2. Managerial Accounting

Cost-volume-profit — Quiz

Test your understanding of cost-volume-profit with 5 practice questions.

Practice Questions

Question 1

A company produces two products, X and Y. Product X has a contribution margin of $$ \$15 $ per unit, and Product Y has a contribution margin of $ \$25 $ per unit. If the sales mix is $ 70\% $ Product X and $ 30\% $$ Product Y, what is the weighted-average contribution margin per unit?

Question 2

If a company's fixed costs are $$ \$60,000 $, the selling price per unit is $ \$80 $, and the variable cost per unit is $ \$50 $, how many units must be sold to achieve an after-tax target profit of $ \$30,000 $, assuming a tax rate of $ 25\% $$?

Question 3

Which of the following would be the most effective strategy to decrease a company's break-even point in units, assuming all other factors remain constant?

Question 4

A company's current sales are $$ \$200,000 $, and its break-even sales are $ \$150,000 $. If the company's fixed costs are $ \$40,000 $$, what is its margin of safety in dollars and its contribution margin ratio?

Question 5

Which of the following scenarios would result in the highest operating leverage for a company?