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Cost and Management Accounting — BEP, Cost Sheets & Contract Costing: 16 MCQs with answers

All 16 multiple-choice questions from this kit, free and with no sign-up.

Full kit · everything Flashcards · 18 Quick Revision · 17

Warm-up · 6 questions

Q1. What does the weighted average contribution margin per unit (WACMPU) represent in a multi-product firm?

Beginner
A The contribution margin of the highest-selling product B The selling price of the most profitable product C The total fixed cost divided by total units D The composite contribution margin of all products by mix share
Show answer & explanation

The composite contribution margin of all products by mix share

WACMPU combines each product's contribution per unit weighted by its share in the sales mix, treating the firm as one composite product.

Q2. In the source data, P1 sells 6,000 units and P2 sells 4,000 units. What is P1's share in the sales mix?

Beginner
A 0.5 B 0.6 C 0.7 D 0.4
Show answer & explanation

0.6

P1's mix share = 6,000 ÷ 10,000 = 0.6.

Q3. Using the source data, what is the overall break-even point in units?

Beginner
A 5,000 units B 7,000 units C 6,000 units D 12,000 units
Show answer & explanation

6,000 units

Overall BEP = Fixed Cost ÷ WACMPU = 30,000 ÷ 5 = 6,000 units.

Q4. Which of the following is a key assumption of break-even analysis?

Beginner
A Selling price, variable cost, and sales mix remain constant B Sales mix changes continuously C Fixed cost varies with output D Selling price and variable cost change every period
Show answer & explanation

Selling price, variable cost, and sales mix remain constant

Break-even analysis assumes selling price, variable cost, and sales mix remain constant.

Q5. In the source data, P1's selling price per unit is Rs. 10 and P2's is Rs. 15. What is P1's contribution margin per unit?

Beginner
A Rs. 5 B Rs. 10 C Rs. 3 D Rs. 7
Show answer & explanation

Rs. 5

P1's VC per unit = 30,000 ÷ 6,000 = Rs. 5. CM = Rs. 10 − Rs. 5 = Rs. 5.

Q6. For the given data, the weighted average contribution margin per unit is Rs. 5, so the overall break-even point is 6,000 units.

Beginner
A True B False
Show answer & explanation

True

For the given data, the weighted average contribution margin per unit is Rs. 5, so the overall break-even point is 6,000 units.

Building up · 5 questions

Q7. A company sells two products with equal contribution margins per unit. If the sales mix is reversed, what happens to the overall break-even point?

Intermediate
A It stays the same because the CMs are equal B It becomes zero C It decreases because the mix changed D It increases because the mix changed
Show answer & explanation

It stays the same because the CMs are equal

A mix change moves the overall BEP only when products have different CMs. With equal CMs, the WACMPU is unchanged.

Q8. In the source data, what are the product-wise break-even units for P1 and P2?

Intermediate
A P1 = 3,600; P2 = 2,400 B P1 = 2,400; P2 = 3,600 C P1 = 3,000; P2 = 3,000 D P1 = 6,000; P2 = 4,000
Show answer & explanation

P1 = 3,600; P2 = 2,400

Product-wise BEP = Overall BEP × mix share: P1 = 6,000 × 0.6 = 3,600; P2 = 6,000 × 0.4 = 2,400.

Q9. If the desired profit is Rs. 30,000, what is the overall required sales volume in units for the source data?

Intermediate
A 6,000 units B 12,000 units C 15,000 units D 9,000 units
Show answer & explanation

12,000 units

Required units = (Fixed Cost + Desired Profit) ÷ WACMPU = (30,000 + 30,000) ÷ 5 = 12,000 units.

Q10. P1's variable cost rises by 10%. Its old VC per unit was Rs. 5 and its selling price is Rs. 10. What is the new contribution margin per unit for P1?

Intermediate
A Rs. 4.00 B Rs. 4.50 C Rs. 5.00 D Rs. 5.50
Show answer & explanation

Rs. 4.50

New VC = Rs. 5 × 1.10 = Rs. 5.50. New CM = Rs. 10 − Rs. 5.50 = Rs. 4.50.

Q11. What is the margin of safety if actual sales are 12,000 units and break-even sales are 6,000 units?

Intermediate
A 18,000 units B 6,000 units C 3,000 units D 12,000 units
Show answer & explanation

6,000 units

Margin of safety = Actual sales − Break-even sales = 12,000 − 6,000 = 6,000 units.

Topper level · 5 questions

Q12. After P1's variable cost rises by 10%, what is the new WACMPU?

Advanced
A Rs. 4.50 B Rs. 4.70 C Rs. 5.00 D Rs. 5.30
Show answer & explanation

Rs. 4.70

New WACMPU = 4.50(0.6) + 5(0.4) = 2.70 + 2.00 = Rs. 4.70.

Q13. After P1's variable cost rises by 10%, what is the new overall break-even point in units (approximately)?

Advanced
A 7,500 units B 6,667 units C 6,000 units D 6,383 units
Show answer & explanation

6,383 units

New BEP = 30,000 ÷ 4.70 ≈ 6,383 units.

Q14. A student computes BEP for each product separately using the total fixed cost. Why is this wrong?

Advanced
A Fixed cost should always be split equally between products B The sales mix is irrelevant to break-even analysis C Fixed cost is a company-level figure and must be divided by WACMPU first D Variable cost should be used instead of fixed cost
Show answer & explanation

Fixed cost is a company-level figure and must be divided by WACMPU first

Fixed cost is company-level; dividing it by WACMPU and then splitting by mix is the correct method. Splitting fixed cost first gives a wrong answer.

Q15. A company sells two products with different contribution margins. If the mix shifts toward the higher-CM product, what happens to the overall BEP?

Advanced
A It stays the same regardless of CM B It becomes undefined C It falls because WACMPU rises D It rises because more units are sold
Show answer & explanation

It falls because WACMPU rises

Shifting toward the higher-CM product raises WACMPU, which lowers the overall BEP (Fixed Cost ÷ WACMPU).

Q16. Why does cost control on high-volume products have the largest impact on the overall BEP?

Advanced
A Because fixed cost is allocated to them first B Because their CM carries the largest weight in WACMPU C Because high-volume products have the highest selling price D Because they are always the most profitable
Show answer & explanation

Because their CM carries the largest weight in WACMPU

High-volume products dominate the sales mix, so their CM carries the largest weight in WACMPU — a cost change there moves the overall BEP the most.

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