1)

The CVP income statement classifies costs as variable or fixed and computes a contribution margin.

True or False

2)

In CVP analysis, cost includes manufacturing costs but not selling and administrative expenses.

True or False

3)

The cost-volume-profit analysis approach provides a method to assess how many units and or sales dollars we need to achieve to make a desired profit

True or False

4)

If a management accountant provides costs that include significant excess capacity this is helpful to management in their pricing and profitability analysis

True or False

5)

TSox’s are planning its upcoming year. It anticipates selling 50,000 t-shirts, with a price of $20 each. The variable cost per t-shirt is $10. The fixed costs
to run the operation are $300,000 per year.

How much profit (ignore taxes) will ABC make if it achieves the projections for the upcoming year?

A 150,000 B 200,000 C 250,000 D 0

6)

TSox’s are planning its upcoming year. It anticipates selling 50,000 t-shirts, with a price of $20 each. The variable cost per t-shirt is $10. The fixed costs
to run the operation are $300,000 per year.

What is the break even point in units?

A 15.000 B 20.000 C 30,000 D 50,000

6)

TSox’s are planning its upcoming year. It anticipates selling t-shirts, with a price of $20 each. The variable cost per t-shirt is $10. The fixed costs to run
the operation are $300,000 per year.

If the desired profit (ignoring taxes) is $400,000 how many t-shirts will they need to sell?

A 50,000 B 70,000 C 45,000 D 80,000

7)

TSox’s are planning its upcoming year. It anticipates selling 50,000 t-shirts, with a price of $20 each. The variable cost per t-shirt is $10.

If prices drop by 20% and fixed cost increase as noted what is the new break even point?

The fixed costs have now increased to $420,000 per year.

A 50,000 B 60,000 C 30,000 D 70,000