MBA 621 EXAM 2 | COMPLETE QUESTIONS
WITH 100% CORRECT SOLUTIONS | 2026
LATEST UPDATED | GRADE A+
Cost-Volume-Profit Analysis - answer-The study of the effects of changes in costs and
volume on a company's profits
Contribution Income Statement - answer-helpful to managers in judging the impact on
profits of changes in selling price, cost, or volume. The emphasis is on cost behavior
Contribution Margin - answer-is the amount remaining from sales revenue after variable
expenses have been deducted
CVP Analysis estimates the profit effect of changes in: - answer-price, variable costs,
fixed costs, and sales volume
CVP Assumptions - answer-1. Price remains the same unless otherwise indicated
2. Changes in volume are within the relevant range for cost behavior
3. Inventory levels do not change
4. Sales mix does not change
break-even point - answer-the point at which the costs of producing a product equal the
revenue made from selling the product
CVP Equation - answer-Profit= (Sales-VE)-FE
Sales mix - answer-The relative proportions in which a company's products are sold.
Sales mix is computed by expressing the sales of each product as a percentage of total
sales.
, incremental analysis - answer-The process of identifying the financial data that change
under alternative courses of action.
Cost Structure and Profit Stability - answer-Cost structure refers to the relative
proportion of fixed and variable costs in an organization. Managers often have some
latitude in determining their organization's cost structure
If the variable cost per unit goes down - answer-contribution margin increases and
Break-even point decreases
The amount of revenue required to earn a targeted profit is equal to - answer-total fixed
cost plus targeted profit divided by CM Ratio
Break-even revenue for a multiproduct firm can - answer-be calculated by dividing total
fixed cost by the overall CM Ratio
In the CVP graph, - answer-both the total revenue curve and the total cost curve appear
The use of fixed costs to extract higher percentage changes in profits as sales activity
changes involves - answer-operating leverage
If the margin of safety is 0, then - answer-the company is precisely breaking even
Which of following equations is used to obtain the total change in profits from a change
in revenues? - answer-Changes in profits= CM Ratio x Changes in Sales
In cost-volume-profit analysis, assuming unit variable cost and total fixed cost remain
the same, any increase in price will mean - answer-lower break-even point
In cost-volume-profit analysis, assuming price and unit variable cost remain the same,
any increase in fixed costs will mean - answer-a higher break-even point
WITH 100% CORRECT SOLUTIONS | 2026
LATEST UPDATED | GRADE A+
Cost-Volume-Profit Analysis - answer-The study of the effects of changes in costs and
volume on a company's profits
Contribution Income Statement - answer-helpful to managers in judging the impact on
profits of changes in selling price, cost, or volume. The emphasis is on cost behavior
Contribution Margin - answer-is the amount remaining from sales revenue after variable
expenses have been deducted
CVP Analysis estimates the profit effect of changes in: - answer-price, variable costs,
fixed costs, and sales volume
CVP Assumptions - answer-1. Price remains the same unless otherwise indicated
2. Changes in volume are within the relevant range for cost behavior
3. Inventory levels do not change
4. Sales mix does not change
break-even point - answer-the point at which the costs of producing a product equal the
revenue made from selling the product
CVP Equation - answer-Profit= (Sales-VE)-FE
Sales mix - answer-The relative proportions in which a company's products are sold.
Sales mix is computed by expressing the sales of each product as a percentage of total
sales.
, incremental analysis - answer-The process of identifying the financial data that change
under alternative courses of action.
Cost Structure and Profit Stability - answer-Cost structure refers to the relative
proportion of fixed and variable costs in an organization. Managers often have some
latitude in determining their organization's cost structure
If the variable cost per unit goes down - answer-contribution margin increases and
Break-even point decreases
The amount of revenue required to earn a targeted profit is equal to - answer-total fixed
cost plus targeted profit divided by CM Ratio
Break-even revenue for a multiproduct firm can - answer-be calculated by dividing total
fixed cost by the overall CM Ratio
In the CVP graph, - answer-both the total revenue curve and the total cost curve appear
The use of fixed costs to extract higher percentage changes in profits as sales activity
changes involves - answer-operating leverage
If the margin of safety is 0, then - answer-the company is precisely breaking even
Which of following equations is used to obtain the total change in profits from a change
in revenues? - answer-Changes in profits= CM Ratio x Changes in Sales
In cost-volume-profit analysis, assuming unit variable cost and total fixed cost remain
the same, any increase in price will mean - answer-lower break-even point
In cost-volume-profit analysis, assuming price and unit variable cost remain the same,
any increase in fixed costs will mean - answer-a higher break-even point
