You are on page 1of 3

Cost-Volume-Profit Analysis INSTRUCTIONS: Choose the best answer.

1) Last year, Twins Company reported Php750,000 in sales (25,000 units) and a net operating income of Php25,000. At the break-even point, the company's total contribution margin equals Php500,000. Based on this information, the company's: A. contribution margin ratio is 40%. B. break-even point is 24,000 units. C. variable expense per unit is Php9. D. variable expenses are 60% of sales. 2) A company has provided the following data:

If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net operating income will: A. increase by Php61,000. B. increase by Php20,000. C. increase by Php3,500. D. increase by Php11,000. 3) At a break-even point of 400 units sold, variable expenses were Php4,000 and fixed expenses were Php2,000. What will the 401st unit sold contribute to profit? A. Php0 B. Php5 C. Php10 D. Php15 4) Pilkinton Corporation has provided its contribution format income statement for July. The company produces and sells a single product.

If the company sells 10,300 units, its total contribution margin should be closest to: A. Php49,211 B. Php391,400 C. Php407,400 D. Php376,200 5) Last year, Black Company reported sales of Php640,000, a contribution margin of Php160,000, and a net loss of Php40,000. Based on this information, the break-even point was: A. Php640,000 B. Php480,000 C. Php800,000 D. Php960,000 6) North Company sells a single product. The product has a selling price of Php30 per unit and variable expenses of 70% of sales. If the company's fixed expenses total Php60,000 per year, then it will have a break-even of: A. Php60,000 B. Php85,714 C. Php42,000 D. Php200,000 7) Forest Corporation has prepared the following budgeted data based on a sales forecast of Php3,000,000:

What would be the amount of dollar sales at the break-even point? A. Php1,125,000 B. Php2,000,000 C. Php2,650,000

D. Php1,750,000

8) Mardist Corporation has sales of Php100,000, variable expenses of Php75,000, fixed expenses of Php30,000, and a net loss of Php5,000. How much would Mardist have to sell to achieve a profit of 10% of sales? A. Php187,500 B. Php200,000 C. Php225,500 D. Php180,000 9) Green Company's variable expenses are 75% of sales. At a sales level of Php400,000, the company's degree of operating leverage is 8. At this sales level, fixed expenses are: A. Php87,500 B. Php100,000 C. Php50,000 D. Php75,000 10) Slosh Cleaning Corporation services both residential and commercial customers. Slosh expects the following operating results next year for each type of customer:

Slosh expects to have Php18,000 in fixed expenses next year. What would Slosh's total dollar sales have to be next year in order to generate a profit of Php90,000? A. Php216,000 B. Php250,000 C. Php270,000 D. Php300,000 11) Data concerning Damberger Corporation's single product appear below:

The company is currently selling 5,000 units per month. Fixed expenses are Php243,000 per month. The marketing manager believes that an Php11,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change? A. increase of Php200 B. decrease of Php200 C. increase of Php10,800 D. decrease of Php11,000 12) Bear Publishing sells a nature guide. The following information was reported for a typical month (sales volume is constant each month):

Bear is expecting a 20 cent increase in variable expenses. No other changes are expected or planned. How much contribution margin should Bear expect after the increase? A. Php7,700 B. Php4,100 C. Php9,900 D. Cannot be determined. 13) The following is last month's contribution format income statement:

What is the company's margin of safety in pesos? A. Php100,000 B. Php600,000 C. Php1,500,000 D. Php250,000 14) Austin Manufacturing had the following operating data for the year just ended.

Management plans to improve the quality of its only product by: (1) replacing a component that costs Php3.50 with a higher-grade component that costs Php5.50; and (2) renting a packing machine for Php18,000 a year. If the desired target profit is Php288,000, the company must sell: A. 19,300 units B. 21,316 units C. 22,500 units D. 20,842 units 15) The following is last month's contribution format income statement:

What is the company's degree of operating leverage? A. 0.125 B. 8.0 C. 3.0 D. 0.333 16) The following data pertain to Wistron Company's two products:

If fixed expenses for the company as a whole are Php60,000 and the product mix is constant, the overall break-even point for the company would be: A. Php150,000 B. Php153,846 C. Php100,000 D. Php132,000 The following is Addison Corporation's contribution format income statement for last month:

The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month. 17) What is the company's contribution margin ratio? A. 250% B. 150% C. 70% D. 30% 18) What is the company's break-even in units? A. 20,000 units B. 0 units C. 18,000 units D. 12,000 units 19) If sales increase by 100 units, by how much should net operating income increase? A. Php400 B. Php4,800 C. Php1,500 D. Php2,500 20) How many units would the company have to sell to attain the target profit of Php150,000? A. 22,000 B. 37,500 C. 25,000 D. 26,667