Allyssa Tobitt

MBA-A-6815

Prof SB Salter 6815 Quiz 2

1. Which of the following is NOT a key assumption of cost-volume-profit?

A. Costs may be fixed, variable, mixed or step.
B. Production and sales are equal.
C. Changes in total cost are strictly due to changes in activity.
D. Total costs and revenues can be depicted with a straight line.

2. If production does not equal sales,

A. it must adjust the CVP formulas for that fact if it wishes to use CVP.
B. it cannot use CVP, as an assumption is violated.
C. a CVP analysis will always indicate a breakeven point that cannot be reached.
D. the conclusions it draws from a CVP analysis will not be as sound as they would be if
production equaled sales.

3. Profit is indicated on a cost-volume-profit graph by

A. the profit line.
B. the horizontal difference between the revenue line and the cost line.
C. the vertical difference between the revenue line and the cost line.
D. the horizontal distance from the breakeven point.

4. What component of the profit equation should be set equal to zero to find the breakeven
point?
A. Total sales revenue
B. Total variable costs
C. Total fixed costs
D. Profit

5. The break-even point is

A. the point where zero contribution margin is earned.
B. the point where zero profit is earned.
C. the point where selling price just equals variable cost.
D. equal to sales revenue less fixed costs.

6. The profit equation is

A. Unit price Q - Unit variable costs  Q - Total fixed costs = Profit
B. Unit price  Q - Unit variable costs  Q + Total fixed costs = Profit
C. (Unit price - Unit variable costs - Total fixed costs)  Q = Profit
D. Unit price  Q + Unit variable costs  Q + Total fixed costs = Profit
 Allyssa Tobitt
MBA-A-6815

7. The formula for break-even point in terms of units is

A. Total variable costs/Unit contribution margin
B. Total fixed costs/Contribution margin ratio
C. Total fixed costs/Unit contribution margin
D. Total variable costs/Total fixed costs

8. The formula for break-even point in terms of revenue is

A. Total variable costs/Contribution margin ratio
B. Total fixed costs/Contribution margin ratio
C. Total fixed costs/Unit contribution margin
D. Total variable costs/Total fixed costs
 Allyssa Tobitt
MBA-A-6815

9. Alfred Corp has a selling price of $15, variable costs of $10 per unit, and fixed costs of
$5,000. How many units must be sold to break-even?
A. 5,000
B. 10,000
C. ,500
D. 1,667

This should be $1,000.

Contribution Margin = 5 (unit price, 15 – total variable cost, 10)
Breakeven Point = 1,000 (Fixed Cost, 5,000 / contribution margin, 5)

10. Alfred Corp has a selling price of $25 per unit, variable costs of $20 per unit, and fixed costs
of $25,000. How many units must be sold to break even?
A. 5,000
B. 10,000
C. 2,500
D. 1,667

11. Emille Corp has a selling price of $20 per unit, variable costs of $10 per unit, and fixed costs
of $100,000. How many units must be sold to break even?
A. 5,000
B. 10,000
C. 2,500
D. 1,667

12. Amelia, Inc. has a contribution margin of 40% and fixed costs of $120,000. What is the
break-even point?
A. $48,000
B. $300,000
C. $200,000
D. $72,000

13. Marissa, Inc. has a contribution margin of 40% and fixed costs of $200,000. What is the
break-even point?
A. $80,000
B. $200,000
C. $300,000
D. $500,000
 Allyssa Tobitt
MBA-A-6815

14. Hawley Corp has a selling price of $50 per unit, variable costs of $40 per unit, and fixed
costs of $75,000. How many units must be sold to break-even?
A. 1,500
B. 1,875
C. 7,500
D. 1,667

15. Allain Corp has a selling price of $30, and variable costs of $20 per unit. When 12,000 units
are sold, profits equaled $70,000. How many units must be sold to break-even?
A. 19,000
B. 12,000
C. 14,333
D. 5,000

16. Piazza Corp has sales of $400,000, a contribution margin ratio of 40%, and a profit of
$40,000. If 20,000 units were sold, what is the break-even point in units?
A. 12,000
B. 8,000
C. 20,000
D. 15,000

17. Last month Kallina Company had a $30,000 profit on sales of $250,000. Fixed costs are
$60,000 a month. What sales revenue is needed for Calico to break even?
A. $166,667
B. $90,000
C. $30,000
D. $280,000

18. Last month Karina Company had a $60,000 profit on sales of $300,000. Fixed costs are
$120,000 a month. What sales revenue is needed for Calico to break even?
A. $360,000
B. $420,000
C. $200,000
D. $240,000
 Allyssa Tobitt
MBA-A-6815

19. Alfred Corp has a selling price of $25per unit, variable costs of $20 per unit, and fixed costs
of $25,000. What sales revenue is needed to break-even?
A. $100,000
B. $5,000
C. $125,000
D. $50,000

20. Calloway Corp has a selling price of $15 per unit, and variable costs of $10 per unit. When
12,000 units are sold, profits equaled $35,000. How many units must be sold to break-even?
A. 19,000
B. 12,000
C. 14,333
D. 5,000

21. Hawley Corp has a selling price of $50 per unit, variable costs of $40 per unit, and fixed
costs of $75,000. What sales revenue is needed to break-even?
A. $375,000
B. $93,750
C. $3,750,000
D. $750,000

22. Rollag Corp has a selling price of $30 per unit, and variable costs of $20 per unit. When
12,000 units are sold, profits equaled $55,000. How many units must be sold to break-even?
A. 4,000
B. 12,000
C. 6,500
D. 5,500

23. Last month Calico Company had a $15,000 loss on sales of $150,000. Fixed costs are
$60,000 a month. How much do sales have to increase for Calico to break even?
A. $60,000
B. $75,000
C. $45,000
D. $50,000

24. Last month Kallina Company had a $30,000 profit on sales of $250,000. Fixed costs are
$60,000 a month. How much would sales have to decrease for Calico to break even?
A. $90,000
B. $83,333
C. $166,667
D. $280,000
 Allyssa Tobitt
MBA-A-6815

25. Last month Kallina Company had a $30,000 loss on sales of $250,000. Fixed costs are
$60,000 a month. What sales revenue is needed for Calico to break even?
A. $166,667
B. $500,000
C. $280,000
D. $220,000

26. Plaza Corp has sales of $400,000, a variable cost ratio of 60%, and a profit of $40,000. If
20,000 units were sold, what is the break-even point in units?
A. 8,000
B. 12,000
C. 15,000
D. 20,000

27. Last month Kironina Company had a $60,000 loss on sales of $300,000. Fixed costs are
$120,000 a month. What sales revenue is needed for Calico to break even?
A. $360,000
B. $480,000
C. $600,000
D. $420,000

28. The formula for target units is

A. (Total fixed costs + Target profit)/Contribution margin ratio
B. (Total variable costs + Total fixed costs)/Contribution margin ratio
C. (Total fixed costs + Target profit)/Unit contribution margin
D. (Total variable costs + Total fixed costs)/Unit contribution margin

29. The formula for target sales is

A. (Total fixed costs + Target profit)/Contribution margin ratio
B. (Total variable costs + Total fixed costs)/Contribution margin ratio
C. (Total fixed costs + Target profit)/Unit contribution margin
D. (Total variable costs + Total fixed costs)/Unit contribution margin

30. Perisia, Inc. has fixed costs of $200,000, sales price of $50, and variable cost of $30 per unit.
How many units must be sold to earn profit of $50,000?
A. 2,500
B. 10,000
C. 12,500
D. 20,000
 Allyssa Tobitt
MBA-A-6815

31. Perisia, Inc. has fixed costs of $200,000 and a contribution margin ratio of 40%. How much
sales revenue must be earned for a profit of $50,000?
A. $125,000
B. $500,000
C. $625,000
D. $1,000,000

32. Kongle, Inc. has fixed costs of $400,000, sales price of $40, and variable cost of $30 per unit.
How many units must be sold to earn profit of $80,000?
A. 2,000
B. 10,000
C. 40,000
D. 48,000

33. KOngle, Inc. has fixed costs of $400,000 and a contribution margin ratio of 25%. How much
sales revenue must be earned for a profit of $80,000?
A. $80,000
B. $400,000
C. $1,600,000
D. $1,920,000

34. Marissa, Inc. has a contribution margin of 40% and fixed costs of $220,000. What sales
revenue is needed to attain a $60,000 profit?
A. $88,000
B. $550,000
C. $700,000
D. $466,667

35. Nadine Inc. has a contribution margin ratio of 30% and fixed costs of $90,000. What sales
revenue is needed to generate a $60,000 profit?
A. $45,000
B. $200,000
C. $500,000
D. $214,286

36. Louise Corp has a contribution margin ratio of 35%, fixed costs of $60,000, and a profit of
$45,000. What are total sales?
A. $300,000
B. $105,000
C. $36,750
D. $171,429
 Allyssa Tobitt
MBA-A-6815

37. Nadine Inc. has a variable cost ratio of 70% and fixed costs of $90,000. What sales revenue
is needed to generate a $120,000 profit?
A. $171,429
B. $300,000
C. $500,000
D. $700,000

38. Piazza Corp has sales of $200,000, a contribution margin ratio of 35%, and a target profit of
$40,000. If 10,000 units were sold, what are total variable costs?
A. $200,000
B. $130,000
C. $240,000
D. $160,000

39. Perham Company has sales of $400,000, variable costs of $12 per unit, fixed costs of
$100,000, and a target profit of $60,000. How many units were sold?
A. 10,000
B. 15,000
C. 20,000
D. 25,000

40. Bench Corp has sales of $300,000, a contribution margin ratio of 30%, and a target profit of
$30,000. If 20,000 units were sold, what is the variable cost per unit?
A. $15.00
B. $10.50
C. $4.50
D. $2.00

41. Padua Corp has sales of $400,000, a variable cost ratio of 60%, and a profit of $40,000. If
10,000 units were sold, what is the contribution margin per unit?
A. $40.00
B. $24.00
C. $16.00
D. $12.00

42. Sharona Company has sales of $100,000, variable costs of $4 per unit, fixed costs of
$25,000, and a profit of $15,000. How many units were sold?
A. 25,000
B. 20,000
C. 15,000
D. 10,000
 Allyssa Tobitt
MBA-A-6815

43. Pierre Corp has sales of $200,000, a contribution margin ratio of 35%, and a profit of
$40,000. If 10,000 units were sold, what is the variable cost per unit?
A. $13.00
B. $20.00
C. $7.00
D. $3.00

44. Bates Company has sales of $200,000, variable costs of $8 per unit, fixed costs of $50,000,
and a profit of $30,000. How many units were sold?
A. 10,000
B. 15,000
C. 20,000
D. 25,000

45. Piazza Corp has sales of $400,000, a contribution margin ratio of 30%, and a profit of
$40,000. If 20,000 units were sold, what is the variable cost per unit?
A. $6.00
B. $20.00
C. $14.00
D. $2.00

46. Abilene Corp has a contribution margin ratio of 30%, fixed costs of $45,000, and a profit of
$60,000. What are total sales?
A. $31,500
B. $105,000
C. $150,000
D. $350,000

47. Pearl Company sold 20,000 units, had variable costs of $12 per unit, fixed costs of $100,000,
and profits of $60,000. What is the selling price per unit?
A. $8
B. $17
C. $20
D. $32

48. Last month Norblad Company had a $60,000 profit on sales of $300,000. Fixed costs are
$120,000 a month. How much do sales have to increase for Calico to earn a $100,000 profit?
A. $66,667
B. $83,333
C. $220,000
D. $400,000
 Allyssa Tobitt
MBA-A-6815

49. The margin of safety is the difference between

A. actual sales and budgeted sales.
B. actual sales and break-even sales.
C. target sales and actual sales.
D. target sales and budgeted sales.

50. Froogal, Inc. has actual sales of $350,000 and a margin of safety of $100,000. What is
Froogal's break-even point in sales?
A. $100,000
B. $250,000
C. $350,000
D. $450,000