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WorksheetsDPA40113 - COST VOLUME PROFIT
Total questions: 20
Worksheet time: 16mins
Break-even point (BEP) is defined as the point where total revenue equals to total costs.
True
False
Contribution is the difference between sales value and variable costs incurred. In other words, it is a reduction of sales after covering the variable costs.
True
False
Margin of safety (MOS) indicates on how much can the company increase its sales before a loss occurs.
True
False
Each of the following would affect the break-even point except a change in the
number of units sold
variable cost per unit
total fixed cost
sales price per unit
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
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
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
BEP calculation can be calculated using:
Equation approach
Evaluation approach
Comprehensive approach
Contribution Margin approach
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
The current sales price for Jameela Company is RM16 per unit and variable cost is RM8 per unit. The total fixed cost for the year is RM125,000 and the targeted profit is RM35,000. What is the total units sales for Jameela Company if they want to achieve the target profit?
15,000 units
16,000 units
20,000 units
22,000 units
The current sales price for Jameela Company is RM16 per unit and variable cost is RM8 per unit. The total fixed cost for the year is RM125,000 and the targeted profit is RM35,000. What is the total units sales for Jameela Company if they want to achieve the target profit, considering the increase in sales price by RM1.50 and the decrease in variable cost by RM2?
13,609 units
14,548 units
15,765 units
13,913 units
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
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
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
