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Quiz CVP and Decision Making

1. CVP analysis calculations show a contribution margin ratio of 40%, a break even point of 12,000 units, and a margin of safety of 2,000 units. 2. Calculations for another product show a contribution margin of 50% and a break even point of 3,000 units with a margin of safety of 40%. 3. In decision making, the relevant cost for a sunk cost decision is the incremental cost, not the sunk cost. The opportunity cost of choosing one option is the profit forgone from the best alternative option.

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29 views9 pages

Quiz CVP and Decision Making

1. CVP analysis calculations show a contribution margin ratio of 40%, a break even point of 12,000 units, and a margin of safety of 2,000 units. 2. Calculations for another product show a contribution margin of 50% and a break even point of 3,000 units with a margin of safety of 40%. 3. In decision making, the relevant cost for a sunk cost decision is the incremental cost, not the sunk cost. The opportunity cost of choosing one option is the profit forgone from the best alternative option.

Uploaded by

abdulrahimrasul05
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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QUIZ :TOPIC CVP ANALYSIS AND DECISION MAKING

CVP ANALYSIS

30000 / (15-5) = 3000

(4.8 x 10000) / ( 6 - 1.6) = 10909

fixed cost = 4.8 x 10000 contribution in units = 59000/4.4


= 48000 = 13409
contribution = profit + fixed cost
= 11000 + 48000
= 59000

1
contribution sales ratio = contribution/sales
40% = x / 10
x=4
break even = 48000/4 margin of safety = (140000/10) - 12000
= 12000 = 2000

6000 = x / (90-40)
x = 300000

2
(4 + 11) / 60 = 25%

3
(5 + 5) / 20 = 50%

contribution = profit + fixed


= 6000 + (2 x 5000)
= 16000
16000/4 = 4000

fixed cost = 10000 x 1.2


= 12000
BEP = 12000/4
= 3000
margin of safety = (5000 - 2000) / 5000
= 40%

4
DECISION MAKING

5
600 x 3.25 = 1950

sunk cost

500 x 1.5 = 750 (oppurtunity)


(800 - 500) x 5 = 1500 (incremental)

5 6 55 4
42 53

6
skilled semi skilled
5 x 9 = 45 5 x 5 = 25
45 + 25 = 70

contribution 34 36 57
mat/unit 11 7 13
contribution/unit 3.09 5.14 4.38

7
2.5 2.75 2 3.5

saving/limit factor 2.5/1.5 2.75/3 2/2 3/2.5

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