Question

1. A change in which of the following would have no impact on a product’s break-even point?

a) Selling price per unit

b) Total fixed expense

c) Variable expense per unit

d) Number of units sold

2. Which of the following is an assumption under standard Cost-Volume-Profit (CVP) analysis?

a) Fixed expenses will change as volume increases.

b) The sales mix is constant in multiproduct companies.

c) In manufacturing companies, inventories are always changing.

d) As volume changes, the price of a product or service is expected to change.

Answer 1

Answers:

1. Option D (Number of units sold)

A change in the number of units sold would have no impact on a product’s break-even point because  break-even point is based on the fixed costs and the contribution margin and also the contribution margin is based on the selling price and variable price.

2. Option B (The sales mix is constant in multiproduct companies.)

The sales mix is constant in multiproduct companies is an assumption under standard Cost-Volume-Profit (CVP) analysis.

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