Cost-Volume-Profit Analysis

Question 1

Shows how changes in cost, prices, and unit volumes impact the profitabilty of a business.

Answer 1

Cost-Volume-Profit Analysis

Question 2

1. Activity Level
2. Price per unit
3. VC per unit
4. TFC
5. Sales Mix

Answer 2

Components of a CVP Analysis

Question 3

The total number of units sold in the measurement period.

Answer 3

Activity Level

Question 4

The avarage price per unit sold.

Answer 4

Price per Unit

Question 5

A cost per unit which changes with the change in the level of production.

Answer 5

Variable Cost per Unit

Question 6

The total fixed cost of the business within the measurement period.

Answer 6

Total Fixed Cost

Question 7

The proportion of sales a single product accounts for in a company’s total sales.

Answer 7

Sales Mix

Question 8

1. Setting the selling price
2. Determining the product mix
3. Determine the level of sales to break even or to reach a certain profit
4. Evaluate the impact of changes in costs

Answer 8

Usage of CVP Analysis

Question 9

The statement which shows the amount of contribution arrived after deducting all the variable costs from the total revenue amount and further fixed expenses are deducted from the contribution to get the net profit/loss of the business entity.

Answer 9

Contribution Margin Income Statement

Question 10

Represents the level of sales (in peso or in units) where net income equals zero.

Answer 10

Break-Even Point

Question 11

1. Equation Method
2. Contribution Approach
3. Graphical Method

Answer 11

Methods for Break-even Point

Question 12

The difference between your breakeven point and the budgeted sales or actual sales that have been made.

Answer 12

Margin of Safety

Question 13

Measures the sensitivity of a company’s operating income with changes in sales.

Answer 13

Degree of Operating Leverage