Corporate Finance Quiz : Cost Volume Profit Analysis

What is the primary purpose of Cost Volume Profit analysis?

• To determine the break-even point

• To calculate total revenue

• To evaluate employee performance

• To assess market demand

Which one is NOT one of the five factors of Cost Volume Profit?

• Selling prices

• Total fixed costs

• Unit variable costs

• Total variable costs

Which of the following is a key assumption in Cost Volume Profit analysis?

• Costs are variable only

• Sales price per unit remains constant

• Fixed costs change with production levels

• All products are sold at a loss

Contribution margin goes toward

• Fixed and variable costs

• Variable costs

• Fixed cost and profit

• Only profit

Contribution Margin Ratio is calculated

• (Sales-Variable costs)/Fixed costs

• (Sales-Variable costs)/Sales revenue

• Contribution margin/Variable costs

• Contribution margin/Fixed costs

The contribution margin increase when sales volume remain the same and

• Fixed cost increase

• Fixed cost decrease

• Variable cost per unit decrease

• Variable cost per unit increase

Which of the following are true about breakeven point

• The breakeven point is where total costs exceed total revenue.
• The breakeven point is determined by market demand alone.
• The breakeven point is only relevant for fixed costs.
• The breakeven point is where total revenue equals total costs.

Each of the following would affect the break-even point except a change in the

• Variable costs

• Number of units sold

• Production costs

• Fixed expenses

Rent, administrative costs, employee salary are examples of ...

• Variable costs

• Prices

• Fixed costs

• Costs

At a local ballpark a team charges $10 per ticket. The team must pay its players $4000. It costs the owners $6 for each souvenir they give away.

How many tickets must be sold to break even.

Break-even = Fixed Cost/Gross Profit

• 10,000 tickets

• 1000 tickets

• 600 tickets

• 660 tickets