Cost- Volume -Profit Anyalsis

CONTINUOUS ASSESSMENT TEST
COST-VOLUME- PROFIT ANALYSIS


Question 1
1. With relevant example in the hospitality industry define the following terms

a. Cost (4 Marks)
b. Fixed cost (3 Marks)
c. Variable cost (3 Marks)

Question 2
1. Discuss the concept of cost volume profit analysis and its relevance to the
hospitality industry (10 Marks)

2. Thyme restaurant has introduced a new item in its menu offer due to
customer demands with the following projection

Item Kshs
Total fixed costs 1,000,000
Variable cost per unit 150
Variable overhead per unit 100
Maximum covers to be produced and 20,000 covers
sold
Selling price per unit 500


Required
1. Calculate the number of covers to be produced and sold in order to break
even (5 Marks)

2. Calculate the Net Profit if all the 20,000 cover are produced and sold (5
Marks)


3. Calculate the margin of safety as a percentage of sales (5 Marks)

4. If 30,000 covers are produced determine the total sales (5 Marks)