The amount by which an item contributes towards covering fixed cost and providing for profit is known

as:

a) gross profit
b) gross margin
c) contribution margin
d) net margin

Contribution margin = ?

a) Sales - Fixed expenses

b) Sales - Selling expenses
c) Sales - Admin. expenses
d) Sales - Variable expenses

If the amount of contribution margin is not enough to cover all fixed expenses, the business will

a) suffer a loss
b) earn a profit
c) neither earn a profit nor suffer a loss
d) be closed

Consider the following information:

Sales revenue: $12,000

 Variable manufacturing expenses: $3,000

Variable marketing and admin. expenses: $1,000

Fixed manufacturing expenses: $1,500

Fixed marketing and admin. expenses: $500

Based on the above information, the contribution margin is:

a) $9,000
b) $8,000
c) $10,500
d) $10,000

Variable cost per unit is multiplied to quantity of sold units to calculate

1. per unit cost

2. variable cost
3. fixed cost
4. multiple cost

The Break-even Point of a company is that level of sales income which will equal the sum of its
fixed cost.

a) True
b) False

2. Which of the following are characteristics of B.E.P?

a) There is no loss and no profit to the firm.

b) Total revenue is equal to total cost.
c) Contribution is equal to fixed cost.
d) All of the above.

3. Which of the following are assumptions for break-even analysis?

A) Elements of cost cannot be divided in different groups.

B) Fixed cost remains certain from zero production to full capacity.

C) Behavior of different costs is linear

D) Selling per price unit remains constant.

a) A, B, C
b) B, C, D
c) A, C, D
d) A, B, D

4. While measuring break-even analysis, it is considered that during a specific period there will be
no change in general price level, i.e., labor, cost of material and other overheads.

a) True
b) False

5. Which of the following are limitations of break-even analysis?

A) Static concept
b) Capital employed is taken into account.
c) Limitation of non-linear behavior of costs
d) Limitation of presence of perfect competition

6. Break-even analysis is used in “Make or Buy” decision.

a) True
b) False

7. Using equation method, Break-even point is calculated as

a) Sales = Variable expenses + Fixed expenses + Profit

b) Sales = Variable expenses + Fixed expenses - Profit

c) Sales = Variable expenses - Fixed expenses + Profit

 d) None of the above

8. Given selling price is Rs 10 per unit, variable cost is Rs 6 per unit and fixed cost is Rs 5,000. What
is break-even point?

a) 500 units
b) 1,000 units
c) 1,250 units
d) None of the above

9. Contribution is also known as

a) Contribution margin
b) Net Margin
c) Both a and b
d) None of the above

10. Given selling price is Rs 20 per unit, variable cost is Rs 16 per unit contribution is

a) Rs 1.25 per unit

b) Rs 4 per unit
c) Rs 0.8 per unit
d) None of the above

Profit at any level of sales in amount is measured as

a. Sales * P/V ratio – Variable cost

b. Sales * P/V ratio + Fixed cost
c. Sales * P/V ratio – Fixed cost
d. Sales * P/V ratio + Variable cost

Which of the following statements are true?

a) Contribution doesn’t include fixed cost whereas profit includes fixed cost.

b) Contribution is not based on the concept of marginal cost.

c) Contribution above breakeven point becomes profit.

d) All of the above

Profit-Volume ratio is also known as

a) Contribution ratio
b) Contribution/Sales ratio
c) Marginal Income percentage
d) All of the above

Which of the following statements are true?

a) P/V Ratio can never be used to measure break-even point

b) Higher the P/V ratio less will be the profit and vice versa

c) Concept of P/V ratio is also used to determine profit at a given volume of sales

d) All of the above

What will be the impact on B.E.P if variable costs are reduced?

a. Decrease
b. No change
c. Increase
d. None of the above

Risk is expressed in terms of probability and impact.

a) True
b) False

1. Capital market deals in

a. Debt and equity
b. Debt
c. Equity
d. Cash
2. Capital market is a very useful tool in channelizing the savings from
a. Individuals to corporate
b. Corporate to individuals
c. Government to individuals
d. Government to corporate
3. The efficiency of the capital market is dependent on the specialization attained by
 a. Intermediaries
b. Individuals
c. Government
d. Corporate
4. The foreign financial institutions have influence on Indian stock markets due to
a. Huge investment
b. Minor investment
c. Political background
d. Public image
5. The individuals can acquire shares of various companies at one time through
a. Investing in mutual funds
b. Investing in public provident fund
c. Investing in post saving bank
d. Housing loans
6. The turning point for Indian capital market was
a. The establishment of National Stock Exchange
b. The establishment of Bombay Stock Exchange
c. Introduction of licensing policy
d. Formation of FEMA Act
7. The SEBI has traced the movement of bank scrips linked with
a. Statement from Finance Ministry
b. Statement from Home Ministry
c. Statements form UK parliament
d. Statements form USA parliament
a)
8. Major beneficiaries of the amendment to the income tax act on increase in dividend payout are
a. The promoters of the company
b. The distributors of the company
c. The bankers of the company
d. The customers of the company
9. The amendment in SCRA was supposed to facilitate
a. The derivatives trading in the interest rate futures and options
b. The trading in securities in futures and options
c. The dealing in stock market by FII
d. The dealing in futures and options by FII

10. Demutualization was supposed to separate

a. Ownership and management from the right to access the trading
b. Ownership from management of a listed company
c. Share brokers and share holders from right to access the trading
d. Management from government intervention in trading
11. Now a days capital market includes even instruments like commercial paper.
 a. TRUE FALSE

12. Generally capital market is a market for __________ term funds and investment.
i. Long
ii. Short
iii. Fixed
iv. Current
13. Capital market refers to all __________ of raising medium and long term funds.
i. Institutes
ii. Laws
iii. Constitutions
iv. Functions
14. Capital market requires __________ to act between people who save and who need funds.
i. Intermediaries
ii. Agents
iii. Vendors
iv. Suppliers
15. Indian Capital market is considered as part of the __________ markets across the world.

i. Emerging
ii. Advanced
iii. Developed
iv. Matured
16. The secondary market committee of SEBI recommended the permission for stock splitting only if
share price was more than Rs. __________ .
i. 500
ii. 1,000
iii. 550
iv. 100
17. Country's largest bank, __________, has also entered the stock market.
i. State Bank of India
ii. ICICI Bank
iii. Citi Bank
iv. Reserve Bank of India