MA2 Managing Cost & Finances Test
Name
Batch Teacher: Saba Nayyar
Date Teacher Asstt: Shahab
Marks 30
1.
Contribution/unit: $2400,000/200,000=$12
BEP: $1800,000/$12=150,000units
MOS:200,000-150,000=50000units
2. What is the BEP as measured in sales?
A. Fixed cost ÷ c/s ratio
B. Fixed cost x contribution per unit
C. Fixed cost ÷ contribution per unit
D. Fixed x c/s ratio
Fixed cost ÷ c/s ratio
3.
Total fixed cost equal total contribution
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MA2 Managing Cost & Finances Test
4.
What the marked area ABC & 0PD represents?
ABC: variable cost 0PD: sales revenue
5.
A. It is impossible to say without more information
B. It will remain constant
C. It will fall
D. It will rise
6. Selling price per unit = $90; total absorption costs per unit = $70; marginal cost per unit =
$50. Budgeted production = 2,000 units.
What is the profit or loss if 1,500 units are made and sold?
A. $60,000 profit
B. $20,000 loss
C. $40,000 profit
D. $20,000 profit
D Fixed overhead per unit = 70 – 50 = 20.
Budgeted fixed overheads = $20 x 2,000 = $40,000.
If 1,500 units are made, contribution = 1,500 x (90 – 50) = $60,000.
Therefore a profit of $20,000 = $60,000 - $40,000 is expected
7.
Ans: Contribution/unit= f.cost/unit+profit margin/unit
f.cost/unit =96000/12000=$8
profit margin/unit =40-8=32x.25=$8
contribution=8+8=16
8. A product has a C/S ratio of 30%.
If contribution is $75/unit what is the variable cost per unit?
A $225 B $250 C $175 D $150
75/30*70=175
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MA2 Managing Cost & Finances Test
9. A product makes a profit of $50 per unit and a contribution of $80 per unit. Fixed costs are
$220,000.
How many units will need to be made and sold to make a profit of $100,000?
A 2,000 B 4,000 C 6,400 D 4,750
(220000+100000)/80=4000
10. Currently a product has marginal costs of $40 and a selling price of $60. Fixed costs are
$120,000 and 10,000 units are sold. Inflation will increase both marginal costs and fixed
costs by 10%, but competition means that the selling price can be increased by 5% only.
What volume will have to be sold if the same profits are to be earned?
A 6,000 B 11,000 C 10,526 D 11,158
D Current profits = (60 – 40) x 10,000 – 120,000 = $80,000.
If the same profits are to be made, the new contribution must be
$80,000 + $120,000 x 1.10 = $212,000.
New contribution per unit = 60 x 1.05 – 40 x 1.1 = 19
Required volume = 212,000/19 = 11,158
11. Currently a product has marginal costs of $45 and a selling price of $70. 200,000 units are
sold and fixed costs are $3 million.
If the selling price were reduced by $5, by how many units would the volume sold have
to increase to earn the same profit?
A 50,000 B 250,000 C 15,385 D 40,000
Current Fixed cost/unit=$3M/200000=15
Profit/unit=selling price/unit-marginal cost/unit-fixed cost/unit
=70-45-(3m/200000)
=10
After changing the selling price by $5
Target sales=target profit +fixed cost/contribution per unit new contribution/unit:65-45
=$2m+$3m/$20
=250000units
12. Where is profit on the following diagram?
A Line A B Line B C Line C D Line D
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MA2 Managing Cost & Finances Test
13. Where is the margin of safety on the following diagram?
A Line A B Line B C Line C D Line D
14. When is the breakeven point achieved?
A When the level of contribution is equal to total costs
B When the total variable costs are equal to total contributions
C When the total variable costs are equal to total fixed costs
D When the total contribution is equal to total fixed costs
15. Which of the following describes the margin of safety?
A The total sales units up to break-even sales volume
B The difference in units between the expected sales volume and the break-even sales
volume
C The difference between sales value and variable costs
D The difference between total costs and the fixed costs at break-even sales volume
