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WorksheetsCVP AND BUDGET
Total questions: 20
Worksheet time: 19mins
At the break-even point which of the following relationships does not hold true?
sales value = fixed costs/contribution to sales ratio%
profit = contribution + fixed costs
contribution = fixed costs
number of units = fixed costs/contribution per unit
Which one of the following best describes the margin of safety?
The extent to which the total sales revenue exceeds the total fixed costs
The extent to which the total sales revenue exceeds the total variable costs
The extent to which the total sales revenue exceeds the total fixed and variable costs
Fixed costs/ (Sales revenue per unit – variable costs per unit)
To find the break-even in dollars, you have to divide the fixed cost by ____________?
Variable Cost
Contribution Margin per unit
Contribution Margin
Contribution Margin ratio
Which of the following costs would decrease if production levels were increase within the relevant range?
Total fixed costs
Variable costs per unit
Total variable costs
Fixed costs per unit
A cash budget is used to determine:
profit
cash closing balance
the value of the business
the debts of the business
Management's operating & financial plans for a specified period, including budged financial reports is expressed in:
Cash Budget
Master Budget
Production Budget
Sales Budget
Which of the following items are included in a cash budget?
Depreciation
Accumulated depreciation
Cash receipts
Bad debts
Which of the following is not an advantage of preparing a cash budget?
Knowing when a shortage of cash may occur
Knowing when there is an excess of cash
Refusal of suppliers to supply goods on credit
Knowing when non-current assets may be purchased.
A business has estimated credit sales of $100,000 for April. What is the estimated cash they would receive in June if the expected collection rate is:
70% in the month following
30% in the second month
$70,000
$30,000
$100,000
The "month following" means the month after a transaction has occurred
True
False
Is depreciation on non-current asset included in the Cash Budget?
Yes
No
Static budgets are:
Prepared for a range of activity levels
Updated for the actual level of activity
Provide valid basis for comparing actual and expected costs
Prepared for a single, planned level of activity
Fixed costs should not be included in a flexible budget since such costs are not likely to be controllable by managers.
True
False
A major disadvantage of static budgets is:
the difficulty in developing such budgets due to the high cost of gathering the necessary information.
the cost behavior pattern of manufacturing overhead, which is primarily fixed.
that the variances between actual and budget on a static budget result from comparing actual costs at one level of activity to budgeted costs at a different level of activity.
their length and complexity.
If a company increases its fixed costs for Product B, then the contribution margin per unit will
Increase
decrease
remain the same
more information is needed
If a company increases its selling price per unit for Product A, then the new breakeven point will
increase
decrease
remain the same
more information is needed
Which is the correct formula for calculating breakeven
Fixed Costs - Variable Costs
Fixed Costs/Variable Costs
Fixed Costs/Selling Price - Variable Costs
Fixed Costs - Selling Price and Variable Costs
