A firm with fixed costs of $61,500 per month sells three products with the following characteristics: $\begin{array}{lll}& \text { Sales Mix } & \text { Contribution } \\ \text { Product } & \text { Percentage } & \text { Margin }\\ \mathrm{P} & 25 \% & \$ 48 \\ \mathrm{Q} & 50 \% & 50 \\ \mathrm{R} & 25 \% & 52 \end{array}$ How many total units must be sold to break even?

A) 1,230 B) 1,500 C) 1,533 D) 1,600 A) 1,230 B) 1,500 C) 1,533 D) 1,600

Ferguson Co. incurs $568,000 in fixed costs while producing three products with the following characteristics: $\begin{array}{llll}& \text { Sales Mix } & \text { Unit Contribution } & \text { Contribution } \\ \text { Product } & \text { (Units) } & \text { Margin } & \text { Margin Ratio }\\ \mathrm{T} & 5 & \$ 900 & 45 \% \\ \mathrm{Q} & 3 & 600 & 40 \% \\ \mathrm{R} & 2 & 400 & 35 \% \end{array}$ What is the selling price of Product T?

A) $1,200 B) $1,143 C) $2,000 D) $1,500 A) $1,200 B) $1,143 C) $2,000 D) $1,500

PhotoMix Corporation produces three products. Cost, price, and volume data is shown below: $\begin{array}{lr} \text { Total Fixed costs } & \$ 2,400 \\ \text { Tax rate } & 40 \% \end{array}$ $\begin{array}{lrrr}&\text { Picture } & \text { Candle } & \text { CD } \\ &\text { Holders } & \text { Holders } & \text { Holders } \\ \hline \text { Normal volume } & 300 & 150 & 200 \\ \text { Price per unit } & \$ 5 & \$ 7 & \$ 10 \\ \text { Variable cost per unit } & 2 & 3 & 4 \end{array}$ When using units as the measure, what proportion of the sales mix do picture holders represent? Round to the nearest whole percent.

A) 33% B) 46% C) Some other percentage D) Cannot be determined A) 33% B) 46% C) Some other percentage D) Cannot be determined

Exam 3: Cost-Volume-Profit Analysis

BETA sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: If BETA increases its sales volume by 10%, what will happen to its margin of safety?

(Multiple Choice)

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Question 121

Dundas Inc. manufactures a single product. The product sells for $10. The variable manufacturing cost per unit is $2 and the variable selling cost is $2 per unit. Dundas incurs monthly fixed costs of $100,000 for manufacturing and $140,000 for administration and selling. If Dundas raises its selling price by 10% in response to a 10% increase in variable costs, and income taxes are 40%, its new breakeven point in sales dollars (relative to that of the original data above) will be:

(Multiple Choice)

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Question 122

The contribution margin per unit is calculated as Selling Price per unit minus Variable Cost per unit.

(True/False)

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Question 123

BETA sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: Which of the following actions will move Point B higher on the y axis?

(Multiple Choice)

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Question 124

Salmon Co. is deciding between two compensation plans. In Plan A, salaries are $100,000 and the commission is $2 per unit. In Plan B, salaries are $40,000 and the commission is $4 per unit. Which of the following statements is true?

(Multiple Choice)

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Question 125

The contribution margin is:

(Multiple Choice)

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Question 126

FCS Corporation sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: Area C is best described as:

(Multiple Choice)

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Question 127

The Fricker Co. sells three products in a ratio of 3:2:6. The contribution margins for the units are $10, $25, and $30, respectively. Total fixed costs are $119,600. How many of each product must be sold to realize a pre-tax profit of $39,000? a) 450; 300; 900 b) 1,830; 1,220; 3,660 c) 1,380; 920; 2,760 d) 7,320; 4,880; 14,640

(Short Answer)

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Question 128

A firm with fixed costs of $61,500 per month sells three products with the following characteristics: Sales Mix Contribution Product Percentage Margin 25\% \ 48 50\% 50 25\% 52 How many total units must be sold to break even?

(Multiple Choice)

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Question 129

Log Homes on Spec (LHOS) in New Brunswick makes log home kits. Currently, the company does not advertise and has a low selling price for its kits compared to competitors. Next year, the company plans to increase the selling price and begin a wide advertising campaign. Which of the following statements is true?

(Multiple Choice)

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Question 130

Data extracted from the accounting information system of Turner Corporation produced the following graph. The equation of the dashed line is y = $25x; the equation of the solid line is y = $200 + $5x. The area to the left of the point where the two lines intersect, where the dashed line is below the solid line, shows where Turner:

(Multiple Choice)

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Question 131

Old MacDonald had a farm with expected fixed costs for next year of $91,000. The projected selling price per bushel is $12, with variable costs of $5 per bushel. How many bushels past the breakeven point does MacDonald have to sell to realize a pre-tax profit of $37,100?

(Multiple Choice)

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Question 132

A linear revenue function is one of the assumptions involved in CVP analysis.

(True/False)

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Question 133

Accountants typically do not perform CVP analysis; instead, they delegate that responsibility to production managers.

(True/False)

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Question 134

The breakeven point occurs when:

(Multiple Choice)

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Question 135

Which of the following is not an assumption in CVP analysis?

(Multiple Choice)

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Question 136

FCS Corporation sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: Point A is best described as:

(Multiple Choice)

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Question 137

Ferguson Co. incurs $568,000 in fixed costs while producing three products with the following characteristics: Sales Mix Unit Contribution Contribution Product (Units) Margin Margin Ratio 5 \ 900 45\% 3 600 40\% 2 400 35\% What is the selling price of Product T?

(Multiple Choice)

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Question 138

PhotoMix Corporation produces three products. Cost, price, and volume data is shown below: Total Fixed costs \ 2,400 Tax rate 40\% Picture Candle CD Holders Holders Holders Normal volume 300 150 200 Price per unit \ 5 \ 7 \ 10 Variable cost per unit 2 3 4 When using units as the measure, what proportion of the sales mix do picture holders represent? Round to the nearest whole percent.

(Multiple Choice)

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Question 139

The margin of safety is the:

(Multiple Choice)

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Question 140

BETA sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: If BETA increases its sales volume by 10%, what will happen to its margin of safety?

The contribution margin per unit is calculated as Selling Price per unit minus Variable Cost per unit.

BETA sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: Which of the following actions will move Point B higher on the y axis?

Salmon Co. is deciding between two compensation plans. In Plan A, salaries are $100,000 and the commission is $2 per unit. In Plan B, salaries are $40,000 and the commission is $4 per unit. Which of the following statements is true?

The contribution margin is:

FCS Corporation sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: Area C is best described as:

A firm with fixed costs of $61,500 per month sells three products with the following characteristics: Sales Mix Contribution Product Percentage Margin 25\% \ 48 50\% 50 25\% 52 How many total units must be sold to break even?

Old MacDonald had a farm with expected fixed costs for next year of $91,000. The projected selling price per bushel is $12, with variable costs of $5 per bushel. How many bushels past the breakeven point does MacDonald have to sell to realize a pre-tax profit of $37,100?

A linear revenue function is one of the assumptions involved in CVP analysis.

Accountants typically do not perform CVP analysis; instead, they delegate that responsibility to production managers.

The breakeven point occurs when:

Which of the following is not an assumption in CVP analysis?

FCS Corporation sells its single product for $14 per unit, and its variable cost per unit is $4. Total fixed costs are $800. Its CVP graph is as follows: Point A is best described as:

Ferguson Co. incurs $568,000 in fixed costs while producing three products with the following characteristics: Sales Mix Unit Contribution Contribution Product (Units) Margin Margin Ratio 5 \ 900 45\% 3 600 40\% 2 400 35\% What is the selling price of Product T?

The margin of safety is the:

The Role of Accounting Information in Ethical Management Decision Making

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