Question 1

If sales increase by 100 units,by how much should operating income increase?

Accepted Answer

A)  $400. 
B)  $4,800. 
C)  $1,500. 
D)  $2,500. 
A)  $400. 
B)  $4,800. 
C)  $1,500. 
D)  $2,500.

Question 2

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 3

What is the unit contribution margin per book?

Accepted Answer

A)  $10.30. 
B)  $14.30. 
C)  $10.80. 
D)  $8.30. 
A)  $10.30. 
B)  $14.30. 
C)  $10.80. 
D)  $8.30.

Question 4

The contribution margin ratio is closest to which of the following?

Accepted Answer

A)  47.1%. 
B)  2.1%. 
C)  1.9%. 
D)  52.9%. 
A)  47.1%. 
B)  2.1%. 
C)  1.9%. 
D)  52.9%.

Question 5

What is the company's margin of safety percentage?

Accepted Answer

A)  25%. 
B)  20%. 
C)  40%. 
D)  10%. 
A)  25%. 
B)  20%. 
C)  40%. 
D)  10%.

Question 6

The break-even in sales dollars for the expected sales mix is closest to which of the following?

Accepted Answer

A)  $160,772. 
B)  $95,178. 
C)  $109,091. 
D)  $175,644.Total CM = (150 - 120 - 16)* 600 + (165 - 126 - 13)* 1,200 = $39,600. 
A)  $160,772. 
B)  $95,178. 
C)  $109,091. 
D)  $175,644.Total CM = (150 - 120 - 16)* 600 + (165 - 126 - 13)* 1,200 = $39,600.

Question 7

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 8

The break-even point in unit sales increases when variable expenses do which of the following?

Accepted Answer

A)  Increase,and the selling price remains unchanged. 
B)  Decrease,and the selling price,remains unchanged. 
C)  Decrease,and the selling price increases. 
D)  Remain unchanged,and the selling price increases. 
A)  Increase,and the selling price remains unchanged. 
B)  Decrease,and the selling price,remains unchanged. 
C)  Decrease,and the selling price increases. 
D)  Remain unchanged,and the selling price increases.

Question 9

Kern Company prepared the following tentative budget for next year:  
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 operating income?

Accepted Answer

A)  $66,000. 
B)  $90,000. 
C)  $120,000. 
D)  $145,000.Budgeted operating income = 90,000 * $3 - 150,000 = $120,000. 
A)  $66,000. 
B)  $90,000. 
C)  $120,000. 
D)  $145,000.Budgeted operating income = 90,000 * $3 - 150,000 = $120,000.

Question 10

Company Y is considering two production technologies,Bronze and Platinum,for producing its new product.The cost structures of the two technologies are as follows:  
At what level of sales volume in units (rounded to the nearest whole unit)would Company Y be indifferent in choosing between the Bronze and Platinum technologies?

Accepted Answer

A)  10,000 units. 
B)  12,100 units. 
C)  13,000 units. 
D)  Cannot be determined without additional information. 
A)  10,000 units. 
B)  12,100 units. 
C)  13,000 units. 
D)  Cannot be determined without additional information.

Question 11

The following is Arkadia Corporation's contribution format income statement for last month:   
The company has no beginning or ending inventories and produced and sold 20,000 units during the month.
Required:
a)What is the company's contribution margin ratio?
b)What is the company's break-even in units?
c)If sales increase by 100 units,by how much should operating income increase?
d)How many units would the company have to sell to attain target operating income of $125,000?
e)What is the company's margin of safety in dollars?
f)What is the company's degree of operating leverage?
g)If the tax rate is 30%,how many units must be sold to attain an after tax profit of $84,000?

Accepted Answer

a)Contribution margin ratio
CM ratio = C

Question 12

The break-even in sales dollars for the expected sales mix is closest to which of the following?

Accepted Answer

A)  $160,772. 
B)  $95,178. 
C)  $109,091. 
D)  $175,644.Total CM = (150 - 120 - 16)* 600 + (165 - 126 - 13)* 1,200 = $39,600. 
A)  $160,772. 
B)  $95,178. 
C)  $109,091. 
D)  $175,644.Total CM = (150 - 120 - 16)* 600 + (165 - 126 - 13)* 1,200 = $39,600.

Question 13

A product sells for $20 per unit,and has a contribution margin ratio of 40%.Fixed expenses total $120,000 annually.The company that makes and sells the product has an income tax rate of 40%.How many units must be sold to yield an after-tax operating profit of $30,000?

Accepted Answer

A)  21,250 units. 
B)  18,750 units. 
C)  24,375 units. 
D)  14,167 units.Units required = (120,000 + 50,000)/(20 * .40)= 21,250 units. 
A)  21,250 units. 
B)  18,750 units. 
C)  24,375 units. 
D)  14,167 units.Units required = (120,000 + 50,000)/(20 * .40)= 21,250 units.

Question 14

What is the contribution margin ratio for the book?

Accepted Answer

A)  71.5%. 
B)  54.0%. 
C)  51.5%. 
D)  51.9%. 
A)  71.5%. 
B)  54.0%. 
C)  51.5%. 
D)  51.9%.

Question 15

The following monthly data are available for the Phelps Company:  
What are the break-even sales for the month for the company?

Accepted Answer

A)  $91,667. 
B)  $203,000. 
C)  $148,000. 
D)  $137,500. 
A)  $91,667. 
B)  $203,000. 
C)  $148,000. 
D)  $137,500.

Question 16

If two companies produce the same product and have the same total sales and same total expenses,operating leverage will be lower in the company with a higher proportion of fixed expenses in its cost structure.

Accepted Answer

A) True 
 B)False

Question 17

Belli-Pitt,Inc produces a single product.The results of the company's operations for a typical month are summarized in contribution format as follows:   
The company produced and sold 120,000 kilograms of product during the month.There were no beginning or ending inventories.
Required:
a)Given the present situation,compute
1 The break-even sales in kilograms.
2 The break-even sales in dollars.
3 The sales in kilograms that would be required to produce operating income of $90,000.
4 The margin of safety in dollars.
b)An important part of processing is performed by a machine that is currently being leased for $20,000 per month.Belli-Pitt has been offered an arrangement whereby it would pay $0.10 royalty per kilogram processed by the machine rather than the monthly lease.
1 Should the company choose the lease or the royalty plan?
2 Under the royalty plan,compute the break-even point in kilograms.
3 Under the royalty plan,compute the break-even point in dollars.
4 Under the royalty plan,determine the sales in kilograms that would be required to produce operating income of $90,000.

Accepted Answer

The answer of Belli-Pitt,Inc produces a single product.The results of...

Question 18

If total units sold remain unchanged,but the sales mix shifts more heavily toward Product C,what would the overall contribution margin ratio be expected to do?

Accepted Answer

A)  Increase. 
B)  Decrease. 
C)  Remain unchanged. 
D)  The effect cannot be predicted without additional information. 
A)  Increase. 
B)  Decrease. 
C)  Remain unchanged. 
D)  The effect cannot be predicted without additional information.

Question 19

If Dorian Company desires a monthly operating income equal to 10% of sales,what will its monthly sales have to be?

Accepted Answer

A)  $90,000. 
B)  $45,600. 
C)  $120,000. 
D)  $96,000. 
A)  $90,000. 
B)  $45,600. 
C)  $120,000. 
D)  $96,000.

Question 20

At a break-even point of 400 units sold,variable expenses were $4,000 and fixed expenses were $2,000.What will the 401st unit sold contribute to operating income?

Accepted Answer

A)  $0. 
B)  $5. 
C)  $10. 
D)  $15. 
A)  $0. 
B)  $5. 
C)  $10. 
D)  $15.

If sales increase by 100 units,by how much should operating income increase?

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 unit contribution margin per book?

The contribution margin ratio is closest to which of the following?

What is the company's margin of safety percentage?

The break-even in sales dollars for the expected sales mix is closest to which of the following?

What is the company's contribution margin ratio?

The break-even point in unit sales increases when variable expenses do which of the following?

Kern Company prepared the following tentative budget for next year: 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 operating income?

The break-even in sales dollars for the expected sales mix is closest to which of the following?

A product sells for $20 per unit,and has a contribution margin ratio of 40%.Fixed expenses total $120,000 annually.The company that makes and sells the product has an income tax rate of 40%.How many units must be sold to yield an after-tax operating profit of $30,000?

What is the contribution margin ratio for the book?

The following monthly data are available for the Phelps Company: What are the break-even sales for the month for the company?

If two companies produce the same product and have the same total sales and same total expenses,operating leverage will be lower in the company with a higher proportion of fixed expenses in its cost structure.

If total units sold remain unchanged,but the sales mix shifts more heavily toward Product C,what would the overall contribution margin ratio be expected to do?

If Dorian Company desires a monthly operating income equal to 10% of sales,what will its monthly sales have to be?

At a break-even point of 400 units sold,variable expenses were $4,000 and fixed expenses were $2,000.What will the 401^st unit sold contribute to 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

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Exam 4: Cost-Volume-Profit Relationships

If sales increase by 100 units,by how much should operating income increase?

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 unit contribution margin per book?

The contribution margin ratio is closest to which of the following?

What is the company's margin of safety percentage?

The break-even in sales dollars for the expected sales mix is closest to which of the following?

What is the company's contribution margin ratio?

The break-even point in unit sales increases when variable expenses do which of the following?

Kern Company prepared the following tentative budget for next year: 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 operating income?

The break-even in sales dollars for the expected sales mix is closest to which of the following?

A product sells for $20 per unit,and has a contribution margin ratio of 40%.Fixed expenses total $120,000 annually.The company that makes and sells the product has an income tax rate of 40%.How many units must be sold to yield an after-tax operating profit of $30,000?

What is the contribution margin ratio for the book?

The following monthly data are available for the Phelps Company: What are the break-even sales for the month for the company?

If two companies produce the same product and have the same total sales and same total expenses,operating leverage will be lower in the company with a higher proportion of fixed expenses in its cost structure.

If total units sold remain unchanged,but the sales mix shifts more heavily toward Product C,what would the overall contribution margin ratio be expected to do?

If Dorian Company desires a monthly operating income equal to 10% of sales,what will its monthly sales have to be?

At a break-even point of 400 units sold,variable expenses were $4,000 and fixed expenses were $2,000.What will the 401st unit sold contribute to 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

At a break-even point of 400 units sold,variable expenses were $4,000 and fixed expenses were $2,000.What will the 401^st unit sold contribute to operating income?