Question

1. Which of the following is NOT an assumption ofCost-Volume-Profit analysis?

A. Inventory levels will change as production levels vary.

B. Managers can classify each cost as either variable or fixed,and mixed costs can be broken down into their variable or fixedcomponent.

C. Revenues are linear throughout the relevant range ofvolume.

D. A change in volume is the only factor that affects costs.

2. If the sales price is $20 per unit, the variable cost is $12per unit, total fixed costs is $12,000, and 15,000 units areproduced, the contribution margin per unit is:

A. $20.

B. $12.

C. $9.

D. $8.

3. If the sales price is $60 per unit, the variable cost is $10per unit, total fixed costs is $60,000, and 12,000 units areproduced, the breakeven in units is:

A. 1,200.

B. 1,000.

C. 240.

D. 200.

4. If the sales price is $150 per unit, the variable cost is $90per unit, and total fixed costs is $24,000, the contribution marginratio is:

A. 80%.

B. 60%.

C. 40%.

D. 20%.

5. If the sales price is $150 per unit, the variable cost is $90per unit, and total fixed costs is $24,000, the breakeven in salesdollars is:

A. $15,000.

B. $24,000.

C. $36,000.

D. $60,000.

6. If the sales price is $60 per unit, the variable cost is $36per unit, total fixed costs is $50,000, how many units need to besold if the desired profit is $100,000?

A. 1,000 units

B. 2,500 units

C. 4,100 units

D. 6,250 units

10. Leverage Corporation sells two products: Regular andSupreme. Leverage sells three Regulars for every two Supremes. TheRegular sells for $20 each with variable costs of $11 each, whereasthe Supreme sells for $25 each with variable costs of $15 each. Iffixed costs are $21,000, what is the breakeven point in units?

A. 1,167 units of each

B. 1,050 units of each

C. 1,340 units of Regular and 894 units of Supreme

D. 894 units of Regular and 1,340 units of Supreme