CVP Analysis and Marginal Analysis Paper 1

1

Cost-volume-profit (CVP) analysis is a key factor in many decisions, including choice of product lines, pricing of products, marketing strategy, and use of productive facilities. A calculation used in a CVP analysis is the breakeven point. Once the breakeven point has been reached, operating income will increase by the






2

The change in period-to-period operating income when using variable costing can be explained by the change in the






3

If inventories are expected to change, the type of costing that provides the best information for breakeven analysis is






4

One of the major assumptions limiting the reliability of breakeven analysis is that






5

When used in cost-volume-profit analysis, sensitivity analysis






6

Marston Enterprises sells three chemicals: petrol, septine, and tridol. Petrol is the company’s most profitable product; tridol is the least profitable. Which one of the following events will definitely decrease the firm’s overall breakeven point for the upcoming accounting period?






7

Which of the following will result in raising the breakeven point?






8

A company’s breakeven point in sales dollars may be affected by equal percentage increases in both selling price and variable cost per unit (assume all other factors are constant within the relevant range). The equal percentage changes in selling price and variable cost per unit will cause the breakeven point in sales dollars to






9

The breakeven point in units increases when unit costs






10

For a profitable company, the amount by which sales can decline before losses occur is known as the






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