10 Questions
What is the weighted-average unit contribution margin if Curl provides a selling price of $200 and a percentage of 62.5%?
$125
How is the break-even point calculated if the fixed expenses are $170,000 and the weighted-average unit contribution margin is $331.25?
Break-even point = Fixed expenses / Weighted-average unit contribution margin
What is the assumption underlying CVP analysis that states the selling price is constant throughout the entire relevant range?
Selling price is constant throughout the entire relevant range.
What is the cost structure of an organization, and what does it comprise of?
The cost structure is the relative proportion of fixed and variable costs.
What is operating leverage, and how does it relate to the cost structure of an organization?
Operating leverage is the extent to which an organization uses fixed costs in its cost structure.
In a multiproduct company, what assumption is made about the sales mix?
The sales mix is constant.
What is the break-even point in units, if the fixed expenses are $170,000 and the weighted-average unit contribution margin is $331.25?
514 combined unit sales (rounded up)
What is the assumption underlying CVP analysis that states costs are linear over the relevant range?
Costs are linear over the relevant range.
What is the implication of a company having a high proportion of fixed costs in its cost structure?
The company has high operating leverage.
What is the assumption underlying CVP analysis that states inventories do not change?
In manufacturing firms, inventories do not change (units produced = units sold).
Understand the concept of break-even point where revenues and expenses are equal. Learn how to calculate the break-even point using the contribution-margin approach. Test your knowledge with this quiz!
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