Question

The breakeven point on a CVP graph is

1. the intersection of the fixed expense line and the total expense line.

2. the intersection of the fixed expense line and the sales revenue.

3. the intersection of the sales revenue line and the total expense line.

4. the intersection of the sales revenue line and the​ y-axis.

Total contribution margin less total fixed expenses equals

1. sales revenue.

2. gross profit.

3. operating income.

4. contribution margin ratio.

If the sales price of a product increases while everything else remains the​ same, what happens to the breakeven​ point?

1. The breakeven point will decrease.

2. The breakeven point will remain the same.

3. The breakeven point will increase.

4. The effect cannot be determined without further information.

How is the sales volume in dollars necessary to reach a target profit​ calculated?

1. ​(fixed expenses​ + target​ profit) / contribution margin ratio

2. target profit / unit contribution margin

3. ​(fixed expenses​ + target​ profit) / unit contribution margin

4. target profit / contribution margin ratio

Answer 1

In a cost-volume-profit graph, the break-even point is the sales volume where the total sales line intersects with the total costs line. This sales volume is the point at which total sales equals total costs

the intersection of sales revenue line and total expense line

Breakeven point =total fixed cost/price-variable costs(per unit)

as the sales price decrease the denominater will decrease so the breakeven point will increase

Sales (units) = (Target Profit + Fixed Costs) / Contribution margin per unit

(fixed expenses​ + target​ profit) / unit contribution margin