CVP Analysis and Marginal Analysis Paper 2


When an organization is operating above the breakeven point, the degree or amount that sales may decline before losses are incurred is called the


Which one of the following is true regarding a relevant range?


Positive operating income is shown on a cost-volume-profit chart when the


Breakeven quantity is defined as the volume of output at which revenues are equal to


All of the following are assumptions of cost-volume-profit analysis except


Blount, Inc., is considering discontinuing a certain product line if it does not have a margin of safety higher than 15%. The breakeven sales are $76,800, and the margin of safety is $13,200. Based on this information, the controller has recommended that Blount keep this product line. Did the controller make the appropriate decision?


Which one of the following would cause a profitable company’s margin of safety to decrease?


Two companies produce and sell the same product in a competitive industry. Thus, the selling price of the product for each company is the same. Company 1 has a contribution margin ratio of 40% and fixed costs of $25 million. Company 2 is more automated, making its fixed costs 40% higher than those of Company 1. Company 2 also has a contribution margin ratio that is 30% greater than that of Company 1. By comparison, Company 1 will have the breakeven point in terms of dollar sales volume and will have the dollar profit potential once the indifference point in dollar sales volume is exceeded. List A List B


The breakeven point in units sold for Tierson Corporation is 44,000. If fixed costs for Tierson are equal to $880,000 annually and variable costs are $10 per unit, what is the contribution margin per unit for Tierson Corporation?


How much does each additional sales dollar contribute toward profit for a firm with $4 million breakeven level of revenues and $1.2 million in fixed costs including depreciation?


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