TECH 303

Question 1

CVP Analysis stand for?

Answer 1

Cost-Volume- Profit Analysis

Question 2

Also commonly referred to as BREAK -EVEN analysis

Answer 2

Cost-Volume Profit Analysis

Question 3

It is a way for companies to determine how changes in cost (both variable and fixed) and volume sales affect a company’s profit

Answer 3

Cost-Volume Analysis

Question 4

Assimptions of CVP analysis

Answer 4

• The sales price per unit doesn’t change
• Variable Costs per unit don’t change
• Total fixed Cost are constant
• The company assumes that it has sold all the units it has produced
• Changes in expenses occur because of changes in activity level

Question 5

The main Components of CVP Analysis are:

Answer 5

1. Fixed Costs
2. Variable Costs

Question 6

These are the costs that don:t fluctuate with sales or product changes

Answer 6

Fixed Costs

Question 7

Example of Fixed Cost

Answer 7

Rent
Advertising

Question 8

These are the costs that change as the quantity of products changes.

Answer 8

Variable Costs

Question 9

Example of Variable Costs

Answer 9

Direct Materials
Direct Labor

Question 10

This is the difference between total variable costs and a companys total revenue

Answer 10

Contribution Margin

Question 11

This is the contribution margin expressed as a percentage

Answer 11

Contribution Ratio

Question 12

This is the number of products that business sell during a specific period

Answer 12

Sales volume

Question 13

This is the amount a customer pays for the product

Answer 13

Selling Price

Question 14

This is the number of products that business selll during a specific period

Answer 14

Sales Volume

Question 15

This is when the total costs and revenue are equal, meaning the business is neither making a loss nor a profit (Net Income:0)

Answer 15

Break-Even Point

Question 16

This is when the total costs and revenue are equal, meaning the business is neither making a loss nor a profit (Net Income:0)

Answer 16

Break-Even Point

Question 17

This is the amount a customer pays for the product

Answer 17

Selling Price

Question 18

It is quite common for companies to want to estimate how their out income will change with changes in sales behavior

Answer 18

Changes in Net Income (What- if Analysis)

Question 19

Is the difference between yor gross Revenue and your break-even point

Answer 19

The Margin of Safety

Question 20

The product Selling Price less the Variable costs associated with producing that product

Answer 20

Contributuon Margin

Question 21

It follows the order of revenies minus cost of good sold and gives gross margin, while revenues minus expenses lead to net incom

Answer 21

Regular Income Statement

Question 22

Follows similar concept (Regular IT) but uses different format by separating fixed Cost and Variable Cost

Answer 22

Contribution Margin Income Statement

Question 23

What is the formula of Contribution margin

Answer 23

CM= Selling Price - Variable Cost
CM= Fixed Costs + Net Income

Question 24

Formula ( Contribution Margin Ration)

Answer 24

CM= Contribution Margin/ Total Sales

Question 25

Break-Even Point Formula

Answer 25

Total Contibution Margin= Total Fixed Costs

Question 26

BEP in unit Formula

Answer 26

BEP/unit= Total Fixed Cost/ Contibution Margin/ unit

Question 27

BEPin Sales Formula

Answer 27

BEPin peso= Total Fixed Costs/Contribution Margin Ratio

Question 28

Target Sales in unit Formula

Answer 28

No. of units= (Fixed Cost+ Target Profit)/Contribution Margin/ unit

Question 29

Margin of Safety Formula

Answer 29

Margin of safety= Actual Sales- Break-Even Point in Sales

Question 30

This is the Variable Cost expressed in percentage

Answer 30

Variable Cost Ratio

Question 31

Variable Cost Ration Formula

Answer 31

VCr= Variable Cost/Total Sales

Question 32

First Step to take when CVP Analaysis to help make decision

Answer 32

Identify which costs are Variable and Fixed.

Question 33

CVP Analysis belongs to

Answer 33

1. Managerial Accounting

Question 34

Managerial Accounting Reports are for internal users and bot vound by financial Accounting standards

Answer 34

TRUE

Question 35

Margin where it is safe from loss

Answer 35

Amount between Break-Even Point and the Actual Sales

Question 36

An increase of Contribution Margin is an Increase of Break-Even Point

Answer 36

TRUE

Question 37

Refers to the proportion of the companys total sales for each type of product sold

Answer 37

Sales Mix

Question 38

The intersection of Total cost and total revenue

Answer 38

BEP

Question 39

ASSUMPTIONS OF CVP ANALYSIS

Answer 39

-The Sales Price per unit doesn't change - Variable Costs per unit don't change - Total fixed cost are constant - The company assumes that it has sold all the unit it has produced - Changes in expenses occur because of changes in activity level