THEORIES:

1.s To which function of management is CVP analysis most applicable?

A. Planning C. Directing
B. Organizing D. Controlling Bobadilla

2. The systematic examination of the relationships among selling prices, volume of sales and production, costs, and
profits is termed:
A. contribution margin analysis C. budgetary analysis
B. cost-volume-profit analysis D. gross profit analysis Bobadilla

3. The term contribution margin is best defined as the:

A. difference between fixed costs and variable costs.
B. difference between revenue and fixed costs.
C. amount available to cover fixed costs and profit.
D. amount available to cover variable costs. Bobadilla

4. Cost-volume-profit analysis allows management to determine the relative profitability of a product by

A. Highlighting potential bottlenecks in the production process.
B. Determining the contribution margin per unit and projected profits at various levels of production.
C. Assigning costs to a product in a manner that maximizes the contribution margin.
D. Keeping fixed costs to an absolute minimum. Bobadilla

5. Cost-volume-profit analysis cannot be used if which of the following occurs?

A. Costs cannot be properly classified into fixed and variable costs.
B. The per unit variable costs change.
C. The total fixed costs change.
D. Per unit sales prices change. Bobadilla

6. The most useful information derived from a breakeven chart is the

A. Amount of sales revenue needed to cover enterprise variable costs.
B. Amount of sales revenue needed to cover enterprise fixed costs.
C. Relationship among revenues, variable costs, and fixed costs at various levels of activity.
D. Volume or output level at which the enterprise breaks even. Bobadilla
7. Which of the factors is (are) involved in studying cost-volume-profit relationships?
A. Levels of production C. Fixed costs
B. Variable costs D. All of these Bobadilla

8. At the breakeven point, fixed cost is always

A. Less than the contribution margin C. More than the contribution margin
B. Equal to the contribution margin. D. More than the variable cost Bobadilla

9. At the break-even point:

A. net income will increase by the unit contribution margin for each additional item sold above break-even.
B. the total contribution margin changes from negative to positive
C. fixed costs are greater than contribution margin
D. the contribution margin ratio begins to increase Bobadilla
10. In cost-volume-profit analysis, the greatest profit will be earned at
A. One hundred percent at normal productive capacity.
B. The production point with the lowest marginal cost.
C. The production point at which average total revenue exceeds average marginal cost.
D. The point at which marginal cost and marginal revenue are equal.

11. If the fixed costs attendant to a product increase while variable costs and sales price remains constant, what will
happen to contribution margin (CM) and breakeven point (BEP)?
Bobadilla A. B. C. D.
CM Increase Decrease Unchanged Unchanged
BEP Decrease Increase Increase Unchanged

PROBLEMS
Green Corporation expects to sell 3,000 plants a month. Its operations manager estimated the following monthly costs:
Variable costs P 7,500
Fixed costs 15,000
What sales price per plant does she need to achieve to begin making a profit if she sells the estimated number of
plants per month?
A. P7.51 C. P5.00
B. P7.50 D. P2.50

Answer: B
Contribution Margin = Fixed costs
= P15,000

(Contribution Margin/Unit Sales) + Variable cost per unit

= Desired Minimum Sales Price

(P15,000 ÷ 3,000) + (P7,500 ÷ 3,000) 7.50

2) Calculate the company’s breakeven point in units if it has the following data:
 Fixed cost = 5,000,000
 Selling price per unit = 15
 Variable cost per unit = 10

A. 1,500,000
B. 2,000,000
C. 1,000,000
D. 2,500,000
Ngano man ni sya? Kay ang formula for BEP in units is : Fixed cost/Contribution margin per unit
Diba ang Selling Price per unit less Variable cost per unit equals CM per unit? So dali nalang ni:
5,000,000/(15-10) = 1,000,000. Gets?

Consider the following:

Fixed expenses P78,000
Unit contribution margin 12
Target net profit 42,000
How many unit sales are required to earn the target net profit?
A. 15,000 units C. 12,800 units
B. 10,000 units D. 20,000 units

Discussion sa answer:

Kani na problem, mura rag crush nimo, dili jud nimo makuha ug imoha rang tan awon. :D
Sige oy , i-solve daw nato  Kani na problem ang gipangita niya kay ang target sales in units para
makuha daw nato ang target profit na 42,000. Diba ang format sa variable costing kay

Sales xx
Less: Variable Cost _xx___
Equals: Contribution Margin 120,000 (gi workback nato para makuha ang contribution margin)
Less: Fixed Cost 78,000
Equals: Net Profit 42,000 then: 120,000/12= 10,000 units
Meaning, para ma achieve ang 42,000 na
target profit dapat makahalin tag 10,000
kabook. Gets? 