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ACCA Skills Level Cost Volume Profit Analysis — practice questions

Explore 16 free Cost Volume Profit Analysis questions in ACCA Skills Level Management Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Cost Volume Profit Analysis questions and exercises with answers

Showing questions 1–16 of 16.

Sort each cost by how it behavesRead the answer and worked solution →Fill the gaps in three CVP rulesRead the answer and worked solution →Judge each margin claimRead the answer and worked solution →Order a breakeven with two productsRead the answer and worked solution →Flip to pair a measure with its ruleRead the answer and worked solution →Total fixed costs are $480 whether 200 or 800 pizzas are sold. What is the fixed cost per pizza at a volume of 800 pizzas?Read the answer and worked solution →Variable cost is $12 per unit. In the busiest month 2,900 units were sold at a total cost of $69,800. What are the fixed costs?Read the answer and worked solution →A unit sells for $25 and carries a variable cost of $10. What is the unit contribution margin?Read the answer and worked solution →1,000 units are sold at $25 each, variable cost is $10 per unit and fixed costs are $8,000. What is the operating income?Read the answer and worked solution →A unit sells for $25 and carries a variable cost of $10. What is the contribution margin ratio?Read the answer and worked solution →Breakeven is 2,400 units a month and the unit contribution margin is $50. Monthly sales are expected to reach 4,300 units. What is the operating income?Read the answer and worked solution →Hair dryers sell at $70 and make up 60% of unit sales, while curling irons sell at $50 and make up 40%. What is the weighted average selling price per unit?Read the answer and worked solution →A company reports a contribution margin of $100,000 and operating income of $20,000. What is its operating leverage?Read the answer and worked solution →A company has operating leverage of 5 and operating income of $20,000. Sales rise by 20%. What is the new operating income?Read the answer and worked solution →Breakeven is 2,400 units a month and actual sales for the month were 8,000 units. What is the margin of safety in units?Read the answer and worked solution →Breakeven is 2,400 units and actual sales are 8,000 units. What is the margin of safety expressed as a percentage?Read the answer and worked solution →

Worked practice questions

Sort each cost by how it behaves

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Left
Fixed cost
Items
  1. Item
    Factory insurance
    Answer
    Fixed cost
  2. Item
    Rent
    Answer
    Fixed cost
  3. Item
    Depreciation
    Answer
    Fixed cost
  4. Item
    Supervisor salary
    Answer
    Fixed cost
  5. Item
    Pizza ingredients
    Answer
    Variable cost
  6. Item
    Guest breakfast
    Answer
    Variable cost
  7. Item
    Desk materials
    Answer
    Variable cost
  8. Item
    Desk direct labor
    Answer
    Variable cost
Right
Variable cost
Instructions
Swipe left if the total stays flat as sales rise, right if the total climbs.
_Source: Jonick, Principles of Managerial Accounting, section 5.1 Introduction_

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Fill the gaps in three CVP rules

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Missing parts
  1. Answer
    unit contribution margin
    Choices
    1. unit selling price
    2. unit contribution margin
    3. total variable costs
  2. Answer
    sales
    Choices
    1. fixed costs
    2. operating income
    3. sales
  3. Answer
    operating income
    Choices
    1. operating income
    2. total fixed costs
    3. units sold
Complete the statement
Breakeven in units = total fixed costs divided by {0}. Contribution margin ratio = contribution margin divided by {1}. Operating leverage = contribution margin divided by {2}.
Instructions
Tap a chip for each blank so all three lines read correctly.
_Source: Jonick, Principles of Managerial Accounting, section 5.3 Breakeven Point_

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Judge each margin claim

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Questions
  1. Statement is true
    Yes
    Statement
    Selling more units at the same price and cost leaves the contribution margin ratio unchanged.
  2. Statement is true
    Yes
    Statement
    Raising the selling price per unit while costs hold steady raises the contribution margin ratio.
  3. Statement is true
    No
    Statement
    Raising the variable cost per unit raises the contribution margin ratio.
  4. Statement is true
    No
    Statement
    A change in fixed costs shifts the contribution margin ratio.
  5. Statement is true
    Yes
    Statement
    At breakeven the contribution margin exactly equals total fixed costs.
  6. Statement is true
    Yes
    Statement
    Every unit sold above breakeven adds profit equal to its unit contribution margin.
  7. Statement is true
    No
    Statement
    A lower breakeven point is worse, because fewer units get covered.
Instructions
Tap true or false for each statement.
_Source: Jonick, Principles of Managerial Accounting, section 5.2.1 Contribution Margin_

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More Management Accounting topics

Differential AnalysisVariable Costing AnalysisVariance AnalysisActivity-Based Costing