1) The CVP income statement classifies costs as variable or fixed and computes a
ID: 2371729 • Letter: 1
Question
1)
The CVP income statement classifies costs as variable or fixed and computes a contribution margin.
True or False
2)
In CVP analysis, cost includes manufacturing costs but not selling and administrative expenses.
True or False
3)
The cost-volume-profit analysis approach provides a method to assess how many units and or sales dollars we need to achieve to make a desired profit
True or False
4)
If a management accountant provides costs that include significant excess capacity this is helpful to management in their pricing and profitability analysis
True or False
5)
TSox's are planning its upcoming year. It anticipates selling 50,000 t-shirts, with a price of $20 each. The variable cost per t-shirt is $10. The fixed costs to run the operation are $300,000 per year.
How much profit (ignore taxes) will ABC make if it achieves the projections for the upcoming year?
A 150,000 B 200,000 C 250,000 D 0
6)
TSox's are planning its upcoming year. It anticipates selling 50,000 t-shirts, with a price of $20 each. The variable cost per t-shirt is $10. The fixed costs to run the operation are $300,000 per year.
What is the break even point in units?
A 15.000 B 20.000 C 30,000 D 50,000
6)
TSox's are planning its upcoming year. It anticipates selling t-shirts, with a price of $20 each. The variable cost per t-shirt is $10. The fixed costs to run the operation are $300,000 per year.
If the desired profit (ignoring taxes) is $400,000 how many t-shirts will they need to sell?
A 50,000 B 70,000 C 45,000 D 80,000
Explanation / Answer
(1)true
(2)false
(3) true
(4)false
(5)50,000*20-50000*10-300000 =200000
(6)Q*20-Q*10-300000=400000
Q=70000
(7) 20 % drop means price is 16
16*Q-10Q =420000 for break even
hence Q =70000
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