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6. A company that desires to lower its break-even point should strive to: A. sell more units B. increase fixed costs C. decrease selling prices

6. A company that desires to lower its break-even point should strive to:

A. sell more units

B. increase fixed costs

C. decrease selling prices

D. reduce variable costs

7. If a company desires to increase its safety margin, it should:

A. increase fixed costs

B. stimulate sales volume

C. decrease selling prices

D. decrease the contribution margin

8. If Zarra Sdn Bhd's fixed costs are RM285, 000, the sales price per unit is RM80 per unit, and the variable cost per unit is RM20, calculate the break-even point (in RM).

A. RM380,000

B. RM95,000

C. RM14,250

D. RM4,750

9. Kucai Bhd has fixed costs of RM200, 000 and variable costs are 30% of sales. If the company desires net income of RM10, 000, what would be the required sales?

A. RM700,000

B. RM525,000

C. RM350,000

D. RM300,000

10. CVP analysis DOES NOT consider:

A. level of activity

B. variable cost per unit

C. fixed cost per unit

D. sales mix

11. Which of the following is an example of a cost that varies in total as the number of units produced changes?

A. Salary of a production supervisor

B. Direct materials cost

C. Property taxes on factory buildings

D. Straight-line depreciation on factory equipment

12. Contribution margin is:

A. the excess of sales revenue over variable cost

B. another term for volume in the "cost-volume-profit" analysis

C. profit

D. the same as sales revenue

13. Salim's fixed costs are RM41, 500, the variable cost is RM12 per unit. If Salim sells the product for RM22 per unit, the breakeven point is:

A. 4,150 units

B. 8,300 units

C. 2,075 units

D. 6,225 units

14. The fixed costs of Juara Co. are RM500, 000 and the unit contribution margin is RM40. If the fixed costs are increased by RM80,000, what is the break-even point?

A. 14,500

B. 12,500

C. 8,333

D. 9,667

15. The followings are underlying assumptions of CVP analysis EXCEPT:

A. the changes in the activity are the only factors that affect costs

B. the costs classifications are reasonably accurate

C. the beginning inventory is larger than ending inventory

D. sales mix is constant

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