Cost Volume Profit (CVP) Analysis Quiz

What is cost-volume-profit analysis?

• The examination of the relationships among selling prices, sales and production volume, and profits

• The examination of the relationships among selling prices, sales and production volume, costs, expenses, and profits

• The examination of the relationships among selling prices, sales and production volume, and costs

• The examination of the relationships among selling prices, sales and production volume, costs, and expenses

What is the contribution margin?

• The excess of fixed costs over sales revenues

• The excess of variable costs over fixed costs

• The excess of sales revenues over variable costs

• The excess of sales revenues over fixed costs

What is the contribution margin ratio?

• The percentage of each sales dollar available to cover fixed costs and to provide income from operations

• The percentage of each sales dollar available to cover variable costs and to provide income from operations

• The percentage of each sales dollar available to cover total costs and to provide income from operations

• The percentage of each sales dollar available to cover expenses and to provide income from operations

How is the unit contribution margin computed?

• Unit variable costs minus selling price

• Unit variable costs minus fixed costs

• Unit selling price minus variable costs

• Unit selling price minus fixed costs

What is the break-even point?

• The level of operations at which a company's profits are maximized

• The level of operations at which a company's revenues and expenses are equal

• The level of operations at which a company's revenues exceed expenses

• The level of operations at which a company's expenses exceed revenues

How do increases in fixed costs affect the break-even point?

• Decrease the break-even point

• Increase the break-even point

• Have no effect on the break-even point

• Increase the profit margin

How do decreases in unit variable costs affect the break-even point?

• Increase the profit margin

• Decrease the break-even point

• Have no effect on the break-even point

• Increase the break-even point

How do increases in the unit selling price affect the break-even point?

• Decrease the break-even point

• Increase the profit margin

• Increase the break-even point

• Have no effect on the break-even point

What does the cost-volume-profit chart graphically show?

• The sales mix at different levels of activity

• Only the difference between total sales and total costs

• The efficiency of operations at different levels of activity

• Sales, costs, and the related profit or loss for various levels of units sold

If sales are $500,000, variable costs are $200,000, and fixed costs are $240,000, what is

the contribution margin ratio?

• 40%

• 48%

• 52%

• 60%