Question 1: At an activity level of 20,000 units produced, fixed costs total $12,000 and variable costs total $44,000. What would be the amount of total costs if 25,000 units are produced, assuming that this activity level is within the relevant range?
a. $56,000
b. $59,000
c. $67,000
d. $70,000
Question 2: The contribution margin is calculated as:
a. sales minus fixed costs, divided by sales.
b. sales minus variable costs, divided by sales.
c. sales minus fixed costs.
d. sales minus variable costs.
Question 3: Last month, Brown Company had total sales revenue of $75,000. Variable costs totaled $15,000, and fixed costs totaled $40,000.
What was the contribution margin?
a. $60,000
b. $55,000
c. $35,000
d. $20,000
Question 4: When Delton, Inc. sold 30,000 units of product, total sales revenue was $210,000, fixed costs totaled $30,000 and net income was $120,000. What was the contribution margin per unit?
a. $6.00
b. $5.00
c. $3.00
d. $2.00
Question 5: The breakeven point in units is calculated using
a. fixed costs and the contribution margin ratio.
b. variable costs and the unit contribution margin.
c. variable costs and the contribution margin ratio.
d. fixed costs and the unit contribution margin.
Question 6: Which of the following is NOT an assumption of CVP analysis?
a. In multiproduct companies, the sales mix is constant over the relevant range
b. Variable cost per unit is constant over the relevant range
c. Fixed cost per unit is constant over the relevant range
d. Total revenue behaves in a linear fashion
Question 7: Golden Fixtures Company sells a single product for $52 per unit. If variable expenses are 70% of sales and fixed expenses total $16,000, the breakeven point in sales dollars will be
a. $53,333.
b. $36,400.
c. $22,857.
d. $1,025.
Question 8: Hortense Flowers Co. sells a single product for $28 per unit. If unit variable cost is $16 per unit of sales and fixed expenses total $12,000, the breakeven point will be
a. 28,000 units.
b. 21,000 units.
c. 1,000 units.
d. 750 units.
Question 9: Jazzie Jumpers Company produces one product that is sold for $32 per unit. Variable costs are $14 per unit and total fixed costs are $72,000. What is dollar amount of sales revenue needed to achieve a target profit of $90,000?
a. $370,285
b. $288,000
c. $128,000
d. $ 9,000
Question 10: The margin of safety is the excess of
a. actual net operating income over expected net operating income.
b. expected or actual sales over break-even sales.
c. expected or actual sales over expected or actual fixed costs.
d. expected or actual sales over expected or actual variable costs.