CVP Analysis
CVP Analysis
CVP Analysis
1
Prepared by Irfan Ullah
2
Prepared by Irfan Ullah
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
3
Prepared by Irfan Ullah
42.
43.
44.
45.
46.
47.
48.
b. 85,000 units
c. 30,000 units
d. 34,000 units
e. None of the above
Target operating income is $450,000 and fixed costs
are $60,000. The sales price per unit is $15, with a
contribution margin of 40%. What is the sales
volume in dollars required to achieve the target
operating income?
a. $1,400,000
b. $750,000
c. $510,000
d. $474,000
e. $1,275,000
The contribution margin ratio is 40%. Operating
income is $320,000. What is the margin of safety?
a. $800,000
b. $128,000
c. $672,000
d. Cannot be computed from information provided
Product A sells for $24 and has a contribution margin
ratio of 25%. Sales are expected to decline by
10,000 units over the next accounting period. What
will be the loss in operating income?
a. $240,000
b. $250,000
c. $25,000
d. $60,000
e. $75,000
Fixed costs of $50,000 are expected to increase 20%.
The contribution margin per unit of $6 on a sales
price of $18 is expected to decrease by 25%. With a
projected operating income of $300,000, what must
be the projected sales?
a. $1,081,081
b. $1,400,000
c. $1,440,000
d. $720,000
e. $1,240,000
The current sales price is $80 per unit. Variable costs
are expected to increase from $65.00 to $67.50 per
unit. Fixed costs of $300,000 will not change. How
many additional sales units are required in order to
maintain an operating income of $360,000?
a. 8,000
b. 8,800
c. 10,800
d. 12,000
e. 2,800
Which of the following is not an assumption
underlying cost-volume-profit analysis?
a. Sales price per unit is assumed to be constant
b. Fixed costs are assumed to remain constant at all
levels of sales within a relevant range of activity
c. Variable costs are assumed to remain constant
as a percentage of sales revenue
d. If more than one product is sold, the proportion
of the various products sold is assumed to
remain constant
e. All the above are true
The sales volume in units can be determined by
dividing a denominator into the total of fixed costs
plus the target operating income. What is the
denominator?
a. Unit contribution margin
b. Margin of safety
c. Contribution margin ratio
d. Unit sales price
Answers:
s.n
o
s.no
26
27
28
29
30
31
32
33
34
10
35
11
36
12
37
13
38
14
39
15
40
16
41
17
42
18
43
19
44
20
45
21
46
22
47
4
Prepared by Irfan Ullah
23
48
24
49
25
50