MULTIPLE CHOICE - PROBLEMS

The Avengers Company is trying to do cost volume profit analysis with the

following information for the month of August

P1,100,000

280,000

660,000

40

Sales

Total Fixed cost

Total variable costs

Unit price

1.The operating income of the Avengers Company is

a. P160,000

b. P190,000

c. P240,000

d. P440,000

2.What is the break-even point in units?

a. 14,000 units

b. 25,000 units

C. 28,000 units

d. 35,000 units

3.If the company desires a profit of P80,000, how many must be sold?

a. 30,000 units

b. 35,000 units

c. 36,000 units
d. 45,000 units

4.The margin of safety is

a. P100,000

b. P200,000

c. P300,000

d. P400,000

The Orange Company plans to sell a new product. The selling price is expected to

be P 150 per unit. The company is able to produce 15,000 units but the company's

marketing manager feels that a more realistic level of sales would be 12,000 units.

Variable cost is estimated at P70 per unit. Total fixed costs will be P 900,000

5.The break-even sales

a. 10,000 units

b. 11,250 units

c. 16,000 units

d. 18,000 units

6. How much is the income (loss) if the company sells all the units it can produce

a. P (87,500)

b. P122,500

c. P300,000

d. P330,000

7. If the company desires to earn P400,000 before tax at full capacity, what selling

price must be charged

a. P 80.00

b. P 90.00

c. P 95.00
d. P100.00

Donna Company manufactures and sells two products: Product A and Product B.

The two products have the following characteristics

Product B

P30.00

900,000

24.00

Product A

P 50.00

750,000

Selling price per unit

Sales revenue

Variable cost per unit

30.00

Total fixed cost for the company was P320,000 but increase to P400,000 at

production levels over 100,000. Selling price and variable cost per unit are the

same at all production levels

8.Assuming a constant product mix, what is the break-even in units?

a. 10,000 units

b. 16,000 units

c. 25,000 units

d. 30,000 units

.or tne company to earn a profit of P400.000, assuming a constant product mix,

how many units must be sold

a. 25,000 units
b. 37,500 units

c. 50,000 units

d. 75,000 units

The following costs have been estimated based on sales of 30,000 units

Percent Variable

Total annual cost

100%

100

50

30

P 300,000

250,000

250,000

150,000

Direct materials

Direct labor

Manufacturing overhead

Selling and administrative

10.What selling price will result in a 40% contribution margin

a. P33.25

b. P39.58

c. P52.78

d, P60.00

T1. What selling price will yield a projected income of P50,000?

a. P35.20
b. P36.94

c. P41.80

d. P42.25

Happy Face Company has fixed cost of P500,000 per year, variable cost of P30

per unit, and a selling price of P50 per unit.

12. At a production level of 30,000 units, how much is the operating income?

a. P 50,000

b. P 100,000

c. P 150,000

d. P 200,000

13. The break-even sales in units

a. 10,000 uits

b. 25,000 units

c. 27,500 units

d. 30,000 units

14. The number of units the company must sell to earn an income of P100,000?

a. 10,000 units

b. 25,000 units

C. 27,500 units

d. 30,000 units

Alexis Company operated at normal capacity during the current year producing

50,000 of its single product.. Sales totaled 40,000 units at a selling price of P20

per unit. Variable manufacturing cost were P8 per unit and variable selling and

administrative were P 4 per unit. Fixed cost were incurred uniformly throughout

the year and amounted to P188,000 for manufacturing and P64,000 for P64,000 for
selling and administrative.

15.The break-even point in pesos is

a. P 420,000

b. P 470,000

c. P 630,000

d. P 732,000

The Presley Company manufactures two products, Product X and Product Y. The

following are projections for the coming year,

Product Y

P 112,500

7,500

Product X

P 100,000

10,000

Sales

Sales in units

Expenses

P 24,000

75,000

14,000

P 20,000

60,000

20.000

Fixed

Variable
Projected profit

16.Assuming that the facilities are not jointly used, the breakeven output (in

units)for Product X would be

a. 8,000

b. 7,000

c. 6,000

d. 5,000

The Power Company sells its product at P15.00 per unit. The variable cost is

P9.00 per unit. Total fixed cost is P12,000. Current sales amounted to P45,000

17.If sales decrease by 500 units, by how much would fixed expenses have to be

reduced to maintain the current net income?

a. P7,500

b. P6,000

c. P3,000

d. P2,000

18.At a break-even point of 400 units, the variable costs P400 and the fixed costs

were P200. What will the 401s unit sold contribute to profit before tax?

a. Po

b. PO.60.

C. P1.00

d. P1.50

The statement of comprehensive income for Blanche Company for the current

year is presented below

Sales

Variable costs
Contribution margin

Fixed costs

Income before tax

P 400,000

125.000

275,000

200,000

P 75.000

19.What is the degree of operating leverage of Blanche Company

a.3.67

b.1.45

C. 5.33

d. 1.67

The following information pertains to Ellery Company. Budgeted sales -

P1,000,000, break even sales P700,000, budgeted contribution margin

P600,000.

20.The margin of safety for the Ellery Company is

a. P300,000

b. P400.000

c. P500,000

d. P600,000