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MAS > CVP Analysis > Flashcards

CVP Analysis Flashcards

1
Q

These are production-related costs such as direct materials, direct labor, and factory overhead.

a. Manufacturing
b. Selling
c. Administrative
d. Variable

A

a.

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2
Q

The following are functional costs, except for one:

a. Selling
b. Mixed
c. Administrative
d. Manufacturing

A

b.

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3
Q

________________ is constant in total, while ________________ is constant per unit.

a. Variable, fixed
b. Variable, variable
c. Fixed, variable
d. Fixed, fixed

A

c.

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4
Q

What is the relationship between fixed cost per unit and quantity produced?

a. Direct
b. Parallel
c. No effect
d. Inverse

A

d.

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5
Q

The band of activity within which the identified cost behavior patterns are valid.

a. Relevant range
b. Irrelevant range
c. Breakeven point
d. Margin of safety

A

a.

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6
Q

What kind of relationship does cost and revenue behavior have?

a. Indirect
b. Inverse
c. Linear
d. It’s complicated

A

c.

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7
Q

True or false: If level of activity exceeds the range given in a linear relationship, cost behavior patterns remain unchanged.

A

False.

Level of activity that is outside the range of the linear relationship may have different cost behavior patterns.

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8
Q

Relevant range is only good for a short period of time. What is usually classified as short period of time?

a. 3 months
b. 6 months
c. Depends on professional judgment
d. 1 year

A

d.

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9
Q

Costs which are attributed to the number of goods or services a company produces.

a. Fixed
b. Variable
c. Choices a and c
d. None of the choices

A

b.

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10
Q

Which of the following is an example of a variable cost?

a. Monthly insurance of P15,000
b. Monthly depreciation of factory building
c. Salaries and wages paid to factory personnel, based on number of hours worked
d. Monthly salary of company COO

A

c.

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11
Q

True or false: The more fixed costs a company has, the more revenue a company needs in order to breakeven.

A

True

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12
Q

The graph of total fixed costs resembles:

a. Diagonal line
b. Horizontal line
c. Step graph
d. Vertical graph

A

b.

Remember that total fixed costs are fixed in total. The only thing that changes are movements in unit costs and units produced. For example, let’s assume that total fixed costs are P30,000, per-unit fixed cost is P15 and units produced are 2,000. If management decides to increase per-unit fixed costs by P5 (meaning it now becomes P20 per unit), then units produced will decrease by 1,500. However, total fixed costs will remain the same at P30,000.

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13
Q

When graphed, total variable costs resemble:

a. Diagonal line
b. Step graph
c. Vertical line
d. Horizontal line

A

a.

Remember that total variable costs vary depending on number of units produced. The amount of per-unit variable costs, however, remains constant. For example, let’s assume total variable costs to be P15,000, units produced are 3,000, and unit variable cost is P5. If management decides to decrease production to 2,500 units, then total variable costs will be P12,500. The per-unit variable cost of P5 will remain the same, but the total amount of variable costs will change in a direct manner (if units produced increases, total variable costs will increase and vice-versa).

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14
Q

Assume the following information related to Batang Quiapo Corp. (BQC) for 2023:

Total variable costs = P100,000
Total fixed costs = P150,000
Unit variable cost = P4
Unit fixed costs = P6
Units produced and sold = 25,000

Assume that BQC produced and sold 30,000 units for 2024. How much is BQC’s total fixed costs 2024?

a. P120,000
b. P180,000
c. P150,000
d. P100,000

A

c.

Remember: TOTAL fixed costs remain the same, no matter the movement in number of units produced & sold and per-unit fixed cost.

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15
Q

Assume the following information related to Batang Quiapo Corp. (BQC) for 2023:

Total variable costs = P100,000
Total fixed costs = P150,000
Unit variable cost = P4
Unit fixed costs = P6
Units produced and sold = 25,000

Assume that BQC produced and sold 30,000 units for 2024. How much is BQC’s total variable costs for 2024?

a. P120,000
b. P180,000
c. P150,000
d. P100,000

A

a.

Unit variable costs will remain the same, but total variable costs will change directly with number of units produced. In this case, P4 x 30,000 units produced for 2024 = P120,000.

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16
Q

Assume the following information related to Batang Quiapo Corp. (BQC) for 2023:

Total variable costs = P100,000
Total fixed costs = P150,000
Unit variable cost = P4
Unit fixed costs = P6
Units produced and sold = 25,000

Assume that BQC produced and sold 30,000 units for 2024. How much is BQC’s total variable costs for 2023?

a. P120,000
b. P180,000
c. P150,000
d. P100,000

A

d.

This is INTENTIONAL and pure common sense. I want to test whether you’re really looking at the requirements and facts given.

17
Q

Assume the following information related to Batang Quiapo Corp. (BQC) for 2023:

Total variable costs = P100,000
Total fixed costs = P150,000
Unit variable cost = P4
Unit fixed costs = P6
Units produced and sold = 25,000

Assume that BQC produced and sold 30,000 units for 2024. How much is BQC’s unit variable cost for 2024?

a. P4
b. P6
c. P5
d. P10

A

a.

Unit variable costs will remain CONSTANT/THE SAME. Only the total variable costs will CHANGE.

18
Q

Assume the following information related to Batang Quiapo Corp. (BQC) for 2023:

Total variable costs = P100,000
Total fixed costs = P150,000
Unit variable cost = P4
Unit fixed costs = P6
Units produced and sold = 25,000

Assume that BQC produced and sold 30,000 units for 2024. How much is BQC’s total costs for 2023?

a. P300,000
b. P280,000
c. P270,000
d. P250,000

A

d.

Requirement is for 2023, which is obvious. P100,000 + P150,000 = P250,000

19
Q

Assume the following information related to Batang Quiapo Corp. (BQC) for 2023:

Total variable costs = P100,000
Total fixed costs = P150,000
Unit variable cost = P4
Unit fixed costs = P6
Units produced and sold = 25,000

Assume that BQC produced and sold 30,000 units for 2024. How much is BQC’s total costs for 2024?

a. P300,000
b. P280,000
c. P270,000
d. P250,000

A

c.

Total variable costs (P4 x 30,000) = P120,000
Total fixed costs (never changes) = P150,000
Total costs for 2024 = P270,000

20
Q

This is used to predict the impact on profits of changes in various factors, like prices of products, volume of units produced, per-unit variable costs, fixed costs, and sales mix.

a. BEP analysis
b. CVP analysis
c. Standard costing
d. Budgeting

A

b.

BEP analysis is more on how much units should be sold or how much should be the revenues generated in currency a company must have in order to have total revenues equal total costs (in this case, zero profits: not a winner, but not a loser).

21
Q

This is the point where total revenues equal total costs.

a. Break-even point
b. Breakdown point
c. Breakup point
d. Breaker point

A

a.

22
Q

Find the true statements in relation to the limitations and assumptions of CVP analysis:

I. All costs are classified as product or period.
II. Fixed costs per unit remain constant within the relevant range
III. For companies who produce multiple products, the selling prices, costs, and proportion of units sold will not change.
IV. The behavior of total revenues and total costs will be linear over the relevant range.
V. There is significant change in inventory levels during the period under review.

a. All except V
b. III & IV only
c. All except III & IV
d. I, II, V

A

b.

I. All costs are classified as either VARIABLE or FIXED.
II. Fixed costs remain constant over the relevant range
V. There is NO significant change in inventory levels during the period under review.

23
Q

The following will be affected when a change in selling price will occur. Choose the exception:

a. Total sales
b. Total contribution margin
c. Profit
d. Total variable costs

A

d.

24
Q

The following are affected when there is a change in variable cost. Choose the exception.

a. Total sales
b. Total variable cost
c. Profit
d. Total contribution margin

A

a.

25
Q

Changes in fixed costs will affect:

a. Total cost
b. Contribution margin
c. Profit
d. Choices a and b
e. Choices a and c

A

e.

26
Q

The algebraic approach of computing Break-Even Point is computed as TR = TC where

TR = SPUx; and
TC = VCUx + FC

What does x represent?

a. Sales units (actual)
b. Sales units (breakeven point)
c. Sales units (standard)
d. Sales units (budgeted)

A

b.

27
Q
A

MAS (4 decks)

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