CVP Analysis and Marginal Analysis MCQs

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Cost-volume-profit (CVP) analysis is a key factor in many decisions, including choice of product lines, pricing of products, marketing strategy, and u...






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






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






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






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






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Marston Enterprises sells three chemicals: petrol, septine, and tridol. Petrol is the companys most profitable product; tridol is the least profitabl...






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






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A companys breakeven point in sales dollars may be affected by equal percentage increases in both selling price and variable cost per unit (assume al...






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The breakeven point in units increases when unit costs






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






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






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






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






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






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






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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,...






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Which one of the following would cause a profitable companys margin of safety to decrease?






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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. Compan...






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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 ...






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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 c...






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What is the breakeven point in units for a product that sells for $10 if fixed costs are $4,000 and variable costs are 20% of sales?






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Madengrad Company manufactures a single electronic product called Precisionmix. This unit is a batch-density monitoring device attached to large indus...






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Madengrad Company manufactures a single electronic product called Precisionmix. This unit is a batch-density monitoring device attached to large indus...






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Madengrad Company manufactures a single electronic product called Precisionmix. This unit is a batch-density monitoring device attached to large indus...






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Madengrad Company manufactures a single electronic product called Precisionmix. This unit is a batch-density monitoring device attached to large indus...






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A company has sales of $500,000, variable costs of $300,000, and operating income of $150,000. If the company increased the sales price per unit by 10...






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Barnes Corporation manufactures skateboards and is in the process of preparing next year’s budget. The pro forma income statement for the current ye...






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Barnes Corporation manufactures skateboards and is in the process of preparing next year’s budget. The pro forma income statement for the current ye...






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Romashka, Inc., plans to introduce a new product. The marketing manager forecasts a unit selling price of $500. The variable cost per unit is estimate...






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A company makes a product that sells for $30. During the coming year, fixed costs are expected to be $180,000, and variable costs are estimated at $26...






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Oradell Company sells its single product at a price of $60 per unit and incurs the following variable costs per unit of product: .tg {border-colla...






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Oradell Company sells its single product at a price of $60 per unit and incurs the following variable costs per unit of product: .tg {border-colla...






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Donnelly Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the vari...






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Donnelly Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the vari...






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Harper and her band want to put on a concert. They have looked at two venues, a small one and a large one, and have compiled the following information...






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Harper and her band want to put on a concert. They have looked at two venues, a small one and a large one, and have compiled the following information...






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Tonykinn Company is contemplating marketing a new product. Fixed costs will be $800,000 for production of 75,000 units or less and $1,200,000 if produ...






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A company has sales of one of its products of $400,000 per year and a contribution margin ratio of 20%. Its margin of safety is $40,000. What is the ...






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The Childers Company breaks even at an annual sales volume of 75,000 units. Actual annual sales volume was 100,000 units, and the company reported ope...






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A company has sales of one of its products of $400,000 per year and a contribution margin ratio of 20%. Its margin of safety is $40,000. What are the...






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For one of its divisions, Buona Fortuna Company has fixed costs of $300,000 and a variable-cost percentage equal to 60% of its $10 per unit selling pr...






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Oak Fine Furnishings manufactures a wide range of home furnishings. One of their products is an oak headboard. The company currently sells 4,000 headb...






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Dimmell has a potential foreign customer that has offered to buy 1,500 tons at $450 per ton. Assume that all of Dimmells costs would be at the same l...






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Kimbeth Carpet cleans carpets for residences and offices. It charges an average price of $100 to clean a standard room. The variable cost per room is ...






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A company uses cost-volume-profit (CVP) analysis to evaluate a new product. The total fixed cost of production is $600,000. If the product would break...






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Madengrad Company manufactures a single electronic product called Precisionmix. This unit is a batch-density monitoring device attached to large indus...






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The data below pertain to the forecasts of XYZ Company for the upcoming year. .tg {border-collapse:collapse;border-spacing:0;} .tg td{font-family...






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The data below pertain to the forecasts of XYZ Company for the upcoming year. .tg {border-collapse:collapse;border-spacing:0;} .tg td{font-family...






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Associated Supply, Inc., is considering introducing a new product that will require a $250,000 investment of capital. The necessary funds would be rai...






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BE&H Manufacturing is considering dropping a product line. It currently produces a multi-purpose woodworking clamp in a simple manufacturing process t...






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Bruell Electronics Co. is developing a new product, surge protectors for high-voltage electrical flows. The cost information below relates to the prod...






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Bruell Electronics Co. is developing a new product, surge protectors for high-voltage electrical flows. The cost information below relates to the prod...






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Austin Manufacturing, which is subject to a 40% income tax rate, had the following operating data for the period just ended: Selling price per unit $...






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A company has just completed the final development of its only product, general recombinant bacteria, which can be programmed to kill most insects bef...






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A company that sells its single product for $40 per unit had after-tax net income for the past year of $1,188,000 after applying an effective tax rate...






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A company that sells its single product for $40 per unit had after-tax net income for the past year of $1,188,000 after applying an effective tax rate...






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A manufacturer produces a product that sells for $10 per unit. Variable costs per unit are $6 and total fixed costs are $12,000. At this selling price...






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Donnelly Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the vari...






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Donnelly Corporation manufactures and sells T-shirts imprinted with college names and slogans. Last year, the shirts sold for $7.50 each, and the vari...






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For one of its divisions, Buona Fortuna Company has fixed costs of $300,000 and a variable-cost percentage equal to 60% of its $10 per unit selling pr...






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Based on potential sales of 1,000 units per year, a new product has estimated costs of $600,000. What is the target price to obtain a 20% return on sa...






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The margin of safety is a key concept of CVP analysis. The margin of safety is the






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A company sells two products, X and Y. The sales mix consists of a composite unit of 2 units of X for every 5 units of Y (2:5). Fixed costs are $49,50...






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Catfur Company has fixed costs of $300,000. It produces two products, X and Y. Product X has a variable cost percentage equal to 60% of its $10 per un...






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Catfur Company has fixed costs of $300,000. It produces two products, X and Y. Product X has a variable cost percentage equal to 60% of its $10 per un...






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Catfur Company has fixed costs of $300,000. It produces two products, X and Y. Product X has a variable cost percentage equal to 60% of its $10 per un...






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Ticker Company sells two products. Product A provides a contribution margin of $3 per unit, and Product B provides a contribution margin of 4 per unit...






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Eagle Brand, Inc., produces two products. Data regarding these products are presented below. .tg {border-collapse:collapse;border-spacing:0;} .tg...






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Due to a change in market conditions, a company finds that it can sell as many of each of its three main products as it can produce. Which one of the ...






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During the previous year, Morrison, Inc., produced 200,000 pogo sticks and sold them all for $10 each. The explicit costs of production were $700,000,...






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A normal profit is






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A corporations net income as presented on its income statement is usually






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The change in total product resulting from the use of one unit more of the variable factor is known as






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If a firm currently producing 500 units of output incurs total fixed costs of $10,000 and total variable costs of $15,000, the average total cost per ...






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When a firm produces 10,000 units of output, its total variable cost is equal to $50,000. Also, it experiences average fixed costs of $3 per unit. Wha...






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Regardless of output, a firm has $4,000 a year in total fixed costs. This same firm has an average variable cost of $3 while producing 1,000 units of ...






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A firm produces only 5 units of output. If total variable cost is $400 and total fixed cost is $200, then






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If a firms fixed costs are $500 and its average variable costs stay constant despite various levels of output, which of the following must be true?






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The sum of the average fixed costs and the average variable costs for a given output is known as






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The definition of economic cost is






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Jennilyn Jasper, whose annual salary as a flight instructor is $40,000, has just inherited $100,000 after taxes. She is considering quitting her job a...






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Jennilyn Jasper, whose annual salary as a flight instructor is $40,000, has just inherited $100,000 after taxes. She is considering quitting her job a...






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Two months ago, Hickory Corporation purchased 4,500 pounds of Kaylene at a cost of $15,300. The market for this product has become very strong, with t...






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Verla Industries is trying to decide which one of the following two options to pursue. Either option will take effect on January 1st of the next year....






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In differential cost analysis, which one of the following best fits the description of a sunk cost?






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Capital Company has decided to discontinue a product produced on a machine purchased 4 years ago at a cost of $70,000. The machine has a current book ...






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In a joint manufacturing process, joint costs incurred prior to a decision as to whether to process the products after the split-off point should be v...






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Profits that are lost by moving an input from one use to another are referred to as






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In a management decision process, the cost measurement of the benefits sacrificed due to selecting an alternative use of resources is most often refer...






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Allred Company sells its single product for $30 per unit. The contribution margin ratio is 45%, and fixed costs are $10,000 per month. Allred has an e...






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Jeffrey Company sells its single product for $30 per unit. The contribution margin ratio is 45%, and fixed costs are $10,000 per month. Sales were 3,0...






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Breeze Company has a contribution margin of $4,000 and fixed costs of $1,000. If the total contribution margin increases by $1,000, operating profit w...






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Wilkinson Company sells its single product for $30 per unit. The contribution margin ratio is 45%, and Wilkinson has fixed costs of $10,000 per month....






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In order to avoid pitfalls in relevant-cost analysis, management should focus on






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A major difference between economic profit and accounting profit is that economic profit






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In the short run in perfect competition, a firm maximizes profit by producing the rate of output at which the price is equal to






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A characteristic of a monopoly is that






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Monopolistic competition is characterized by a






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The distinguishing characteristic of oligopolistic markets is






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An industry that is oligopolistic would be best characterized by