Cost Volume Profit Analysis MCQs (11-20)

11. Fixed cost per unit increases when?

(a) Production volume decreases

(b) Production volume increases

(c) Variable cost per unit decreases

(d) None of the above

Correct! Wrong!

12. Contribution margin is also known as____________?

(a) Marginal income

(b) Gross profit

(c) Net income

(d) None of the above

Correct! Wrong!

13. Contribution margin is the difference between sales and____________?

(a) Variable cost

(b) Fixed cost

(c) Profit

(d) Revenue

Correct! Wrong!

14. An increase in variable costs?

(a) Increases P/V ratio

(b) Reduces the contribution margin

(c) Increase new profit

(d) None of above

Correct! Wrong!

15. Those cost that have both fixed and variable element are called________________?

(a) Variable cost

(b) Total fixed cost

(c) Semi variable cost

(d) Prime cost

Correct! Wrong!

16. Following are the uses of CVP analysis except?

(a) Estimating future profits

(b) Deciding on selling price for a product

(c) Analyzing margin of safety in budget

(d) Analyze cash flows

Correct! Wrong!

17. Which of the following costs would decrease if production levels were increase within the relevant range?

(a) Total fixed costs

(b) Variable costs per unit

(c) Total variable costs

(d) Fixed costs per unit

Correct! Wrong!

18. The indicator that results in total revenues being equal to total cost is called the?

(a) Break-even point

(b) Marginal cost

(c) Profit mix

(d) Marginal volume

Correct! Wrong!

19. An example of a semi variable cost would be?

(a) The costs of insuring assets

(b) Electricity costs

(c) The salaries of supervisors in a department

(d) The costs of material to be used for production

Correct! Wrong!

20. Which of the following statements hold true for safety stock?

(a) The higher the profit margin per unit, the lower the safety stock necessary

(b) The lower the opportunity cost of the funds invested in inventory, the smaller the safety stock needed

(c) The greater the risk of running out of stock, the larger the safety stock needed

(d) The greater the uncertainty associated with forecasted demand, the lower the level of safety stock needed

Correct! Wrong!

Cost Volume Profit Analysis MCQs (11-20)

11. Fixed cost per unit increases when?

12. Contribution margin is also known as____________?

13. Contribution margin is the difference between sales and____________?

14. An increase in variable costs?

15. Those cost that have both fixed and variable element are called________________?

16. Following are the uses of CVP analysis except?

17. Which of the following costs would decrease if production levels were increase within the relevant range?

18. The indicator that results in total revenues being equal to total cost is called the?

19. An example of a semi variable cost would be?

20. Which of the following statements hold true for safety stock?

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