1.
At the break-even point, the contributor margin equals fixed costs- True
2. Dallas corporation wishes to market a new product for P1.50 a unit. Fixed costs to manufacture
this product are 100,000 for less than P500,000 units and P150,000 for P500,000 units or more
the contribution margin is 20%. How many units must be sold to realize net income from this
product of P100,000- 833,333
3. The breakeven point is reached when sales revenue equals total fixed costs- False/True/False
4. The planned sales revenue P240,000. Cost of goods sold is equal to 60% of sales revenue.
Operating expenses at 5% of sales revenue plus P20,000. How much would be the net income
before tax. How much is the cost of goods sold?- P144,000
5. The planned sales revenue P240,000. Cost of goods sold is equal to 60% of sales revenue.
Operating expenses at 5% of sales revenue plus P20,000. How much would be the net income
before tax. How much is the operating expense?- P32,000
6. In a break-even computation, fixed expenses are not affected by changes in the amount sales,
whereas variable expenses vary in direct proportion to the sales- True
7. It is impossible to obtain a break-even point with a negative contribution margin- True
8. The break-even point, in pesos can be determined by multiplying break-even units by the selling
price- False/True/True
9. The X company earns an after tax profit of P2,400 on sales of 88,000. The average tax rate of the
company is 25%. The only product in this operation sells for P20, of which P15 is in variable cost.
You were asked to analyze the break-even point of this project and its sensitivity to changes in
cost levels and product price
The break-even point in pesos is- P75,200
10. The planned sales revenue P240,000. Cost of goods sold is equal to 60% of sales revenue.
Operating expenses at 5% of sales revenue plus P20,000. How much is the gross profit?- P96,000
11. The X company earns an after tax profit of P2,400 on sales of 88,000. The average tax rate of the
company is 25%. The only product in this operation sells for P20, of which P15 is in variable cost.
You were asked to analyze the break-even point of this project and its sensitivity to changes in
cost levels and product price
A decrease in fixed cost of P2,000 would result in a new break-even point at- P67,200
12. At the break even point, sales equal variable costs- False
13. The contribution margin increases when sales volume remains at the same end- variable cost
per unit decreases
14. The contribution margin approach is useful for long-range decisions because it defines costs as
fixed or variable- True/False
15. Day Company is a medium-sized manufacturer of lamps. During 2019 a new line called
“Twilight” was made available to Days Customers. The break-even point for sales of Twilight is
P400,000 with a contribution margin of 40%. Assuming that the operating profit for the Twilight
line for 2019 amounted to P200,000, total sales for 2019 amounted to- P900,000
16. The X company earns an after tax profit of P2,400 on sales of 88,000. The average tax rate of the
company is 25%. The only product in this operation sells for P20, of which P15 is in variable cost.
You were asked to analyze the break-even point of this project and its sensitivity to changes in
cost levels and product price
With an increase in price of P5 per unit assuming that volume is constant, the break-even point
would- decreased by 37.5%
17. The X company earns an after tax profit of P2,400 on sales of 88,000. The average tax rate of the
company is 25%. The only product in this operation sells for P20, of which P15 is in variable cost.
You were asked to analyze the break-even point of this project and its sensitivity to changes in
cost levels and product price. The monthly fixed cost in this operation is- 18,800
18. Past sales volume is not an important factor to consider in making a sales forecast- False
19. The planned sales revenue P240,000. Cost of goods sold is equal to 60% of sales revenue.
Operating expenses at 5% of sales revenue plus P20,000. How much would be the net income
before tax- P64,000
20. The X company earns an after tax profit of P2,400 on sales of 88,000. The average tax rate of the
company is 25%. The only product in this operation sells for P20, of which P15 is in variable cost.
You were asked to analyze the break-even point of this project and its sensitivity to changes in
cost levels and product price
A decrease in variable costs of P1 per unit and an increase in fixed costs of P6,000 would bring
the break-even point- 82,667
