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CA Final Cost Volume Profit Analysis and Pricing Decisions — practice questions

Explore 80 free Cost Volume Profit Analysis and Pricing Decisions questions in CA Final Cost and Management Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Cost Volume Profit Analysis and Pricing Decisions questions and exercises with answers

Showing questions 1–30 of 80.

In basic CVP, what is assumed about unsold finished goods at year end?Read the answer and worked solution →A firm sells three products. What does CVP assume about their mix?Read the answer and worked solution →Within the relevant range, CVP treats cost and revenue behaviour as what?Read the answer and worked solution →Which feature does linear revenue in CVP rule out?Read the answer and worked solution →The profit-volume ratio is contribution divided by what?Read the answer and worked solution →In CVP, contribution stands for sales less which cost?Read the answer and worked solution →How is CVP analysis best described in terms of time horizon?Read the answer and worked solution →Why is CVP weak for long-run planning?Read the answer and worked solution →At the break-even point, what is a firm's result?Read the answer and worked solution →Fixed costs are Rs 60,000, price Rs 50 and variable cost Rs 30 a unit. What are the break-even units?Read the answer and worked solution →Price is Rs 40, variable cost Rs 24 and fixed costs Rs 96,000. What are break-even sales?Read the answer and worked solution →Sales are Rs 5,00,000 and variable costs Rs 3,00,000. What is the P/V ratio?Read the answer and worked solution →A unit contributes Rs 20 and fixed costs are Rs 80,000. Units needed for Rs 40,000 profit?Read the answer and worked solution →Budgeted sales are 12,000 units and break-even is 9,000 units. What is the margin of safety?Read the answer and worked solution →Budgeted sales are Rs 8,00,000 and break-even sales Rs 6,00,000. Margin of safety percentage?Read the answer and worked solution →A unit contributes Rs 12; 5,000 units are sold; fixed costs are Rs 45,000. What is profit?Read the answer and worked solution →Fixed costs are Rs 50,000 and a unit contributes Rs 10. Fixed costs rise 20%. New break-even?Read the answer and worked solution →Variable cost is Rs 15 and fixed costs Rs 36,000. Price rises from Rs 25 to Rs 33. New break-even?Read the answer and worked solution →A product sells for Rs 10 and has variable cost Rs 2. What is the contribution margin ratio?Read the answer and worked solution →Sales are Rs 6,00,000, P/V ratio 30% and fixed costs Rs 1,20,000. What is profit?Read the answer and worked solution →With P/V ratio 25% and fixed costs Rs 75,000, break-even sales equal what?Read the answer and worked solution →Fixed costs are Rs 1,00,000 and P/V ratio 20%. Sales needed for Rs 50,000 profit?Read the answer and worked solution →P/V ratio is 40%. Sales rise by Rs 50,000 with fixed costs unchanged. Profit rises by?Read the answer and worked solution →Product A earns Rs 40,000 contribution on Rs 1,00,000 sales; B earns Rs 60,000 on Rs 2,00,000. Combined P/V?Read the answer and worked solution →A higher contribution margin means profits do what as sales rise?Read the answer and worked solution →Operating leverage measures how revenue growth translates into growth in what?Read the answer and worked solution →Contribution differs from gross margin because it separates which costs?Read the answer and worked solution →Break-even is a special case of target income sales where target income is what?Read the answer and worked solution →A relevant cost differs between alternatives. What is it also called?Read the answer and worked solution →Which cost is relevant when comparing two future courses of action?Read the answer and worked solution →

Worked practice questions

In basic CVP, what is assumed about unsold finished goods at year end?

  1. None are left unsold
  2. Equal to opening stock
  3. Written off as loss
  4. Valued at market price
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Correct answer: A. None are left unsold

CVP assumes every unit produced is sold, so no ending finished goods remain.

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A firm sells three products. What does CVP assume about their mix?

  1. It stays constant
  2. It favours high margins
  3. It changes every month
  4. It follows market demand
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Correct answer: A. It stays constant

For multi-product firms the model holds the ratio of each product to total sales fixed.

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Within the relevant range, CVP treats cost and revenue behaviour as what?

  1. Linear in nature
  2. Randomly varying
  3. Exponential growth
  4. Stepped upward
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Correct answer: A. Linear in nature

Linear equations for total cost and total revenue are the core of the model.

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