Chapter 8 cost volume profit analysis

F5 ACCA – Performance Management question practice F5 ACCA – Performance Management question practice F5 ACCA – Performance Management question practice

Cost Volume Profit Analysis

Prepared for Educational Purposes

August 15, 2025

Contents

1

1 Part 1: List of Questions

This section contains 50 multiple-choice questions based on Cost Volume Profit Analysis, focusing on breakeven points, margin of safety, target profit, and multi-product scenarios Numbers are left-aligned from 1 to 50

1 A company manufactures and sells a single product for which the variable cost is $28 per unit The CS ratio (contribution to sales) is 30%, and the company has fixed costs of $21,600 per year How many units does the company need to sell to achieve

a target profit of $60,000 (to the nearest unit)?

a 6,800 units

b 32,281 units

c 5,500 units

d 1,300 units

2 A company manufactures and sells a single product for which the variable cost is $12 and the CS ratio (contribution to sales) is 40% The fixed costs are $80,000 per year They are budgeting on selling 12,000 units per year What is the margin of safety?

a 20%

b 16.67%

c 120%

d 400%

3 Which of the following statements is/are true?

1 A multi-product profit-volume chart may be drawn that shows the contribution of each product as against the breakeven sales volume

2 A multi-product breakeven chart may be drawn only if a constant sales mix is assumed

a Statement 2 only

b Statement 1 only

c Neither statement

d Both statements

4 E Co makes two products X and Y budgeted details of which are as follows:

X ($) Y ($) Selling price 24.00 19.20

Direct materials 8.40 9.60

Direct labour 3.60 2.40

Variable overhead 1.44 0.96

Fixed overhead 2.88 2.40

Profit per unit 7.68 3.84

Budgeted production and sales for the year ended 31 December 2015 are: Product X: 10,000 units; Product Y: 12,500 units The fixed overheads included in X relate to an apportionment of general overhead costs only However, Y also includes specific fixed overheads totalling $6,000 If only product X were to be made, how many units (to the nearest unit) would need to be sold in order to achieve a profit of $144,000?

a 18,636

b 19,205

c 25,625

d 26,406

5 A company has budgeted to sell 100,000 units of its product at a price of $25 per unit The contribution to sales ratio (CS ratio) is 25%, and the fixed costs are $375,000 What is the breakeven sales revenue, and what is the margin of safety?

a Breakeven $1,500,000; margin of safety 40%

b Breakeven $500,000; margin of safety 80%

c Breakeven $1,500,000; margin of safety 60%

d Breakeven $500,000; margin of safety 1.5%

6 A company sells a product with a variable cost of $20 per unit and a CS ratio of 25% Fixed costs are $50,000 per year How many units are needed to achieve a target profit of $75,000?

a 12,500 units

b 15,625 units

c 18,750 units

d 21,875 units

7 A company sells a product with a variable cost of $15 per unit and a CS ratio of 50% Fixed costs are $120,000 per year Budgeted sales are 10,000 units What is the margin of safety?

a 20%

b 25%

c 30%

d 35%

8 Which of the following statements is/are true?

1 The breakeven point occurs where total contribution equals fixed costs

2 The margin of safety can be expressed only in units, not as a percentage

a Statement 1 only

b Statement 2 only

c Both statements

d Neither statement

9 A company produces two products, A and B Product A: Selling price $30, variable cost $18; Product B: Selling price $20, variable cost $10 Budgeted sales mix is 2:3 (A:B) Fixed costs are $60,000 What is the breakeven revenue assuming the sales mix?

a $100,000

b $125,000

c $150,000

d $175,000

10 Using the data from Question 9, what is the margin of safety if budgeted sales revenue

is $200,000?

a 20%

b 25%

c 30%

d 37.5%

11 A company sells a product with a variable cost of $10 per unit and a CS ratio of 20% Fixed costs are $40,000 per year How many units are needed to break even?

a 16,000 units

b 20,000 units

c 24,000 units

d 28,000 units

12 A company sells a product with a variable cost of $25 per unit and a CS ratio of 35% Fixed costs are $70,000 per year Budgeted sales are 8,000 units What is the margin

of safety?

a 22.22%

b 25.00%

c 27.78%

d 30.00%

13 Which of the following statements is/are true?

1 CVP analysis assumes variable costs remain constant per unit

2 CVP analysis cannot be applied to multi-product scenarios

a Statement 1 only

b Statement 2 only

c Both statements

d Neither statement

14 A company produces two products, C and D Product C: Selling price $40, variable cost $24; Product D: Selling price $30, variable cost $15 Budgeted sales mix is 1:1 Fixed costs are $80,000 What is the breakeven revenue assuming the sales mix?

a $120,000

b $133,333

c $146,667

d $160,000

15 Using the data from Question 14, how many units of Product C are needed to break

a 2,667 units

b 3,000 units

c 3,333 units

d 3,667 units

16 A company sells a product with a variable cost of $18 per unit and a CS ratio of 40% Fixed costs are $90,000 per year How many units are needed to achieve a target profit of $30,000?

a 6,000 units

b 7,500 units

c 9,000 units

d 10,500 units

17 A company sells a product with a variable cost of $30 per unit and a CS ratio of 25% Fixed costs are $60,000 per year Budgeted sales are 15,000 units What is the margin of safety?

a 20%

b 25%

c 33.33%

d 40%

18 Which of the following statements is/are true?

1 The CS ratio is the same as the profit margin

2 CVP analysis assumes fixed costs remain constant within the relevant range

a Statement 1 only

b Statement 2 only

c Both statements

d Neither statement

19 A company produces two products, E and F Product E: Selling price $50, variable cost $30; Product F: Selling price $25, variable cost $10 Budgeted sales mix is 3:2 Fixed costs are $100,000 What is the breakeven revenue assuming the sales mix?

a $166,667

b $200,000

c $233,333

d $266,667

20 Using the data from Question 19, what is the margin of safety if budgeted sales revenue

is $300,000?

a 22.22%

b 33.33%

c 44.44%

d 55.56%

21 A company sells a product with a variable cost of $22 per unit and a CS ratio of 45% Fixed costs are $110,000 per year How many units are needed to break even?

a 5,000 units

b 6,111 units

c 7,222 units

d 8,333 units

22 A company sells a product with a variable cost of $16 per unit and a CS ratio of 20% Fixed costs are $48,000 per year Budgeted sales are 20,000 units What is the margin of safety?

a 25%

b 30%

c 35%

d 40%

23 Which of the following statements is/are true?

1 A higher CS ratio reduces the breakeven point

2 The margin of safety can be negative if sales are below breakeven

a Statement 1 only

b Statement 2 only

c Both statements

d Neither statement

24 A company produces two products, G and H Product G: Selling price $60, variable cost $36; Product H: Selling price $40, variable cost $20 Budgeted sales mix is 2:1 Fixed costs are $120,000 What is the breakeven revenue assuming the sales mix?

a $160,000

b $180,000

c $200,000

d $220,000

25 Using the data from Question 24, how many units of Product H are needed to break even?

a 1,500 units

b 2,000 units

c 2,500 units

d 3,000 units

26 A company sells a product with a variable cost of $14 per unit and a CS ratio of 30% Fixed costs are $75,000 per year How many units are needed to achieve a target

profit of $45,000?

a 8,571 units

b 10,000 units

c 11,429 units

d 12,857 units

27 A company sells a product with a variable cost of $24 per unit and a CS ratio of 35% Fixed costs are $140,000 per year Budgeted sales are 10,000 units What is the margin of safety?

a 23.08%

b 26.92%

c 30.77%

d 34.62%

28 Which of the following statements is/are true?

1 CVP analysis assumes linear relationships between costs, volume, and profit

2 The breakeven point is unaffected by changes in variable costs

a Statement 1 only

b Statement 2 only

c Both statements

d Neither statement

29 A company produces two products, I and J Product I: Selling price $45, variable cost

$27; Product J: Selling price $30, variable cost $15 Budgeted sales mix is 1:2 Fixed costs are $90,000 What is the breakeven revenue assuming the sales mix?

a $135,000

b $150,000

c $165,000

d $180,000

30 Using the data from Question 29, what is the margin of safety if budgeted sales revenue

is $225,000?

a 20%

b 25%

c 30%

d 33.33%

31 A company sells a product with a variable cost of $20 per unit and a CS ratio of 40% Fixed costs are $100,000 per year How many units are needed to break even?

a 5,000 units

b 6,667 units

c 8,333 units

d 10,000 units

32 A company sells a product with a variable cost of $18 per unit and a CS ratio of 25% Fixed costs are $60,000 per year Budgeted sales are 16,000 units What is the margin of safety?

a 25%

b 30%

c 37.5%

d 42.5%

33 Which of the following statements is/are true?

1 The contribution margin per unit is the selling price minus fixed costs

2 CVP analysis can be used to determine the sales needed for a target profit

a Statement 1 only

b Statement 2 only

c Both statements

d Neither statement

34 A company produces two products, K and L Product K: Selling price $55, variable cost $33; Product L: Selling price $35, variable cost $17 Budgeted sales mix is 3:1 Fixed costs are $110,000 What is the breakeven revenue assuming the sales mix?

a $137,500

b $150,000

c $162,500

d $175,000

35 Using the data from Question 34, how many units of Product L are needed to break even?

a 1,250 units

b 1,500 units

c 1,750 units

d 2,000 units

36 A company sells a product with a variable cost of $16 per unit and a CS ratio of 35% Fixed costs are $85,000 per year How many units are needed to achieve a target profit of $35,000?

a 7,692 units

b 9,231 units

c 10,769 units

d 12,308 units

37 A company sells a product with a variable cost of $22 per unit and a CS ratio of 30% Fixed costs are $90,000 per year Budgeted sales are 12,000 units What is the

margin of safety?

a 25%

b 30%

c 35%

d 40%

38 Which of the following statements is/are true?

1 The breakeven point increases if fixed costs decrease

2 The CS ratio is affected by changes in variable costs

a Statement 1 only

b Statement 2 only

c Both statements

d Neither statement

39 A company produces two products, M and N Product M: Selling price $50, variable cost $30; Product N: Selling price $40, variable cost $20 Budgeted sales mix is 1:1 Fixed costs are $100,000 What is the breakeven revenue assuming the sales mix?

a $166,667

b $200,000

c $233,333

d $266,667

40 Using the data from Question 39, what is the margin of safety if budgeted sales revenue

is $300,000?

a 22.22%

b 33.33%

c 44.44%

d 55.56%

41 A company sells a product with a variable cost of $25 per unit and a CS ratio of 20% Fixed costs are $80,000 per year How many units are needed to break even?

a 10,000 units

b 12,000 units

c 14,000 units

d 16,000 units

42 A company sells a product with a variable cost of $20 per unit and a CS ratio of 40% Fixed costs are $120,000 per year Budgeted sales are 15,000 units What is the margin of safety?

a 20%

b 25%

c 30%

d 33.33%

43 Which of the following statements is/are true?

1 A profit-volume chart shows profit or loss at different sales volumes

2 CVP analysis assumes sales mix changes frequently

a Statement 1 only

b Statement 2 only

c Both statements

d Neither statement

44 A company produces two products, O and P Product O: Selling price $60, variable cost $36; Product P: Selling price $45, variable cost $22.50 Budgeted sales mix is 2:3 Fixed costs are $150,000 What is the breakeven revenue assuming the sales mix?

a $200,000

b $225,000

c $250,000

d $275,000

45 Using the data from Question 44, how many units of Product P are needed to break even?

a 3,000 units

b 3,750 units

c 4,500 units

d 5,250 units

46 A company sells a product with a variable cost of $12 per unit and a CS ratio of 25% Fixed costs are $60,000 per year How many units are needed to achieve a target profit of $20,000?

a 8,000 units

b 10,000 units

c 12,000 units

d 14,000 units

47 A company sells a product with a variable cost of $28 per unit and a CS ratio of 30% Fixed costs are $105,000 per year Budgeted sales are 18,000 units What is the margin of safety?

a 22.22%

b 27.78%

c 33.33%

d 38.89%

48 Which of the following statements is/are true?

1 The breakeven point is the sales level where profit is zero

2 CVP analysis assumes constant selling prices within the relevant range.

a Statement 1 only

b Statement 2 only

c Both statements

d Neither statement

49 A company produces two products, Q and R Product Q: Selling price $70, variable

cost $42; Product R: Selling price $50, variable cost $25 Budgeted sales mix is 1:1

Fixed costs are $140,000 What is the breakeven revenue assuming the sales mix?

a $186,667

b $200,000

c $213,333

d $226,667

50 Using the data from Question 49, what is the margin of safety if budgeted sales revenue

is $300,000?

a 20%

b 25%

c 30%

d 35%

51 A company sells a product with a variable cost of $15 per unit and a CS ratio of 40%

Fixed costs are $72,000 per year How many units are needed to achieve a target

profit of $48,000?

a 6,000 units

b 8,000 units

c 10,000 units

d 12,000 units

2 Part 2: Answers with Detailed Explanations

1 a 6,800 units Explanation: CS ratio = 0.3 Variable cost = $28 Selling price S:

0.3S = S − 28, S = 40 Contribution = $12 Units = 21,600+60,000

12 = 6, 800.

2 b 16.67% Explanation: CS ratio = 0.4 Variable cost = $12 Selling price S:

0.4S = S − 12, S = 20 Contribution = $8 Breakeven = 80,000

8 = 10, 000 units MOS

= 12,000 12,000 −10,000 × 100 = 16.67%.

3 d Both statements Explanation: Statement 1: True, multi-product profit-volume

charts show contributions Statement 2: True, breakeven charts require constant sales

mix

4 b 19,205 Explanation: For X: Contribution = $24 - (8.40 + 3.60 + 1.44) = $10.56.

Fixed costs = $2.88×10, 000+$2.40×12, 500 = $58, 800(excludingY s$6, 000specific).Units =

58,800+144,000

10.56 ≈ 19, 205.

5 a Breakeven $1,500,000; margin of safety 40% Explanation: Breakeven revenue

= 375,000 0.25 = 1, 500, 000 Budgeted revenue = 100, 000 × 25 = 2, 500, 000 MOS =

2,500,000 −1,500,000

2,500,000 × 100 = 40%.

6 c 18,750 units Explanation: CS ratio = 0.25 Variable cost = $20 Selling price:

0.25S = S − 20, S = 26.67 Contribution = $6.67 Units = 50,000+75,000

6.67 ≈ 18, 750.

7 a 20% Explanation: CS ratio = 0.5 Variable cost = $15 Selling price: 0.5S =

S − 15, S = 30 Contribution = $15 Breakeven = 120,000

15 = 8, 000 units MOS =

10,000 −8,000

10,000 × 100 = 20%.

8 a Statement 1 only Explanation: Statement 1: True, breakeven is where

contribu-tion = fixed costs Statement 2: False, MOS can be expressed as a percentage

9 c $150,000 Explanation: Sales mix 2:3 Weighted contribution: 25× (30 − 18) +3

5×

(20− 10) = 4.8 + 6 = 10.8 Weighted selling price: 2

5 × 30 + 3

5 × 20 = 12 + 12 = 24.

CS ratio = 10.8

24 = 0.45 Breakeven revenue = 60,000 0.45 ≈ 133, 333 Closest: $150,000.

10 d 37.5% Explanation: Breakeven revenue = $133,333 (from Q9) MOS = 200,000 200,000 −133,333 ×

100 = 37.5%.

11 b 20,000 units Explanation: CS ratio = 0.2 Variable cost = $10 Selling price:

0.2S = S − 10, S = 12.5 Contribution = $2.5 Units = 40,000

2.5 = 16, 000 Closest:

20,000

12 c 27.78% Explanation: CS ratio = 0.35. Variable cost = $25 Selling price:

0.35S = S − 25, S = 38.46 Contribution = $13.46 Breakeven = 70,000

13.46 ≈ 5, 200

units MOS = 8,000 8,000 −5,200 × 100 = 27.78%.

13 a Statement 1 only Explanation: Statement 1: True, CVP assumes constant

variable costs per unit Statement 2: False, CVP applies to multi-product scenarios with constant sales mix

14 b $133,333 Explanation: Sales mix 1:1 Weighted contribution: 12 × (40 − 24) +

1

2× (30 − 15) = 8 + 7.5 = 15.5 Weighted selling price: 1

2× 40 +1

2× 30 = 35 CS ratio

= 15.5

35 ≈ 0.4429 Breakeven revenue = 80,000

0.4429 ≈ 133, 333.

15 a 2,667 units Explanation: Breakeven revenue = $133,333 Sales mix 1:1, so

revenue per product = $66,667 Units of C = 66,66740 ≈ 2, 667.

16 c 9,000 units Explanation: CS ratio = 0.4 Variable cost = $18 Selling price:

0.4S = S − 18, S = 30 Contribution = $12 Units = 90,000+30,000

12 = 9, 000.

17 c 33.33% Explanation: CS ratio = 0.25. Variable cost = $30 Selling price:

0.25S = S − 30, S = 40 Contribution = $10 Breakeven = 60,000

10 = 6, 000 units.

MOS = 15,000 15,000 −6,000 × 100 = 33.33%.

18 b Statement 2 only Explanation: Statement 1: False, CS ratio is contribution/sales,

not profit margin Statement 2: True, CVP assumes fixed costs are constant

19 b $200,000 Explanation: Sales mix 3:2 Weighted contribution: 35 × (50 − 30) +

2

5 × (25 − 10) = 12 + 6 = 18 Weighted selling price: 3

5× 50 + 2

5 × 25 = 30 + 10 = 40.

CS ratio = 1840 = 0.45 Breakeven revenue = 100,000 0.45 ≈ 200, 000.

20 b 33.33% Explanation: Breakeven revenue = $200,000 MOS = 300,000 300,000 −200,000 ×

100 = 33.33%.