A191 BKAL1013 BUSINESS ACCOUNTING

TUTORIAL 6: COST VOLUME PROFIT ANALYSIS

SUBMISSION DATE: 10 DECEMBER 2019

PART A: MULTIPLE CHOICE QUESTIONS

1. Which of the following best describe contribution margin?

A. Balance of revenue after deducting variable costs

B. the amount of fixed costs less operating income
C. the selling price less cost of sales
D. Both (A) and (B)

2. Costs that change in total dollar amount as the level of activity changes are called:
A. fixed costs
B. mixed costs
C. opportunity costs
D. variable costs

Sintok enterprises uses perpetual inventory system. The following information is

available for the company in April 2018.

Units Produced 700

Selling Price per unit RM800
Variable Cost per unit RM450
Fixed Cost RM140,000

Use the above information to answer questions 3 to 10

3. Calculate the contribution margin in unit

A. RM800
B. RM450
C. RM590
D. RM350

4. Calculate the contribution margin ratio

A. 0.5625 or 56.25%
B. 0.4375 or 43.75%
C. 1 or 100%
D. 1.778 or 177.8%

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5. The break-even point in units is

A. 400 units
B. 311.11 or 312 units
C. 175 units
D. 140 units

6. The break-even point in RM Sales is

A. RM319,550
B. RM320,000
C. RM210,000
D. RM105,000

7. Determine the breakeven point in units, if the target profit is RM210,000?

A. 800 units
B. 900 units
C. 1,000 units
D. 1,100 units

8. Calculate the operating leverage for April 2018?

A. 2 1/3 or 2.33
B. 1 1/3 or 1.67
C. 2/3 or 0.67
D. 1/4 or 0.25

9. If the margin of safety is 20% in April 2018, what is the sales quantity in that month?

A. 400 units
B. 450 units
C. 500 units
D. 550 units

10. to the company wishes to generate more sales in May 2018 so it decides to give RM10
per unit sold as a sale commission to the sales agents. Calculate the new variable cost per
unit?

A. RM10
B. RM450
C. RM460
D. RM480

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11. Which of the following statement is TRUE if the company operating leverage is 5?

A. Increasing in 1% of the selling price will increase 5% of income from operation

B. Increasing in 1% of the variable cost per unit will increase 5% of income from
operation
C. Increasing in 1% of unit sold will increase 5% of income from operation
D. All the above

12. What will be the impact on the company’s contribution margin and break-even point, if a
company able to reduce its variable costs per unit?

Contribution Margin Break-even Point

A. Increase Increase
B. Increase Decrease
C. Decrease Increase
D. Decrease Decrease

13. If a company desires to increase its margin of safety, it should:

A. increase fixed costs

B. stimulate sales volume
C. decrease selling prices
D. decrease the contribution margin

14. Which of the following is an underlying assumption of CVP analysis?

A. Not all units produced are sold

B. Changes in the activity are not the only factors that affect costs
C. Not all costs can be classified either fixed or variable costs
D. Sales mix is constant

15. If a company had a contribution margin of RM300,000 and a contribution margin ratio of
20%, what is the total variable costs?

A. RM1,500,000
B. RM1,200,000
C. RM240,000
D. RM60,000

16. Putra ventures has the following information for a trading period.:

Variable cost per unit = RM5

Contribution margin per unit = RM20
Break-Even (RM) = RM100,000

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 What is the total fixed costs?

A. RM120,000
B. RM100,000
C. RM80,000
D. RM60,000

17. Natasya company sells 100,000 bags for RM10 a unit. Fixed costs are RM300,000 and profit is
RM200,000. What should be reported as variable costs in the company’s income statement?

A. RM700,000
B. RM900,000
C. RM500,000
D. RM1,000,000

18. What happens at a business Break-Even Point (BEP)?

A. The company will make a lot of profit from operation

B. The company will incur a small loss from operation
C. The company will have neither an income nor a loss from operation
D. the company will have both an income and a loss from operation

19. These are the techniques to determine Break-Even Point (BEP) Except:

A. Contribution Margin approach

B. Mathematical Equation approach
C. Graphical approach
D. Accounting Equation approach

20. Which of the following can increase a company’s profit?

A. Increase in sales volume

B. Decrease in fixed cost
C. Decrease in variable cost
D. All the above

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PART B: STRUCTURED QUESTION

Jesslyn Manufacturing Sdn Bhd have the following information for June 2019:

Variable cost per unit Fixed cost

sold
Direct material RM1.80
Direct labor RM3.50
Factory overhead RM15,000
Selling Expenses RM0.50
Administrative Expenses RM35,400

a) If the selling price per unit is RM10.00, calculate the unit contribution margin?
b) What is the minimum sales (in unit) at the break-even point?
c) If the selling price remains at RM10 per unit, how much sales (in RM) should be made in
April 2018 to generate net income of RM27,300?
d) On 1 May 2018, the company purchases a new machine and its monthly depreciation
expenses is estimated at RM2,000. This new machine has increased the sales (in unit) by
10%. Assume that the sales in May is RM200,000 and no changes in selling price and
variable cost per unit. What is an expected net income in July 2019?

END OF QUESTIONS

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 TUTORIAL 6 ANSWER SHEET

DUE DATE: 9 DECEMBER 2019

Group: ___F____

Matric No: _270407_ Name: _YAP MAN YEE_________________________