Cost-Volume-Benefit Analysis & Budgeting in Business

Posted on Mar 13, 2025 in Economy

Cost-Volume-Benefit (CVB) Analysis

  1. When modifying the product mix in a multi-product scenario: the magnitudes of the analysis do not vary, but the volumes, prices, and costs do.
  2. The break-even point provides a perspective to understand the operational situation of the company.
  3. The benefit/volume ratio (B/V): indicates the benefit needed to cover the amount of sales for the safety margin.
  4. The composition of sales can define the average product composition in a multi-product CVB analysis. This sales analysis is made on the basis of the volumes of sales in physical units.
  5. If a company’s sales exceed their break-even point, we can say that the company’s profitability is positive.
  6. Which of the following assumptions are violated in the CVB model: The volume of production and sales price are the only factors affecting the variable cost.
    It is true that:
    • For the production volumes in the range of applicability of the analysis, fixed costs remain constant.
    • It involves the manufacture and sale of a single product.
    • All costs can be broken down, depending on the volume of production, into fixed and variable components.
  7. The reason for the margin of safety: Reports the percentage of revenues that are generating profits.
  8. What is meant by operating leverage?: The amplified percentage change in profit as a result of a percentage variation in sales.

Budgeting in Business

  1. The cash budget: Collects an estimate of the possible forecast of receipts and payments that the company expects to make during the financial year.
  2. The operating budget: Focuses on the activities of the undertaking.
  3. The unit budget is obtained by dividing: The adjusted budget by the actual production.
  4. The budget operator is one that sets the objectives and mechanisms for its control in the operational areas of the company.
  5. The budget is a document that allows business management.
  6. The budget: is a motivational tool in corporate governance.
  7. Indicate which of the following statements is correct: The estimated cost for one unit of product may differ in flexible and tight budgets.
  8. The master budget: must be agreed upon by all participants in its preparation and approved by the general management of the company.
  9. The master budget: includes the operating budget, capital budget, and projected financial statements.
  10. A negative shift in the financial and capital budget by 10% compared to the expected: Is more compromising than a deviation in the same proportion in the operating budget.

Standard Costing and Variance Analysis

  1. Generally, economists consider deviations for technical deviations in direct elements: less controllable because they do not rely exclusively on the willingness of the perpetrator.
  2. For setting standards, the following is used: The fixed budget.
  3. The standard cost system of budgeting, what technique is used in the calculation of deviations?: Incremental variable budget set to actual production.
  4. The standard of raw material is measured in: Physical units X currency unit.
  5. Estimation based on a standard is known as: Standard average.
  6. The standard cost: Default costs are pursuing production efficiency in desirable or possible working conditions.
  7. The term indicates: Activity was estimated for a production equal to the real one.
  8. The standard cost of the work unit of a particular section is calculated by: dividing the total indirect cost for the section provided by the planned activity.
  9. If there is a budget system in the enterprise: The standard cost for a normal utilization of productive capacity can be obtained.
  10. A cost is elementary if: It can be clearly decomposed into its component quantity and price.