CPA C02 Unit 1 Quiz: Calculating Break-Even Points & Contribution Margin| Questions and Answers|2025
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Unit 1 Quiz - Results
Attempt 1 of Unlimited
Written Jul 30, 2024 10:46 PM - Jul 31, 2024 12:59 AM
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n1
Company XYZ sells three products: rocks, paper, and scissors. The rocks’ contribution
margin (CM) per unit is highest and the scissors’ CM per unit is lowest.
Which one of the following events will increase the company’s overall break-even point?
Question options:
a) A decrease in the cost of direct materials used in all three products
b) Increasing scissors' selling price
c) An increase in the cost of direct materials used in all three products
d) An increase in the demand for rocks
Hide question 1 feedback
Option c) is correct. As the cost of direct materials increases, the CM per unit will decrease, causing the
n2
A company has provided the following data:
Sales 2,000 units
Sales price $50/unit
Variable cost $30/unit
Fixed cost $25,000
If the variable cost per unit is decreased by 10%, the total fixed cost is increased by 20%,
and all other factors remain the same, which one of the following will be the effect on
operating income?
Question options:
a) $5,000 decrease
b) $1,000 decrease
c) $1,000 increase
d) $6,000 increase
Hide question 2 feedback
, Option c) is correct. Change in operating income = savings in variable cost – increase in fixed cost = ($3
($25,000 × 20%) = $6,000 – $5,000 = $1,000 increase in operating income.
n3
UCB has the following financial results for the month of June:
Sales $3,120,000
Variable costs 1,920,000
Contribution margin (CM) 1,200,000
Fixed costs 1,380,000
Profit/loss $(180,000)
A total of 200,000 units were produced and sold during the month of June.
In order to break even, which one of the following is the number of units that should be
produced and sold?
Question options:
a) 143,750 units
b) 200,000 units
c) 230,000 units
d) 3,588,000 units
Hide question 3 feedback
Option c) is correct. The CM per unit is $1,200,,000 = $6. Break-even quantity = fixed cost / CM
230,000 units.
n4
James Co. requires 22,223 units to be sold to break even. The sales price per unit is $10
and variable costs per unit are $5.50.
How much are the total fixed costs for this company?
Question options:
a) $100,004
b) $111,115
c) $122,227
d) $222,230
Hide question 4 feedback
, Option a) is correct. At the break-even point, the expected profit is zero: 22,223 × ($10 – $5.50) – fixed c
costs = 22,223 × ($10 – $5.50) = $100,004.
n5
Which one of the following represents the contribution margin (CM) ratio?
Question options:
a) Revenues equal to costs
b) The CM converted to a percentage by dividing the CM dollar value by the variable costs
c) Fixed costs less target profit
d) The CM converted to a percentage by dividing the CM dollar value by the sales dollar value
Hide question 5 feedback
Option d) is correct. The CM ratio is the CM converted to a percentage by dividing the CM dollar value by
n6
JCJ Co. produces alarm system keypads. The sales price of each unit is $12.50, and the
variable costs per unit are $10. The total fixed costs are $100,000.
Which one of the following represents the number of units JCJ needs to sell in order to earn
a profit of $150,000?
Question options:
a) 20,000
b) 25,000
c) 40,000
d) 100,000
Hide question 6 feedback
Option d) is correct. It divides total fixed costs plus desired profit by the contribution margin per unit. ($
– $10.00) = 100,000 units.
n7
Ringo Corp. has a line of edible straws with the following cost breakdown:
· Fixed costs of $88,000
· Break-even of 27,000 units
· Variable costs of $20,000
Update|100% Correct
Unit 1 Quiz - Results
Attempt 1 of Unlimited
Written Jul 30, 2024 10:46 PM - Jul 31, 2024 12:59 AM
Your quiz has been submitted successfully.
n1
Company XYZ sells three products: rocks, paper, and scissors. The rocks’ contribution
margin (CM) per unit is highest and the scissors’ CM per unit is lowest.
Which one of the following events will increase the company’s overall break-even point?
Question options:
a) A decrease in the cost of direct materials used in all three products
b) Increasing scissors' selling price
c) An increase in the cost of direct materials used in all three products
d) An increase in the demand for rocks
Hide question 1 feedback
Option c) is correct. As the cost of direct materials increases, the CM per unit will decrease, causing the
n2
A company has provided the following data:
Sales 2,000 units
Sales price $50/unit
Variable cost $30/unit
Fixed cost $25,000
If the variable cost per unit is decreased by 10%, the total fixed cost is increased by 20%,
and all other factors remain the same, which one of the following will be the effect on
operating income?
Question options:
a) $5,000 decrease
b) $1,000 decrease
c) $1,000 increase
d) $6,000 increase
Hide question 2 feedback
, Option c) is correct. Change in operating income = savings in variable cost – increase in fixed cost = ($3
($25,000 × 20%) = $6,000 – $5,000 = $1,000 increase in operating income.
n3
UCB has the following financial results for the month of June:
Sales $3,120,000
Variable costs 1,920,000
Contribution margin (CM) 1,200,000
Fixed costs 1,380,000
Profit/loss $(180,000)
A total of 200,000 units were produced and sold during the month of June.
In order to break even, which one of the following is the number of units that should be
produced and sold?
Question options:
a) 143,750 units
b) 200,000 units
c) 230,000 units
d) 3,588,000 units
Hide question 3 feedback
Option c) is correct. The CM per unit is $1,200,,000 = $6. Break-even quantity = fixed cost / CM
230,000 units.
n4
James Co. requires 22,223 units to be sold to break even. The sales price per unit is $10
and variable costs per unit are $5.50.
How much are the total fixed costs for this company?
Question options:
a) $100,004
b) $111,115
c) $122,227
d) $222,230
Hide question 4 feedback
, Option a) is correct. At the break-even point, the expected profit is zero: 22,223 × ($10 – $5.50) – fixed c
costs = 22,223 × ($10 – $5.50) = $100,004.
n5
Which one of the following represents the contribution margin (CM) ratio?
Question options:
a) Revenues equal to costs
b) The CM converted to a percentage by dividing the CM dollar value by the variable costs
c) Fixed costs less target profit
d) The CM converted to a percentage by dividing the CM dollar value by the sales dollar value
Hide question 5 feedback
Option d) is correct. The CM ratio is the CM converted to a percentage by dividing the CM dollar value by
n6
JCJ Co. produces alarm system keypads. The sales price of each unit is $12.50, and the
variable costs per unit are $10. The total fixed costs are $100,000.
Which one of the following represents the number of units JCJ needs to sell in order to earn
a profit of $150,000?
Question options:
a) 20,000
b) 25,000
c) 40,000
d) 100,000
Hide question 6 feedback
Option d) is correct. It divides total fixed costs plus desired profit by the contribution margin per unit. ($
– $10.00) = 100,000 units.
n7
Ringo Corp. has a line of edible straws with the following cost breakdown:
· Fixed costs of $88,000
· Break-even of 27,000 units
· Variable costs of $20,000
