Reference: 08-11 Hurst Co. manufactures and sells a single product. Price and cost data regarding this product are as follows: \[\begin{array} { | l | l | } \hline \text { Selling price } & \$ 40 \text { per unit } \\ \hline \text { Variable manufacturing costs } & \$ 20 \text { per unit } \\ \hline \text { Variable selling \& admin. expenses } & \$ 6 \text { per unit } \\ \hline \text { Fixed manufacturing overhead } & \$ 208,000 \text { per year } \\ \hline \text { Fixed selling \& admin. expenses } & \$ 324,000 \text { per year } \\ \hline \end{array}\] -The break-even point in units per year is?

A) 38,000. B) 26,600. C) 15,200. D) 40,000. A) 38,000. B) 26,600. C) 15,200. D) 40,000.

Reference: 08-09 Fletcher Company has three products with the following characteristics: \[\begin{array} { | l | l | l | l | } \hline & \text { Product A } & \text { Product B } & \text { Product C } \\ \hline \text { Monthly sales in dollars } & \$ 60,000 & \$ 80,000 & \$ 100,000 \\ \hline \text { Contribution margin ratio } & 20 \% & 40 \% & 16 \% \\ \hline \end{array}\] -The overall contribution margin ratio for the company as a whole is (round your final answer to the nearest tenth of a percent):

A) 75.0%. B) 25.3%. C) 28.5%. D) 25.0%. A) 75.0%. B) 25.3%. C) 28.5%. D) 25.0%.

Reference: 08-01 The following is Addison Corporation's contribution format income statement for last month: \[\begin{array} { | l | c | } \hline \text { Sales } & \$ 1,000,000 \\ \hline \text { Less variable expenses } & 700,000 \\ \hline \text { Contribution margin } & 300,000 \\ \hline \text { Less fixed expenses } & 180,000 \\ \hline \text { Net income } & \$ 120,000 \\ \hline \end{array}\] The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month. -How many units would the company have to sell to attain target profits of $150,000

A) 37,500 units. B) 22,000 units. C) 25,000 units. D) 26,667 units. A) 37,500 units. B) 22,000 units. C) 25,000 units. D) 26,667 units.

Reference: 08-04 The following data relate to a company that produces and sells a travel guide that is updated monthly: \[\begin{array} { | l | l | } \hline \text { Fixed costs: } & \\ \hline \text { Copy editing } & \$ 6,000 \\ \hline \text { Art work } & 2,000 \\ \hline \text { Typesetting } & 72,000 \\ \hline & \\ \hline \text { Variable costs: } & \\ \hline \text { Printing and binding } & \$ 3.20 \text { per copy } \\ \hline \text { Bookstore discounts } & 4.00 \text { per copy } \\ \hline \text { Salespersons' commissions } & 0.50 \text { per copy } \\ \hline \text { Author's royalties } & 2.00 \text { per copy } \\ \hline \end{array}\] Each book sells for $20.00. The company sold 8,000 books in June and 10,000 books in July. -The degree of operating leverage for July is:

A) the same as that for June. B) lower than that for June. C) not determinable. D) higher than that for June. A) the same as that for June. B) lower than that for June. C) not determinable. D) higher than that for June.

Reference: 08-03 McGordon Corporation has provided the following data: \[\begin{array} { | l | l | } \hline \text { Sales } & \$ 800,000 \\ \hline \text { Variable expenses } & 560,000 \\ \hline \text { Fixed expenses } & 168,000 \\ \hline \end{array}\] -The break-even point in sales dollars is?

A) $240,000. B) $560,000. C) $408,000. D) $728,000. A) $240,000. B) $560,000. C) $408,000. D) $728,000.

The following data pertain to Wistron Company's two products: \[\begin{array} { | l | l | l | } \hline & \text { Product } X & \text { Product } Y \\ \hline \text { Sales in dollars } & \$ 100,000 & \$ 80,000 \\ \hline \text { Contribution margin ratio } & 48 \% & 30 \% \\ \hline \end{array}\] If fixed expenses for the company as a whole are $60,000 and the product mix is constant, the overall break-even point for the company would be:

A) $132,000. B) $153,846. C) $150,000. D) $100,000. A) $132,000. B) $153,846. C) $150,000. D) $100,000.

The following is last month's contribution format income statement: \[\begin{array} { | l | c | } \hline \text { Sales } ( 20,000 \text { units } ) & \$ 1,800,000 \\ \hline \text { Less variable expenses } & 1,200,000 \\ \hline \text { Contribution margin } & 600,000 \\ \hline \text { Less fixed expenses } & 400,000 \\ \hline \text { Net income } & \$ 200,000 \\ \hline \end{array}\] What is the company's break-even in sales dollars?

A) $1,800,000. B) $1,200,000. C) $1,600,000. D) $0. A) $1,800,000. B) $1,200,000. C) $1,600,000. D) $0.

Wallace, Inc. prepared the following budgeted data based on a sales forecast of $6,000,000: \[\begin{array} { | l | l | l | } \hline & \text { Variable } & \text { Fixed } \\ \hline \text { Direct materials } & \$ 1,600,000 & \\ \hline \text { Direct labour } & 1,400,000 & \\ \hline \text { Factory overhead } & 600,000 & \$ 900,000 \\ \hline \text { Selling expenses } & 240,000 & 360,000 \\ \hline \text { Administrative expenses } & 60,000 & 140,000 \\ \hline \text { Total } & \$ 3,900,000 & \$ 1,400,000 \\ \hline \end{array}\] What would be the amount of sales dollars at the break-even point?

A) $4,000,000. B) $5,300,000. C) $3,500,000. D) $2,250,000. A) $4,000,000. B) $5,300,000. C) $3,500,000. D) $2,250,000.

Kern Company prepared the following tentative budget for next year: \[\begin{array} { | l | l | } \hline \text { Sales } & \$ 500,000 \\ \hline \text { Selling price } & \$ 5 \text { per unit } \\ \hline \text { Variable expenses } & \$ 300,000 \\ \hline \text { Fixed expenses } & \$ 150,000 \\ \hline \end{array}\] The sales manager argues that the unit selling price could be increased by 20%, with an expected volume decrease of only 10%. If Kern incorporates these changes in its budget, what should be the budgeted net income?

A) $66,000. B) $120,000. C) $90,000. D) $145,000. A) $66,000. B) $120,000. C) $90,000. D) $145,000.

The following is last month's contribution format income statement: \[\begin{array} { | l | c | } \hline \text { Sales (12,000 units) } & \$ 1,200,000 \\ \hline \text { Less variable expenses } & 700,000 \\ \hline \text { Contribution margin } & 500,000 \\ \hline \text { Less fixed expenses } & 300,000 \\ \hline \text { Net income } & \$ 200,000 \\ \hline \end{array}\] What is the company's margin of safety percentage?

A) 42%. B) 40%. C) 17%. D) 20%. A) 42%. B) 40%. C) 17%. D) 20%.

Exam 8: Cost-Volume-Profit Relationships

Gerber Company is planning to sell 200,000 units for $2.00 a unit and will just brea? even at this level of sales. The contribution margin ratio is 25%. What are the company's fixed expenses?

(Multiple Choice)

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Question 61

Ostler Company's net income last year was $10,000 and its contribution margin wa? $50,000. Using the operating leverage concept, if the company's sales increase next year by 8%, net income can be expected to increase by:

(Multiple Choice)

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Question 62

Reference: 08-11 Hurst Co. manufactures and sells a single product. Price and cost data regarding this product are as follows: Selling price \ 40 per unit Variable manufacturing costs \ 20 per unit Variable selling \& admin. expenses \ 6 per unit Fixed manufacturing overhead \ 208,000 per year Fixed selling \& admin. expenses \ 324,000 per year -The break-even point in units per year is?

(Multiple Choice)

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(88)

Question 63

Reference: 08-09 Fletcher Company has three products with the following characteristics: Product A Product B Product C Monthly sales in dollars \ 60,000 \ 80,000 \ 100,000 Contribution margin ratio 20\% 40\% 16\% -The overall contribution margin ratio for the company as a whole is (round your final answer to the nearest tenth of a percent):

(Multiple Choice)

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Question 64

Young Company has a margin of safety percentage of 20%. The break-even in sales dollars point is $400,000 and the variable costs are 40% of sales. Given this information, the net income is:

(Multiple Choice)

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Question 65

The break-even point in units sold will decrease if there is an increase in which of the following?

(Multiple Choice)

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Question 66

In the income statement of a manufacturing business with both variable and fixed overhead costs of production, if there are no beginning or ending inventories, comparing Absorption Costing to Variable Costing, which of the following statements is true?

(Multiple Choice)

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Question 67

Reference: 08-01 The following is Addison Corporation's contribution format income statement for last month: Sales \ 1,000,000 Less variable expenses 700,000 Contribution margin 300,000 Less fixed expenses 180,000 Net income \ 120,000 The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month. -How many units would the company have to sell to attain target profits of $150,000

(Multiple Choice)

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Question 68

Reference: 08-04 The following data relate to a company that produces and sells a travel guide that is updated monthly: Fixed costs: Copy editing \ 6,000 Art work 2,000 Typesetting 72,000 Variable costs: Printing and binding \ 3.20 per copy Bookstore discounts 4.00 per copy Salespersons' commissions 0.50 per copy Author's royalties 2.00 per copy Each book sells for $20.00. The company sold 8,000 books in June and 10,000 books in July. -The degree of operating leverage for July is:

(Multiple Choice)

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Question 69

Reference: 08-03 McGordon Corporation has provided the following data: Sales \ 800,000 Variable expenses 560,000 Fixed expenses 168,000 -The break-even point in sales dollars is?

(Multiple Choice)

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(80)

Question 70

The following data pertain to Wistron Company's two products: Product X Product Y Sales in dollars \ 100,000 \ 80,000 Contribution margin ratio 48\% 30\% If fixed expenses for the company as a whole are $60,000 and the product mix is constant, the overall break-even point for the company would be:

(Multiple Choice)

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Question 71

The margin of safety percentage is equal to the margin of safety in dollars divided by total sales in dollars.

(True/False)

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Question 72

How many photo-prints did the division have to sell to break even

(Multiple Choice)

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Question 73

The following is last month's contribution format income statement: Sales (20,000 units ) \ 1,800,000 Less variable expenses 1,200,000 Contribution margin 600,000 Less fixed expenses 400,000 Net income \ 200,000 What is the company's break-even in sales dollars?

(Multiple Choice)

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Question 74

Wallace, Inc. prepared the following budgeted data based on a sales forecast of $6,000,000: Variable Fixed Direct materials \ 1,600,000 Direct labour 1,400,000 Factory overhead 600,000 \ 900,000 Selling expenses 240,000 360,000 Administrative expenses 60,000 140,000 Total \ 3,900,000 \ 1,400,000 What would be the amount of sales dollars at the break-even point?

(Multiple Choice)

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Question 75

Kern Company prepared the following tentative budget for next year: Sales \ 500,000 Selling price \ 5 per unit Variable expenses \ 300,000 Fixed expenses \ 150,000 The sales manager argues that the unit selling price could be increased by 20%, with an expected volume decrease of only 10%. If Kern incorporates these changes in its budget, what should be the budgeted net income?

(Multiple Choice)

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Question 76

The following is last month's contribution format income statement: Sales (12,000 units) \ 1,200,000 Less variable expenses 700,000 Contribution margin 500,000 Less fixed expenses 300,000 Net income \ 200,000 What is the company's margin of safety percentage?

(Multiple Choice)

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Question 77

A total of 30,000 units were sold last year. The contribution margin per unit was $2, and fixed expenses totalled $20,000 for the year. This year fixed expenses are expected to increase to $26,000, but the contribution margin per unit will remain unchanged at $2. How many units must be sold this year to earn the same net income as was earned last year?

(Multiple Choice)

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Question 78

While using Variable Costing format of income statement, which of the following is not included in product costs?

(Multiple Choice)

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Question 79

The break-even point in units can be obtained by dividing total fixed expenses by the contribution margin ratio.

(True/False)

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Question 80

Gerber Company is planning to sell 200,000 units for $2.00 a unit and will just brea? even at this level of sales. The contribution margin ratio is 25%. What are the company's fixed expenses?

Ostler Company's net income last year was $10,000 and its contribution margin wa? $50,000. Using the operating leverage concept, if the company's sales increase next year by 8%, net income can be expected to increase by:

Young Company has a margin of safety percentage of 20%. The break-even in sales dollars point is $400,000 and the variable costs are 40% of sales. Given this information, the net income is:

The break-even point in units sold will decrease if there is an increase in which of the following?

In the income statement of a manufacturing business with both variable and fixed overhead costs of production, if there are no beginning or ending inventories, comparing Absorption Costing to Variable Costing, which of the following statements is true?

Reference: 08-03 McGordon Corporation has provided the following data: Sales \ 800,000 Variable expenses 560,000 Fixed expenses 168,000 -The break-even point in sales dollars is?

The following data pertain to Wistron Company's two products: Product X Product Y Sales in dollars \ 100,000 \ 80,000 Contribution margin ratio 48\% 30\% If fixed expenses for the company as a whole are $60,000 and the product mix is constant, the overall break-even point for the company would be:

The margin of safety percentage is equal to the margin of safety in dollars divided by total sales in dollars.

How many photo-prints did the division have to sell to break even

The following is last month's contribution format income statement: Sales (20,000 units ) \ 1,800,000 Less variable expenses 1,200,000 Contribution margin 600,000 Less fixed expenses 400,000 Net income \ 200,000 What is the company's break-even in sales dollars?

The following is last month's contribution format income statement: Sales (12,000 units) \ 1,200,000 Less variable expenses 700,000 Contribution margin 500,000 Less fixed expenses 300,000 Net income \ 200,000 What is the company's margin of safety percentage?

While using Variable Costing format of income statement, which of the following is not included in product costs?

The break-even point in units can be obtained by dividing total fixed expenses by the contribution margin ratio.

An Introduction to Managerial Accounting

Cost Concepts

Systems Design: Job-Order Costing

Process Costing

Activity-Based Costing

Cost Behaviour: Analysis and Use

Budgeting

Relevant Costs: the Key to Decision Making

Capital Budgeting Decisions

Standard Costs and Variance Analysis

Organizational Structure and Performance Measurement

How Well Am I Doing Financial Statement Analysis Online

How Well Am I Doing Cash Flow Statement Online

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