WorksheetsCVP Analysis
Total questions: 15
Worksheet time: 17mins
A fixed cost is a cost that
changes with changes in the level of activity.
stays the same per unit as the number of units changes.
stays the same irrespective of changes in the level of activity.
is a fixed proportion of profit
Which of the following is normally a mixed cost?
Motor vehicle running costs
Electricity costs
Telephone costs
All of the above
Which of the following statements is correct? If the activity level goes outside the relevant range
fixed costs will remain constant
fixed costs can no longer be assumed to be fixed
fixed costs will always increase
fixed costs will always decrease
If the selling price is $25 per unit and variable costs are $16 per unit, the contribution margin per unit is
$9.00
$11.00
$41.00
$1.56
In a cost-volume-profit graph, the break-even point is where the total revenue line
crosses the fixed cost line
crosses the total cost line
is below the total cost line
crosses the variable cost line
Bee Ltd's CM per unit is $2 and break even number is 2000 units. If Bee sells 5000 units, their profit will be
$6000
$2000
$10 000
$4000
If fixed costs are $200,000 and variable costs are 60% of the selling price, the break-even point in sales dollars is
$800,000
$333,333
$200,000
$500,000
Nail Pro Pty Ltd desires an after tax profit of $15,000. If the tax rate is 30%, what is the before tax profit?
$19 500
$50 000
$21 429
$10 500
Which decision below could break-even data assist with?
Which resources do we need to focus on to increase our profit?
What is the impact on profit if there is an increase in fixed costs?
How many bikes need to be sold to achieve a before-tax profit of $12 000 for the year?
All of the options listed
Emphasis Pty Ltd makes luxury pens. If the selling price per pen is $100, the contribution margin ratio is 40% and total fixed costs are $25 000, how many pens must Emphasis Pty Ltd sell to achieve a desired profit of $20 000?
200
625
1125
500
An outsourcing decision means
choosing to buy all products to be sold.
making all products to be sold.
asking another entity to supply services.
deciding on whether to buy or make the products or services.
Avoidable costs of outsourcing refer to
those costs that will still be incurred by the outsourcing entity
those costs that will no longer be incurred by the outsourcing entity
costs required to pay the external provider
fixed costs
Which of the following statements regarding the margin of safety is NOT true?
It is the mix between fixed and variable costs.
It indicates how much revenue can decrease before reaching the break even.
It motivates managers to reduce costs and increase sales to avoid losses.
It is equal to the actual units of activity minus units at break even point
Super Small Pty Ltd is a manufacturer of children’s clothing and has been approached to supply a special order for 10 000 designer shirts at a price of $12 per shirt. The variable costs of producing a shirt are $8 per shirt. Super Small Pty Ltd has sufficient spare capacity to manufacture the order without affecting its normal production and the order is within the relevant range so there will be no impact on fixed costs. Should Super Small Pty Ltd accept the order?
Yes, as profits will be increased by $40 000.
Yes, as fixed costs will not change.
No, as the price being offered of $12 per shirt is not sufficiently above the full cost of production of $8 per shirt.
There is insufficient information to tell whether Super Small Pty Ltd should accept the order or not.
Footballs Pty Ltd has been asked to fulfil a special order for 2000 footballs at a 20% discount on the current selling price. Footballs Pty Ltd are already at full production capacity and would have to forgo regular sales worth $50 000 if they accept this special order. If the net benefits of the special order total $20 000 should they accept the order?
Yes, the profits will increase by $20 000.
Yes, as long as there are no adverse long-term effects that outweigh the short-term benefits.
No, a loss of $30 000 will be generated from the special order.
No. Footballs Pty Ltd do not have the capacity to accept this special order.
