CPFM Cost Management and Analysis 3

Question 1

What is the breakeven point in units if fixed costs are $50,000, price is $25, and variable cost per unit is $15?

Accepted Answer

5,000 units

Answer

Breakeven = $50,000 / ($25 - $15) = 5,000 units.

Question 2

Joint costs incurred before the split-off point should be allocated to joint products primarily for:

Accepted Answer

Inventory valuation and financial reporting

Answer

Joint cost allocation matters for inventory valuation, not for incremental processing decisions.

Question 3

A cost that remains constant per unit but varies in total with activity is a:

Accepted Answer

Variable cost

Answer

Variable costs are constant per unit and change proportionally in total with activity.

Question 4

Target costing begins with which value?

Accepted Answer

Desired market price

Answer

Target costing starts from a competitive market price and works backward to allowable cost.

Question 5

The degree of operating leverage measures:

Accepted Answer

Sensitivity of operating income to changes in sales

Answer

Operating leverage shows how a percentage change in sales magnifies the change in operating income.

CPFM Practice Test