CVP Analysis and Marginal Analysis Paper 2

1

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






2

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






3

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






4

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






5

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






6

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?






7

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






8

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






9

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?






10

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?






Result

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