MSQ-01 - Activity Cost & CVP Analysis (Final)

According to cvp analysis a company could never incur

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30. According to CVP analysis, a company could never incur a loss that exceeded its total 31. Two companies produce and sell the same product in a competitive industry. Thus, the selling price of the product for each company is the same. Company 1 has a contribution margin ratio of 40% and fixed costs of $25 million. Company 2 is more automated, making its fixed costs 40% higher than those of Company 1. Company 2 also has a contribution margin ratio that is 30% greater than that of Company 1. By comparison, Company 1 will have the <List A> breakeven point in terms of dollar sales volume and will have the <List B> dollar profit potential once the indifference point in dollar sales volume is exceeded. A . B. C. D. List A Lower Lower Higher Higher List B Lesser Greater Lesser Greater
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