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Quizzes > Business & Finance > Finance & Economics

Master Cost Volume Profit Analysis with Our ACCA F5 Quiz

Think you can ace this CVP analysis quiz? Test your break-even analysis and contribution margin skills now!

Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper art icons of calculator chart coins and play button for ACCA F5 cost volume profit quiz with teal background

This Cost Volume Profit Analysis quiz helps you practice ACCA F5 skills: break-even points, contribution margin and ratio, and profit shifts as volume changes. You'll get instant feedback to spot gaps before the exam, and you can brush up on cost behavior with the high-low method .

Contribution margin per unit is calculated as:
Fixed cost per unit minus variable cost per unit
Selling price per unit minus fixed cost per unit
Selling price per unit minus variable cost per unit
Variable cost per unit minus fixed cost per unit
The contribution margin per unit is the amount each unit contributes to covering fixed costs and generating profit, calculated by subtracting variable cost per unit from the selling price per unit. This measure indicates how much revenue is available to cover fixed costs after variable costs are paid. Understanding contribution margin helps in pricing and cost management decisions. .
The break-even point in units is calculated by dividing:
Total fixed costs by contribution margin per unit
Total fixed costs by total variable costs
Total fixed costs plus profit target by contribution margin per unit
Total variable costs by selling price
The break-even point in units is found by dividing total fixed costs by the contribution margin per unit, which shows how many units must be sold to cover all fixed costs. This formula assumes constant selling price and variable costs per unit. Once fixed costs are recovered, any additional sales contribute to profit. .
Margin of safety represents:
The excess of actual or budgeted sales over break-even sales
The ratio of contribution margin to sales
Fixed costs divided by sales volume
Variable costs as a percentage of sales
Margin of safety measures how far sales can fall before the company reaches its break-even point and starts incurring losses. It is the difference between actual or budgeted sales and break-even sales. A higher margin of safety indicates lower risk of not covering fixed costs. .
A company sells a product for $50 per unit. The variable cost is $30 per unit and total fixed costs are $40,000. What is the break-even point in units?
800 units
1,333 units
4,000 units
2,000 units
The break-even point in units is calculated as total fixed costs divided by contribution margin per unit: ($40,000) / ($50 - $30) = 2,000 units. This indicates the number of units needed to cover all fixed expenses. Sales beyond this point will contribute to profit. .
Using the same data (selling price $50, variable cost $30, fixed costs $40,000), what sales volume in units is required to achieve a target profit of $20,000?
4,000 units
3,000 units
1,500 units
2,500 units
To find the required sales volume for a target profit, add the desired profit to fixed costs and divide by contribution margin per unit: ($40,000 + $20,000) / ($50 - $30) = 3,000 units. This ensures both fixed costs and target profit are covered. .
If actual sales are $150,000 and break-even sales are $120,000, what is the margin of safety ratio?
25%
20%
15%
30%
Margin of safety ratio = (Actual sales - Break-even sales) / Actual sales. Thus, ($150,000 - $120,000) / $150,000 = 0.20 or 20%. This ratio shows the percentage by which sales can decline before losses occur. .
If a business has a degree of operating leverage of 4 at a certain sales level, what percentage change in operating profit will result from a 10% increase in sales?
4%
14%
10%
40%
Degree of operating leverage measures how sensitive operating profit is to changes in sales. A degree of 4 means a 1% change in sales leads to a 4% change in profit. Therefore, a 10% increase in sales results in a 40% increase in operating profit. .
A company sells two products in a ratio of 2:1. Product A sells for $10 with a variable cost of $6; Product B sells for $15 with a variable cost of $9. If fixed costs are $28,000, what is the break-even sales in units for Product A?
4,000 units
3,000 units
2,000 units
6,000 units
Compute the weighted contribution margin per composite unit: A contributes $4 per unit ×2 = $8, B contributes $6×1 = $6; total $14 per composite of 3 units. Break-even composites = $28,000 / $14 = 2,000 composites. Units of A = 2,000 × 2 = 4,000. .
Which of the following is NOT an assumption of cost-volume-profit analysis?
Selling price per unit remains constant
Total fixed costs remain constant
Variable cost per unit changes with volume
Sales mix remains constant
Cost-volume-profit analysis assumes constant selling price per unit, constant variable cost per unit, constant total fixed costs, and constant sales mix. A change in variable cost per unit would violate the linear cost behavior assumption. .
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Study Outcomes

  1. Apply Cost Volume Profit Analysis principles -

    Learn how to compute break-even points and profit targets using CVP relationships and the cost volume profit formula.

  2. Calculate contribution margins -

    Use the cost volume profit formula to determine unit and sales-mix contribution margins for informed pricing decisions.

  3. Perform break-even analysis -

    Carry out break-even analysis quiz-style questions to assess fixed and variable cost impacts on profitability.

  4. Analyze profit sensitivity -

    Evaluate how changes in sales volume, costs, and prices influence profits through interactive CVP analysis quiz scenarios.

  5. Interpret CVP results for decision-making -

    Translate CVP ratios and break-even data into actionable strategies to optimise resource allocation.

  6. Prepare for ACCA F5 CVP quiz questions -

    Build confidence with realistic ACCA F5 CVP quiz practice, reinforcing core CVP concepts for exam success.

Cheat Sheet

  1. Break-even analysis fundamentals -

    Review the break-even formula: Break-even units = Fixed Costs ÷ Contribution Margin per Unit (ACCA F5 syllabus, ACCA Global). For example, if fixed costs are $50,000 and the contribution margin (selling price $20 minus variable cost $12) is $8, then $50,000 ÷ $8 = 6,250 units. Remember the mnemonic "FC ÷ (P - VC) = BEP" to ace your break-even analysis quiz.

  2. Contribution margin mechanics -

    The contribution margin ratio = (Sales - Variable Costs) ÷ Sales and indicates how much of each sales dollar contributes to covering fixed costs and generating profit (Harvard Business Review). For instance, €100,000 in sales with €60,000 in variable costs yields a 40% ratio, meaning €0.40 per €1 of sales. Master this before your contribution margin quiz by recalling "Every sale covers costs then profit."

  3. Cost volume profit formula for profit planning -

    Use the cost volume profit formula: Profit = (Contribution Margin per Unit × Quantity Sold) - Fixed Costs to project outcomes at various sales levels (Journal of Accounting Education). So if your CM per unit is $8, you sell 10,000 units and have $50,000 fixed costs, Profit = (8×10,000) - 50,000 = $30,000. This clear equation is central to any CVP analysis quiz scenario.

  4. Margin of safety as a risk gauge -

    Margin of safety = Actual Sales - Break-even Sales, which highlights the cushion before losses occur (University of Cambridge Materials). For example, if actual sales are $80,000 and break-even sales are $50,000, the margin of safety is $30,000. Leverage this metric in your CVP analysis quiz to assess how far you can slip before hitting break-even.

  5. Degree of operating leverage & sensitivity -

    Degree of operating leverage (DOL) = Contribution Margin ÷ Net Profit shows how a percentage change in sales affects profit (CIMA Official Text). A DOL of 4 means a 10% sales increase yields a 40% profit jump. Practice this calculation in your ACCA F5 CVP quiz to sharpen your sensitivity analysis skills.

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