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Bobadilla Reviewer MAS

Cost-volume-profit (CVP) analysis is most applicable to the management function of controlling. CVP analysis examines the relationships among selling prices, sales volume, costs, and profits, and is termed cost-volume-profit or contribution margin analysis. The contribution margin is defined as the difference between revenue and variable costs. CVP analysis allows management to determine the relative profitability of a product by determining contribution margins and projected profits at various production levels.

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Mae Cruz
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983 views3 pages

Bobadilla Reviewer MAS

Cost-volume-profit (CVP) analysis is most applicable to the management function of controlling. CVP analysis examines the relationships among selling prices, sales volume, costs, and profits, and is termed cost-volume-profit or contribution margin analysis. The contribution margin is defined as the difference between revenue and variable costs. CVP analysis allows management to determine the relative profitability of a product by determining contribution margins and projected profits at various production levels.

Uploaded by

Mae Cruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1. To which function of management is CVP analysis most applicable?

A. Planning C. Directing

B. Organizing D. Controlling Bobadilla

2. The systematic examination of the relationships among selling prices, volume of sales and

production, costs, and profits is termed:

A. contribution margin analysis C. budgetary analysis

B. cost-volume-profit analysis D. gross profit analysis Bobadilla

3. The term contribution margin is best defined as the:

A. difference between fixed costs and variable costs.

B. difference between revenue and fixed costs.

C. amount available to cover fixed costs and profit.

D. amount available to cover variable costs. Bobadilla

4. Cost-volume-profit analysis allows management to determine the relative profitability of a

product by

A. Highlighting potential bottlenecks in the production process.

B. Determining the contribution margin per unit and projected profits at various levels of

production.

C. Assigning costs to a product in a manner that maximizes the contribution margin.

D. Keeping fixed costs to an absolute minimum. Bobadilla

5. Cost-volume-profit analysis cannot be used if which of the following occurs?

A. Costs cannot be properly classified into fixed and variable costs.

B. The per unit variable costs change.

C. The total fixed costs change.

D. Per unit sales prices change. Bobadilla

6. The most useful information derived from a breakeven chart is the

A. Amount of sales revenue needed to cover enterprise variable costs.

B. Amount of sales revenue needed to cover enterprise fixed costs.

C. Relationship among revenues, variable costs, and fixed costs at various levels of activity.

D. Volume or output level at which the enterprise breaks even. Bobadilla


7. Which of the factors is (are) involved in studying cost-volume-profit relationships?

A. Levels of production C. Fixed costs

B. Variable costs D. All of these Bobadilla

8. At the breakeven point, fixed cost is always

A. Less than the contribution margin C. More than the contribution margin

B. Equal to the contribution margin. D. More than the variable cost Bobadilla

9. At the break-even point:

A. net income will increase by the unit contribution margin for each additional item sold

above break-even.

B. the total contribution margin changes from negative to positive

C. fixed costs are greater than contribution margin

D. the contribution margin ratio begins to increase Bobadilla

10. In cost-volume-profit analysis, the greatest profit will be earned at

A. One hundred percent at normal productive capacity.

B. The production point with the lowest marginal cost.

C. The production point at which average total revenue exceeds average marginal cost.

D. The point at which marginal cost and marginal revenue are equal. Bobadilla

11. Which of the following is not an assumption underlying C-V-P analysis?

A. The behavior of total revenue is linear.

B. Unit variable expenses remain unchanged as activity varies.

C. Inventory levels at the beginning and end of the period are the same.

D. The number of units produced exceeds the number of units sold. Bobadilla

12. Which of the following assumptions is inherent to C-V-P analysis?

A. In manufacturing firms, the beginning and ending inventory levels are the same.

B. In a multi-product organization, the sales mix varies over time.

C. The behavior of total revenue is curvilinear.

D. the relevant range is not a consideration. Bobadilla

13. Which of the following assumptions is closely relevant to cost-volume-profit analysis?

A. for multiple product analysis, the sales mix is not important


B. inventory levels remain unchanged

C. total fixed costs and unit variable costs can be identified and remain constant over the

relevant range

D. B and C

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