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BCO101 Business Math Chapter 5 Exit Quiz(1)

The document contains a series of questions and answers related to break-even analysis, including concepts like fixed costs, variable costs, contribution margin, and revenue functions. It covers various scenarios involving different products and their financial metrics to determine break-even points and other related calculations. Each question is accompanied by multiple-choice answers, providing a comprehensive overview of break-even analysis principles.

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Tushar Herma
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5 views

BCO101 Business Math Chapter 5 Exit Quiz(1)

The document contains a series of questions and answers related to break-even analysis, including concepts like fixed costs, variable costs, contribution margin, and revenue functions. It covers various scenarios involving different products and their financial metrics to determine break-even points and other related calculations. Each question is accompanied by multiple-choice answers, providing a comprehensive overview of break-even analysis principles.

Uploaded by

Tushar Herma
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.

On a break-even chart, the fixed cost line is:


a) parallel to the x-axis
b) parallel to the y-axis
c) has a positive slope
d) has a negative slope

2. A break-even chart has been set up to show the current break-even point. Due to an increase
in the price of raw materials, the variable cost per unit has increased. Assume all other costs
and the selling price per unit remains constant. How does this change in the variable cost per
unit affect the break-even chart?
a) The y-intercept of the total cost line increases.
b) The slope of the total cost line increases.
c) The break-even point in units decreases.
d) The y-intercept of the total cost line decreases.

3. Consider the following data related to the production of an electronic gadget.


The sales price is $20 per unit. The variable cost per unit is $15, and fixed costs
are $85,000. Find the break-even point in units.
a) 4250
b) 5667
c) 17,000
d) 15,567

4. J.B. Lincoln, Ltd. produces a DVD player. Fixed costs are $360,000. The variable cost per
unit is $58, and the selling price per unit is $84. Find the contribution rate per unit.
a) 31%
b) 69%
c) 15%
d) 85%

5. Johnson, Ltd. produces a desk lamp. Fixed costs are $280,000. The variable cost per unit is
$17, and the selling price per unit is $35. Find the break-even point in terms of sales dollars.
a) $15,556
b) $544,444
c) $264,452
d) $279,982
6. A plant produces small TV sets. The plant has a capacity of 24,000 units. Fixed costs are
$320,000. The selling price is $128 per unit, and the variable cost is $88 per unit. Find the
break-even point as a percent of plant capacity.
a) 15.15%
b) 10.42%
c) 21.33%
d) 33.33%

7. Total variable costs are $58,750 when total sales revenue is $124,396. Find the break-even
point in sales dollars if fixed costs are $424,000.
a) $803,460
b) $902,128
c) $656,460
d) $362,250

8. Merit, Ltd. manufactures a remote control device. The device sells for $25 per unit. The
current fixed costs are $75,000 and the current variable cost per unit is $10. Find the new
break-even point in units if fixed costs increase by 20%. The other values stay the same.
a) 6000
b) 5000
c) 5770
d) 9000

9. Jackson, Ltd. produces a bicycle pump. The sales price per unit is $18.98. Fixed costs are
$84,000. The variable cost per unit is $11.98. Find the profit on sales of 15,000 units.
a) 7000
b) 56,700
c) 14,000
d) 21,000

10. Blackstone manufactures wrist watches. The selling price for each watch is $260. Fixed
costs are currently $520,000. The current variable cost per unit is $100. Inflationary
pressures have increased fixed costs to $620,000 and the variable cost per unit has increased
by 10%. Find the new break-even point if Blackstone maintains the selling price of $260.
a) 3467
b) 3250
c) 4134
d) 3875

Answers:
1. a 2. b 3. c 4. a 5. b
6. d 7. a 8. a 9. d 10. c
1. Research on a new product indicates that the product can be sold for $30 per unit. Cost
analysis provides the following information.
Fixed cost per period = $5640
Variable cost per unit = $20
Production capacity per period = 800 units

What is the cost function?


a. TC = 5640 + 20X
b. TC = 5640 + 800X
c. TC = 800 + 20X
d. TC = 5640 + 30X

2. What is the revenue function for the product in Question 1?


a. TR = 30X
b. TR = 20X
c. TR = 30X – 20
d. TR = 800X

3. On a break-even chart the number of units


a. Is plotted on the y-axis
b. Is plotted on the x-axis
c. Is where the sales and output cross
d. Decreases over time

4. The variable costs on a new product will be $40 per unit and the fixed costs are estimated
to be $4800. The selling price of the product is to be $75 per unit. What is the
contribution margin?
a. $15
b. $75
c. $60
d. $35

5. What is the contribution rate for the product in Question 1?


a. 20%
b. 1.6%
c. 80%
d. 46.7%

6. What is the break-even point in units for the product in Question 1?


a. 137
b. 120
c. 40
d. 75
7. The variable costs on a new product will be $60 per unit and the fixed costs are estimated
to be $5900. The selling price will be $140 per unit. What is the total revenue if 300
units are sold?
a. $5900
b. $18,000
c. $42,000
d. $4500

8. What is the total variable cost from Question 7?


a. $5900
b. $18,000
c. $42,000
d. $45,000

9. On a break-even chart the total revenue line is drawn by


a. Plotting two or more total revenue points and joining them
b. Plotting a line parallel to the x-axis
c. Plotting a line parallel to the y-axis
d. Plotting two or more total cost points and joining them

10. The contribution rate is


a. The unit selling price as a fraction of the contribution margin
b. The fixed costs as a fraction of the unit contribution margin
c. The fixed costs as a fraction of the contribution rate
d. The contribution margin as a fraction of the unit selling price

Answers:
1. a 2. a 3. b 4. d 5. d
6. a 7. c 8. b 9. a 10. d

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