Deck 15: Analyzing Cost-Volume-Profit Cvp Relationships and Marginal Contribution Break-Even MCB

Question 1

Determine the number of covers required to break even given the following information: Fixed costs, $300,000; CM%, 40%; check average, $20.00.

A) $37,500
B) $39,862
C) $75,000
D) $35,500

Answer 1

A

Question 2

If the variable cost percentage in an operation is 69%, then the contribution margin percentage must be 31%.

Answer 2

True

Question 3

The results achieved through the least squares approach can be taken at face value.

Answer 3

False

Question 4

Determine the number of covers required to break-even given the following information: Fixed costs, $300,000; CM%, 40%; check average, $25.00.

A) 37,500
B) 39,862
C) 35,500
D) 30,000

Question 5

Which of the following accounting methods excludes costs and revenues that do not change within the relevant range of operating alternatives?

A) accrual accounting
B) full-cost accounting
C) cash-flow accounting
D) differential analysis

Question 6

Contribution margin percentage equals:

A) fixed costs / variable costs
B) 1 - variable cost percentage
C) sales / expenses
D) none of these answers is correct

Question 7

It is not desirable to use full-cost accounting in deciding when to reopen a restaurant in a hotel situation.

Question 8

How much additional revenue must be generated to justify an advertisement costing $500, given a variable cost percentage of 55%.

A) more than $2,000
B) more than $1,000
C) more than $1,111
D) more than $1,222

Question 9

Determine the break-even point given the following information: Fixed costs, $300,000; CM%, 40%; and in addition the owner wants to make a profit margin of 6%. What is the sales volume required?

A) $882,353
B) $856,853
C) $652,174
D) $783,762

Question 10

Given the following information, determine the break-even selling price: Fixed costs, $10,000; number of covers 1,000; variable cost, $7.00 per cover.

A) $20
B) $17
C) $15
D) $18

Question 11

All cost categories may be properly designated as fixed or variable.

Question 12

True variable costs will retain the same cost percentage regardless of fluctuations in business.

Question 13

Absorption costing is generally used for external financial reports. It treats all costs as product costs regardless of whether they are variable or fixed.

Question 14

If the fixed costs of an operation are $7,000, and the contribution margin is 35%, then the level of sales required to break even is $22,000.

Question 15

Fixed costs are fixed in direct proportion to sales.

Question 16

Break-even analysis does not factor in:

A) profit for the owner
B) all labor costs
C) cash flows
D) all answers are correct

Question 17

Marginal costing is defined as the amount of output, at any given volume, at which aggregate costs are changed if the volume of output is increased or decreased by one unit.

Question 18

Sunk cost is a cost that has already been incurred and cannot be changed by any decision made now or in the future. Because sunk costs cannot be changed by any decision, they are not differential costs. Therefore, sunk costs should not be ignored when making a decision.

Question 19

The amount of output, at any given volume, at which the aggregate costs are changed if the volume of output is increased or decreased by one unit:

A) marginal costing
B) regression analysis
C) variable costs
D) fixed costs

Question 20

Determine the break-even point given the following information: Fixed costs, $400,000; Variable cost percentage, 70%.

A) $1,000,000
B) $571, 428.57
C) $680,000
D) $1,333,333.33

Question 21

If the variable cost percentage in an operation is 69%, what is the contribution margin percentage?

Question 22

List examples of costs typically classified as fixed or variable. Do they always behave according to those labels? Why or why not?

Question 23

If fixed costs are $4,000, desired profit is $5,000, check average is $10, and the estimated number covers is 1500, what is the variable cost percentage that must be maintained to reach this objective?

Question 24

If rather than 6% profit, a fixed profit of at least $3,000 is required to justify opening, what is the dollar volume required to meet this objective?

Question 25

If a company bank pays 5% interest, then a deposit of $1,000 today will be worth $1,050 one year from now. What is this called?

Question 26

Define fixed, variable, and semivariable costs.

Question 27

What is meant by the full-cost trap?

Question 28

What is marginal costing?

Question 29

The process of finding the present value of a future cash flow is called what?

Question 30

Define differential analysis.