Accounting Chp 3- Cost-Volume-Profit
Analysis and Pricing Decisions Exams
2025
Which of the following is an additional Cost-Value-Profit (CVP)
assumption in a multiproduct environment?
A
All costs are easily separated into fixed and variable categories.
B
Total fixed expenses and variable costs per unit remain constant across
all sales levels.
C
The sales mix can be determined and will remain constant.
D
Inventory is sold during the same period it is purchased or produced. -
CORRECT ANSWERS ✔✔C
The sales mix can be determined and will remain constant.
Break Even Point - CORRECT ANSWERS ✔✔sales revenue is exactly
equal to total expenses, and there is no profit or loss. There is only one
level of sales at which this relationship is true. Thus, the breakeven
point can be calculated using the profit equation.
Profit Equation - CORRECT ANSWERS ✔✔Sales revenue−Variable
expenses−Fixed expenses=Operating income
,Accounting Chp 3- Cost-Volume-Profit
Analysis and Pricing Decisions Exams
2025
SPx−VCx−FC=$0
Breakeven Point In Units= - CORRECT ANSWERS ✔✔total fixed
costs / contribution margin per unit
Breakeven Point in Sales Dollars - CORRECT ANSWERS ✔✔Total
Fixed Expenses / Contribution Margin Ratio
Contribution Margin Ratio - CORRECT ANSWERS ✔✔Contribution
Margin / Sales = %
Breakeven Graph - CORRECT ANSWERS ✔✔illustrates this
relationship between sales revenue and expenses, allowing managers
to view a range of results at a single glance.
when expenses go down, operating profit goes up.
margin of safety - CORRECT ANSWERS ✔✔is the difference
between current sales and breakeven sales. It represents the volume of
sales that can be lost before the company begins to lose money and can
be measured in units or sales dollars.
, Accounting Chp 3- Cost-Volume-Profit
Analysis and Pricing Decisions Exams
2025
Net Operating Income Formula - CORRECT ANSWERS
✔✔contribution margin - fixed expenses
margin of safety formula - CORRECT ANSWERS ✔✔current sales -
break even sales
Example:
(1) Margin of safety in units=51,975 jerseys−42,000 jerseys=9,975
jerseys
(2) Margin of safety in sales dollars=$1,039,500−$840,000=$199,500
Required sales volume units (pretax income) - CORRECT ANSWERS
✔✔(FC+Target Income) /(CM in units)
Required sales dollars (pretax income) - CORRECT ANSWERS
✔✔(FC-Target Income) /CM Ratio
Net income- Required sales volume (units) formular - CORRECT
ANSWERS ✔✔FC+(X)/ cm per unit
Analysis and Pricing Decisions Exams
2025
Which of the following is an additional Cost-Value-Profit (CVP)
assumption in a multiproduct environment?
A
All costs are easily separated into fixed and variable categories.
B
Total fixed expenses and variable costs per unit remain constant across
all sales levels.
C
The sales mix can be determined and will remain constant.
D
Inventory is sold during the same period it is purchased or produced. -
CORRECT ANSWERS ✔✔C
The sales mix can be determined and will remain constant.
Break Even Point - CORRECT ANSWERS ✔✔sales revenue is exactly
equal to total expenses, and there is no profit or loss. There is only one
level of sales at which this relationship is true. Thus, the breakeven
point can be calculated using the profit equation.
Profit Equation - CORRECT ANSWERS ✔✔Sales revenue−Variable
expenses−Fixed expenses=Operating income
,Accounting Chp 3- Cost-Volume-Profit
Analysis and Pricing Decisions Exams
2025
SPx−VCx−FC=$0
Breakeven Point In Units= - CORRECT ANSWERS ✔✔total fixed
costs / contribution margin per unit
Breakeven Point in Sales Dollars - CORRECT ANSWERS ✔✔Total
Fixed Expenses / Contribution Margin Ratio
Contribution Margin Ratio - CORRECT ANSWERS ✔✔Contribution
Margin / Sales = %
Breakeven Graph - CORRECT ANSWERS ✔✔illustrates this
relationship between sales revenue and expenses, allowing managers
to view a range of results at a single glance.
when expenses go down, operating profit goes up.
margin of safety - CORRECT ANSWERS ✔✔is the difference
between current sales and breakeven sales. It represents the volume of
sales that can be lost before the company begins to lose money and can
be measured in units or sales dollars.
, Accounting Chp 3- Cost-Volume-Profit
Analysis and Pricing Decisions Exams
2025
Net Operating Income Formula - CORRECT ANSWERS
✔✔contribution margin - fixed expenses
margin of safety formula - CORRECT ANSWERS ✔✔current sales -
break even sales
Example:
(1) Margin of safety in units=51,975 jerseys−42,000 jerseys=9,975
jerseys
(2) Margin of safety in sales dollars=$1,039,500−$840,000=$199,500
Required sales volume units (pretax income) - CORRECT ANSWERS
✔✔(FC+Target Income) /(CM in units)
Required sales dollars (pretax income) - CORRECT ANSWERS
✔✔(FC-Target Income) /CM Ratio
Net income- Required sales volume (units) formular - CORRECT
ANSWERS ✔✔FC+(X)/ cm per unit
