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Exam 18: Cost Volume Profit Analysis

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Question 51

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A firm makes and sells three standard products in a specific product mix.All three products are made using the same production facilities.The following budgeted data for the coming year is available.Total annual fixed costs $348 000 Tax rate 40% What sales revenue would be required for each of the three products to earn a profit of $139 200 after tax?

A) $400 000;$600 000;$480 000
B) $296 000;$740 000;$444 000
C) $200 000;$300 000;$240 000
D) $800 000;$1 200 000;$960 000

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Question 52

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For a firm that would break even at $200 000 sales and earn a profit of $30 000 at sales of $250 000,which of the following statements is always true?

A) Fixed costs are $80 000.
B) The selling price is $2 per unit.
C) Profit at sales of $300 000 would be $80 000.
D) The contribution margin is 60 per cent of sales.

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Question 53

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The firm's fixed costs are $60 000,variable cost per unit is $15 and selling price per unit is $20.The contribution margin per unit is:

Under activity-based costing systems,break-even point in units treats which costs as included in the numerator? i.Batch costs ii.Product costs iii.Faculty level costs

Econ Pty Ltd produced and sold 45 000 units of a single product last year.Data concerning the year's profit and loss statement is as follows: Assuming all cost relationships will remain constant for the coming year,how many units must be sold for the company to earn an after-tax profit of $180 000 if the income tax rate is 40 per cent?

Maxie Pty Ltd makes and sells two types of shoes,Plain and Fancy.Product data is as follows: Sixty per cent of the sales in units are Plain and annual fixed expenses are $45 000 and the sales mix remains constant.Assume an income tax rate of 20 per cent.The break-even point for this data is 5000 units in total.How will the calculation of the break-even point change (if at all) if the relative percentages of the products in the mix change from 60 per cent Plain shoes to 40 per cent Fancy shoes?

'Goal seek' analysis provides for which of the following? i.An output for a given set of inputs ii.Required inputs for a given output iii.A range of outputs for a range of inputs

Which of the following are advantages of an activity-based costing approach to cost volume profit (CVP) analysis as compared to a CVP analysis based on traditional product costing?

'What-if' analysis allows financial models to be manipulated in terms of changes to assumptions and data,to determine the changes in outputs.

Which of the following will increase a company's break-even point?

Would you expect the following to be high or low in an automated firm: (1) level of fixed costs, (2) level of risk and (3) break-even point?

Maxie Pty Ltd makes and sells two types of shoes,Plain and Fancy.Product data is as follows: Sixty per cent of the sales in units are Plain and annual fixed expenses are $45 000 and the sales mix remains constant.Assume an income tax rate of 20 per cent.How many units of Plain must Maxie Pty Ltd sell to earn an after tax profit of $18 000?

Which of the following are assumptions of cost volume profit analysis? i.Sales mix is constant ii.External factors do not change. iii.Fixed costs change with sales volume.iv.Variable costs are constant per unit of sales.

Which of the following statements about the cost-volume-profit graph is false?

The firm's fixed costs are $60 000,variable cost per unit is $15 and selling price per unit is $20.The contribution margin percentage is:

The firm's fixed costs are $60 000,variable cost per unit is $15 and selling price per unit is $20.The break-even point in units is:

A firm makes and sells three standard products in a specific product mix.All three products are made using the same production facilities.The following budgeted data for the coming year is available.Total annual fixed costs $348 000 Tax rate 40% The break-even sales units for products 1,2 and 3 are: