influenced by changes in fixed costs or selling price.

• At this point, total contribution margin is zero.

• It occurs at maximum sales volume.

If fixed costs are $25,000 and the contribution margin per unit is $5, what is the break-even point in units?

• 5,000

• 4,000

• 6,000

• 3,500

The sensitivity analysis in CVP focuses on:

• Calculating fixed costs

• Estimating tax implications

• Assessing changes in volume, cost, or price

• Preparing financial statements

If a product's selling price is $50, variable cost is $30, and fixed costs are $40,000, how many units must be sold to break even?

• 1,000

• 2,000

• 800

• 1,500

A company sells a product for $20 with a $5 variable cost per unit. If fixed costs are $15,000, what is the contribution margin ratio?

• 25%

• 75%

• 50%

• 20%

With a contribution margin of $10 and fixed costs of $50,000, how much profit is earned at a sales level of 6,000 units?

• $10,000

• $60,000

• $50,000

• $40,000