3 Cost-Volume-Profit Analysis Online Quiz Questions

True or false: Basic CVP analysis commonly assumes that the number of units produced equals the number of units sold.

A product sells for $\$72$ per unit and has a variable cost of $\$45$ per unit. What is its contribution margin per unit?

A product sells for $\$80$ per unit and has a variable cost of $\$50$ per unit. What is its contribution-margin ratio? Enter the value in percentage points.

A company has fixed costs of $\$52{,}500$ and a contribution margin of $\$21$ per unit. How many units must it sell to break even?

True or false: CVP analysis by itself establishes that customers will maintain the same sales volume after a company raises its selling price.

What is the term for a cost structure in which relatively high fixed costs can cause income to change sharply as sales change?

A company increases fixed costs while keeping selling price, variable cost per unit, and sales volume unchanged. Assume contribution margin per unit is positive. Which statements correctly describe the effects? Select all that apply.

A company wants an after-tax profit of $\$18{,}000$, and its tax rate is $25\%$. What pretax operating-income target should it use in the target-profit formulas?

Which are common assumptions of CVP analysis? Select all that apply.

A company is considering a price cut that would lower contribution margin per unit. Which conclusion best reflects how CVP analysis should inform the decision?

A company has fixed costs of $\$60{,}000$, a target operating income of $\$30{,}000$, and a contribution margin of $\$18$ per unit. How many units must it sell to reach its target? Enter a whole number of units.

A company sells Product X, with a contribution margin of $\$12$ per unit, and Product Y, with a contribution margin of $\$30$ per unit. Its expected sales mix is three X units for every two Y units, and fixed costs are $\$192{,}000$. Calculate the break-even number of composite bundles and the number of units of each product at break-even. Then explain how a shift toward Product X would affect the break-even analysis.

True or false: A larger margin of safety generally means expected sales can fall further before the company reaches break-even.

A product has a contribution-margin ratio of 0.35. What does this ratio mean?

A company sells a product for $\$64$ per unit, has variable costs of $\$42$ per unit, and incurs fixed costs of $\$30{,}000$. What is its operating income if it sells $1{,}800$ units?

Fixed costs are $\$48{,}000$, and contribution margin is $\$18$ per unit. What is the minimum whole number of units the company must sell to break even?

A company has fixed costs of $\$48{,}000$, a contribution-margin ratio of $0.40$, and a target operating income of $\$32{,}000$. What sales revenue is needed to reach the target?

A product sells for $\$50$ per unit and has fixed costs of $\$40{,}000$. If its variable cost rises to $\$33$ per unit, what is the minimum whole-unit break-even volume?