Question 1

Assume sales next year total $240,000;product A $70,000,product B $90,000 and C $80,000.Total Contribution Margin for Fletcher will be closest to:

Accepted Answer

A)  $60,000. 
B)  $62,800. 
C)  $32,800. 
D)  $30,000. 
A)  $60,000. 
B)  $62,800. 
C)  $32,800. 
D)  $30,000.

Question 2

The break-even point is closest to which of the following?

Accepted Answer

A)  19,111 units. 
B)  10,118 units. 
C)  21,500 units. 
D)  24,000 units. 
A)  19,111 units. 
B)  10,118 units. 
C)  21,500 units. 
D)  24,000 units.

Question 3

The break-even point in sales for Rice Company is $360,000,and the company's contribution margin ratio is 20%.Its income tax rate is 40%.If Rice Company desires an after-tax operating profit of $84,000,what would total sales have to be?

Accepted Answer

A)  $1,050,360. 
B)  $1,060,000. 
C)  $780,000. 
D)  Cannot be determined without additional information.Sales = (360,000 * .20 + 140,000)/.20 = $1,060,000 
A)  $1,050,360. 
B)  $1,060,000. 
C)  $780,000. 
D)  Cannot be determined without additional information.Sales = (360,000 * .20 + 140,000)/.20 = $1,060,000

Question 4

What is the company's contribution margin ratio?

Accepted Answer

A)  250%. 
B)  150%. 
C)  70%. 
D)  30%. 
A)  250%. 
B)  150%. 
C)  70%. 
D)  30%.

Question 5

How is the degree of operating leverage calculated?

Accepted Answer

A)  Contribution margin divided by sales. 
B)  Gross margin divided by operating income. 
C)  Operating income divided by sales. 
D)  Contribution margin divided by operating income. 
A)  Contribution margin divided by sales. 
B)  Gross margin divided by operating income. 
C)  Operating income divided by sales. 
D)  Contribution margin divided by operating income.

Question 6

A product sells for $20 per unit and has a contribution margin ratio of 40%.Fixed expenses total $240,000 annually.How many units of the product must be sold to yield an operating income of $60,000?

Accepted Answer

A)  37,500 units. 
B)  40,000 units. 
C)  65,000 units. 
D)  30,000 units. 
A)  37,500 units. 
B)  40,000 units. 
C)  65,000 units. 
D)  30,000 units.

Question 7

The formula for the break-even point is the same as the formula to attain a given target operating profit for the special case where the target operating profit is zero.

Accepted Answer

A) True 
 B)False

Question 8

The company has an opportunity to secure a special order of 800 units if it is willing to drop the selling price on these units to $13.Costs of securing the special order would be $1,000.The special order would not affect the company's regular sales.If the special order is accepted,what will be the impact on the company's overall operating income?

Accepted Answer

A)  Increase $3,200. 
B)  Increase $2,200. 
C)  Increase $3,800. 
D)  Remain the same.Incremental profit = 800 * (13 - 9)- 1,000 = $2,200 increase 
A)  Increase $3,200. 
B)  Increase $2,200. 
C)  Increase $3,800. 
D)  Remain the same.Incremental profit = 800 * (13 - 9)- 1,000 = $2,200 increase

Question 9

Wilson Company prepared the following preliminary budget assuming no advertising expenditures:  
Based on a market study,the company estimated that it could increase the unit selling price by 15% and increase the unit sales volume by 10%,if $100,000 were spent on advertising.Assuming that these changes are incorporated in its budget,what should be the budgeted operating income?

Accepted Answer

A)  $175,000. 
B)  $190,000. 
C)  $205,000. 
D)  $365,000.Budgeted Operating Income = 100,000 * 1.10 * $5.50 - 300,000 - 100,000 = $205,000. 
A)  $175,000. 
B)  $190,000. 
C)  $205,000. 
D)  $365,000.Budgeted Operating Income = 100,000 * 1.10 * $5.50 - 300,000 - 100,000 = $205,000.

Question 10

At the break-even point: Sales - Variable expenses = Fixed expenses.

Accepted Answer

A) True 
 B)False

Question 11

What is the contribution margin?

Accepted Answer

A)  $240,000. 
B)  $560,000. 
C)  $632,000. 
D)  $72,000. 
A)  $240,000. 
B)  $560,000. 
C)  $632,000. 
D)  $72,000.

Question 12

The following information pertains to Rica Company:  
How much is Rica's break-even point?

Accepted Answer

A)  9,848 units. 
B)  10,000 units. 
C)  18,571 units. 
D)  26,000 units.B/E = (70,000 + 60,000)/13 = 10,000 units. 
A)  9,848 units. 
B)  10,000 units. 
C)  18,571 units. 
D)  26,000 units.B/E = (70,000 + 60,000)/13 = 10,000 units.

Question 13

How is the margin of safety percentage computed?

Accepted Answer

A)  Break-even sales divided by Total sales. 
B)  Total sales minus Break-even sales. 
C)  (Total sales - Break-even sales)divided by Break-even sales. 
D)  (Total sales - Break-even sales)divided by Total sales. 
A)  Break-even sales divided by Total sales. 
B)  Total sales minus Break-even sales. 
C)  (Total sales - Break-even sales)divided by Break-even sales. 
D)  (Total sales - Break-even sales)divided by Total sales.

Question 14

Jeff Merchandisers (JM)has determined with 100 percent certainty the following costs for making one unit of its only product:   
The company is,however,not sure of the behaviour of its total indirect manufacturing costs (that is,manufacturing overhead).The controller therefore ran a simple regression based on 20 pairs of monthly observations and obtained the following results:   
Y represents total monthly manufacturing overhead costs while X represents total monthly manufacturing direct labour costs.
Required:
Assume JM incurs NO selling and administrative expenses.What is your best estimate of the company's monthly breakeven sales in units at a guaranteed selling price of $20.00 per unit?

Accepted Answer

The answer of Jeff Merchandisers (JM)has determined with 100 percent...

Question 15

What is the break-even point in annual sales dollars?

Accepted Answer

A)  $530,000. 
B)  $350,000. 
C)  $460,000. 
D)  $400,000. 
A)  $530,000. 
B)  $350,000. 
C)  $460,000. 
D)  $400,000.

Question 16

Lindsay Company reported the following results from sales of 5,000 units for the month of June:  
Assume that Lindsay increases the selling price of the product by 10% on July 1.How many units would have to be sold in July in order to generate an operating income of $20,000?

Accepted Answer

A)  4,000 units. 
B)  4,300 units. 
C)  4,500 units. 
D)  5,000 units.Units required = (60,000 + 20,000)/20 = 4,000 units. 
A)  4,000 units. 
B)  4,300 units. 
C)  4,500 units. 
D)  5,000 units.Units required = (60,000 + 20,000)/20 = 4,000 units.

Question 17

If the company wants its margin of safety to equal $35,000 next year,all other factors remaining the same,how many units will it need to sell?

Accepted Answer

A)  1,000 units. 
B)  833 units. 
C)  1,583 units. 
D)  1,833 units. 
A)  1,000 units. 
B)  833 units. 
C)  1,583 units. 
D)  1,833 units.

Question 18

What is the contribution margin ratio?

Accepted Answer

A)  12.5%. 
B)  33.0%. 
C)  25.0%. 
D)  37.5%. 
A)  12.5%. 
B)  33.0%. 
C)  25.0%. 
D)  37.5%.

Question 19

If the company wants its margin of safety to equal $35,000 next year,all other factors remaining the same,how many units will it need to sell?

Accepted Answer

A)  1,000 units. 
B)  833 units. 
C)  1,583 units. 
D)  1,833 units. 
A)  1,000 units. 
B)  833 units. 
C)  1,583 units. 
D)  1,833 units.

Question 20

Curtis Company anticipates selling 10,000 units next year.The company wants to earn an operating income equal to 10% of sales.If variable expenses are $12 per unit,and fixed expenses total $78,000 per year,what selling price must be established to achieve the desired level of operating income?

Accepted Answer

A)  $19.80 per unit. 
B)  $18.00 per unit. 
C)  $21.78 per unit. 
D)  $22.00 per unit.Selling Price = 220,000/10,000 = $22 per unit. 
A)  $19.80 per unit. 
B)  $18.00 per unit. 
C)  $21.78 per unit. 
D)  $22.00 per unit.Selling Price = 220,000/10,000 = $22 per unit.

Assume sales next year total $240,000;product A $70,000,product B $90,000 and C $80,000.Total Contribution Margin for Fletcher will be closest to:

The break-even point is closest to which of the following?

The break-even point in sales for Rice Company is $360,000,and the company's contribution margin ratio is 20%.Its income tax rate is 40%.If Rice Company desires an after-tax operating profit of $84,000,what would total sales have to be?

What is the company's contribution margin ratio?

How is the degree of operating leverage calculated?

A product sells for $20 per unit and has a contribution margin ratio of 40%.Fixed expenses total $240,000 annually.How many units of the product must be sold to yield an operating income of $60,000?

The formula for the break-even point is the same as the formula to attain a given target operating profit for the special case where the target operating profit is zero.

At the break-even point: Sales - Variable expenses = Fixed expenses.

What is the contribution margin?

The following information pertains to Rica Company: How much is Rica's break-even point?

How is the margin of safety percentage computed?

What is the break-even point in annual sales dollars?

Lindsay Company reported the following results from sales of 5,000 units for the month of June: Assume that Lindsay increases the selling price of the product by 10% on July 1.How many units would have to be sold in July in order to generate an operating income of $20,000?

If the company wants its margin of safety to equal $35,000 next year,all other factors remaining the same,how many units will it need to sell?

What is the contribution margin ratio?

If the company wants its margin of safety to equal $35,000 next year,all other factors remaining the same,how many units will it need to sell?

Curtis Company anticipates selling 10,000 units next year.The company wants to earn an operating income equal to 10% of sales.If variable expenses are $12 per unit,and fixed expenses total $78,000 per year,what selling price must be established to achieve the desired level of operating income?

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Cost Behaviour: Analysis and Use

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: a Tool to Aid Decision Making

Variable Costing: a Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

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Exam 4: Cost-Volume-Profit Relationships

Assume sales next year total $240,000;product A $70,000,product B $90,000 and C $80,000.Total Contribution Margin for Fletcher will be closest to:

The break-even point is closest to which of the following?

The break-even point in sales for Rice Company is $360,000,and the company's contribution margin ratio is 20%.Its income tax rate is 40%.If Rice Company desires an after-tax operating profit of $84,000,what would total sales have to be?

What is the company's contribution margin ratio?

How is the degree of operating leverage calculated?

A product sells for $20 per unit and has a contribution margin ratio of 40%.Fixed expenses total $240,000 annually.How many units of the product must be sold to yield an operating income of $60,000?

The formula for the break-even point is the same as the formula to attain a given target operating profit for the special case where the target operating profit is zero.

At the break-even point: Sales - Variable expenses = Fixed expenses.

What is the contribution margin?

The following information pertains to Rica Company: How much is Rica's break-even point?

How is the margin of safety percentage computed?

What is the break-even point in annual sales dollars?

Lindsay Company reported the following results from sales of 5,000 units for the month of June: Assume that Lindsay increases the selling price of the product by 10% on July 1.How many units would have to be sold in July in order to generate an operating income of $20,000?

If the company wants its margin of safety to equal $35,000 next year,all other factors remaining the same,how many units will it need to sell?

What is the contribution margin ratio?

If the company wants its margin of safety to equal $35,000 next year,all other factors remaining the same,how many units will it need to sell?

Curtis Company anticipates selling 10,000 units next year.The company wants to earn an operating income equal to 10% of sales.If variable expenses are $12 per unit,and fixed expenses total $78,000 per year,what selling price must be established to achieve the desired level of operating income?

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Cost Behaviour: Analysis and Use

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: a Tool to Aid Decision Making

Variable Costing: a Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis Online

Filters