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WorksheetsCost Volume Profit
Total questions: 25
Worksheet time: 24mins
Break-even point (BEP) is the situation where
Revenue > Cost
Revenue < Cost
Revenue = Cost
Revenue - Cost
The following is importance of Cost Volume Profit analysis EXCEPT
Review the impact on profit when there is a change in the Cost Volume Profit analysis element.
Determine sales level on Break Even Point.
Examining the relationship between changes in volume/unit and changes in total sales revenue, expenses and net profit.
Making decisions regarding pricing policies.
The following is assumptions in Cost Volume Profit (CVP) analysis EXCEPT
Fixed cost and variable cost can be identified.
Units of sales equals to unit of production.
Costs and revenues are linear.
Selling price per unit always changed
At break-even point (BEP)
Profit = Sales > Expenses
Profit = Sales < Expenses
Profit = RM0
Profit = Variable Cost + Fixed Cost
Here is information about margin of safety EXCEPT
Effects of changes in selling prices, fixed costs and variable costs over cost volume profit through calculations.
The higher the value of the margin of safety, the more comfortable the business.
It shows how far sales could fall before the company begins operating at a loss.
Difference between actual sales (or expected sales) and sales at the break-even point.
Margin of safety refer to…………………………………………………………………………………………………
Difference between actual sales and sales at the BEP point
Difference between actual profit and actual loss
Difference between actual contribution margin and standard contribution margin
Difference between actual sales and actual profit
Below are the method for computing a break even point EXCEPT;
Mathematical equation
Contribution margin method
Graphical method
Net profit method
One of the example of assumptions of CVP Analysis is:
Difficult to distinguish costs exactly into variable or fixed
The efficiency and productivity are to be unchanged
Fluctuation in revenues or cost
Selling price may be reduced to achieve greater volume of sales
Which statement refer to contribution margin?
Sales price per unit minus all fixed cost
Sales price per unit add all variable cost per unit
Sales price per unit minus all variable cost per unit
Sales price per unit add all fixed cost
Which statement NOT TRUE about break even point?
Volume of activity where the organization’s revenue and expenses are equal
Level of sales is no profit or loss
One of application of CVP analysis
State the amount sales can drop before losses begin
The correct formula of BEP in Ringgit Malaysia by using contribution margin method is:
Fixed cost divide by contribution margin per unit
Fixed cost divide by contribution margin ratio
Fixed cost divide by net profit per unit
Fixed cost divide by net profit ratio
The purpose of CVP analysis is to estimate how profits are affected by the following factors EXCEPT:
Selling price
Sales volume
Supplier discount
Total cost
One of the limitation of CVP Analysis is…………………………………………..
Fluctuation in revenue or costs
Cost are linear
Selling price are constant
Revenue are linear
What is the importance of Margin Of Safety to the company?
Company can predict how their decision will affect sales, cost and net income
Company can take the necessary precautions to avoid any drop in sales
Company can enhances a manager’s ability to make economic decision
Company can improve their performance
A business manufactures a single product which it sells for $50. The variable costs of production are $10 a unit. Next month fixed costs will be $800,000. The Finance Director wants to realise a profit of $120,000. How many units must be sold to generate this profit?
21000
23000
22000
None of these
Which of the following is the correct formula to calculate the break-even sales volume (in units) for a business?
Fixed costs/c/s ratio
Variable costs/contribution per unit
Variable costs /c/s ratio
Fixed costs/ contribution per unit
A company makes a single product which it sells for $30 per unit.
Fixed costs are $18,000 per month. The contribution/sales ratio is 40%.
Next month the company’s profit target is $36,000.
What sales volume is required to achieve next month’s profit target?
1,200 units
1,500 units
3,000 units
4,500 units
A company makes a single product which it sells for $2 per unit.
Fixed costs are $13,000 per month.
The contribution/sales ratio is 40%. Sales revenue is $62,500.
What is the margin of safety in units?
14000
10000
1000
15000
The following statements have been made about Cost-Volume-Profit analysis:
(1) CVP analysis allows for fluctuating selling prices.
(2) CVP analysis assumes productivity remains unchanged.
(3) CVP analysis assumes that the only factor affecting cost is volume.
Which of the above statements is/are true?
(1) only
(2) only
(1), (2) and (3)
(2) and (3) only
In order to calculate Break-even point and Target profit analysis, what equation can be used?
Sales = Fixed cost + Variable cost
Profit + Variable cost - Fixed cost = Sales
Sales - Variable cost - Fixed cost = Profit
Fixed cost + Variable cost x Profit
Sales price is RM20 per unit and Variable cost is RM10 per unit. What is contribution margin per unit?
RM5
RM10
RM30
RM200
Manis Company's sales price is RM34 per unit with total fixed cost RM20,000. The variable cost is RM20 per unit. What is break-even point in unit?
1,489 units
14,285 units
148 units
1,429 units
Pantas Sdn. Bhd. manufacture sport shirts to students. The variable costs consist of direct material RM10, direct labor RM6, variable overhead RM7 and variable selling RM3.50. The total fixed cost would be RM12,500 and the sport shirts are sold with a price of RM30. How much the breakeven point sales in units?
3,772 units
2,357 units
5,372 units
3,571 units
The contribution margin increase when sales volume remain the same and
variable cost per unit decrease
variable cost per unit increase
fixed cost decrease
fixed cost increase
In Cost Volume Profit analysis graph, the intersect line between total costs and total sales will be a __________.
break-even point
point of profit
point of desired sales
point of total sales
