Bottom Up and CVP

Analysis of the room’s occupancy by day of the week can be useful in staff scheduling and advertising.

• True

• False

Net income cannot be considered a cost of running a business.

• True

• False

Mark‑up pricing occurs when the cost of food sold is marked up by a fixed percentage to obtain the selling price.

• True

• False

CVP stands for Cost, Volume, Product

• True

• False

CVP analysis assumes that costs have been fairly accurately broken down into their fixed and variable elements.

• True

• False

Sales revenue less fixed costs equals contribution margin.

• True

• False

If a motel is losing $1,000 a month and rents its units for an average of $20 a night, it needs to sell 50 more units a month to break even.

• True

• False

An assumption under CVP analysis is that relevant costs can be broken down into fixed and variable

• True

• False

An establishment has three departments with variable costs as a percentage of sales revenue of 30%, 40%, and 50%, respectively. Each department has the same level of sales revenue. The weighted average contribution margin is:

• 20%

• 30%

• 50%

• 60%