CVP 1 EXAM WITH VERIFIED QUESTIONS
AND ANSWERS LATEST UPDATE 2025/2026
1 Which of the following is the correct description of the break-even point? [Hint]
. Where total revenue equals total fixed and variable costs
Where total revenue equals total variable costs
Where total revenue equals total contribution
Where total revenue equals total fixed costs
2 In a profit-volume chart, what does the point at which the contribution line
. touches the vertical axis represent? [Hint]
Total variable costs
The break-even point
Total fixed costs
Total contribution
3 A. Choudray (Engineering) Ltd makes a product that is sold for £53 per unit and
. has the following costs per unit:
£
Variable material cost 10
Variable labour cost 24
Share of fixed costs 12
, 46
The labour cost includes three hours charge for assemblers who are paid £6 per
hour.
The company is considering sub-contracting the assembly work as demand for
the product outstrips the ability of the business to assemble the parts that are
produced to make the product.
What is the maximum price that the company should be prepared to pay to have
one unit of the product assembled?
[Hint]
£19
£18
£7
£37
4 Which of the following best describes a fixed cost? [Hint]
. A cost that is unaffected by time
A cost that is unaffected by the level of inflation
A cost that is unaffected by the level of output
A cost that involves a long-term commitment by the business
5 Lim Ltd makes two products - Knick and Knack. Details of each product are
. shown below:
Knick Knack
£ £
Selling price per unit 60 30
Variable labour costs (18) (6)
Variable material costs (12) (10)
Fixed costs (6) (8)
, The variable material costs consist entirely of material Delta. Each Knick uses 6
kgs and each Knack uses 4 kgs of Delta. This material is in short supply.
Lim Ltd cannot vary the selling price of Knicks.
At what price must the company sell Knacks in order to ensure that each
product is equally profitable?
[Hint]
£36
£60
£48
£46
6 Tavy Ltd owns a laser-cutting machine that is used exclusively for the
. manufacture of Product X100. The product details are shown below:
£ £
Selling price 40
Variable costs 15
Fixed costs 12 27
13
The machine takes two hours to complete each product and is used to full
capacity. The company has the opportunity to buy Product X 100 from another
company and, if it decides to do this, it will use the machine to produce Product
X 300. Details of this product are as follows:
£ £
Selling price 50
Variable costs 40
Fixed costs 6 46
4
This product will take one hour to produce using the laser-cutting machine.
What is the maximum price per unit that Tavy Ltd should pay to buy Product
X100 from another company?
AND ANSWERS LATEST UPDATE 2025/2026
1 Which of the following is the correct description of the break-even point? [Hint]
. Where total revenue equals total fixed and variable costs
Where total revenue equals total variable costs
Where total revenue equals total contribution
Where total revenue equals total fixed costs
2 In a profit-volume chart, what does the point at which the contribution line
. touches the vertical axis represent? [Hint]
Total variable costs
The break-even point
Total fixed costs
Total contribution
3 A. Choudray (Engineering) Ltd makes a product that is sold for £53 per unit and
. has the following costs per unit:
£
Variable material cost 10
Variable labour cost 24
Share of fixed costs 12
, 46
The labour cost includes three hours charge for assemblers who are paid £6 per
hour.
The company is considering sub-contracting the assembly work as demand for
the product outstrips the ability of the business to assemble the parts that are
produced to make the product.
What is the maximum price that the company should be prepared to pay to have
one unit of the product assembled?
[Hint]
£19
£18
£7
£37
4 Which of the following best describes a fixed cost? [Hint]
. A cost that is unaffected by time
A cost that is unaffected by the level of inflation
A cost that is unaffected by the level of output
A cost that involves a long-term commitment by the business
5 Lim Ltd makes two products - Knick and Knack. Details of each product are
. shown below:
Knick Knack
£ £
Selling price per unit 60 30
Variable labour costs (18) (6)
Variable material costs (12) (10)
Fixed costs (6) (8)
, The variable material costs consist entirely of material Delta. Each Knick uses 6
kgs and each Knack uses 4 kgs of Delta. This material is in short supply.
Lim Ltd cannot vary the selling price of Knicks.
At what price must the company sell Knacks in order to ensure that each
product is equally profitable?
[Hint]
£36
£60
£48
£46
6 Tavy Ltd owns a laser-cutting machine that is used exclusively for the
. manufacture of Product X100. The product details are shown below:
£ £
Selling price 40
Variable costs 15
Fixed costs 12 27
13
The machine takes two hours to complete each product and is used to full
capacity. The company has the opportunity to buy Product X 100 from another
company and, if it decides to do this, it will use the machine to produce Product
X 300. Details of this product are as follows:
£ £
Selling price 50
Variable costs 40
Fixed costs 6 46
4
This product will take one hour to produce using the laser-cutting machine.
What is the maximum price per unit that Tavy Ltd should pay to buy Product
X100 from another company?
