Better Bonds Better Bonds provided the following data: $\begin{array}{lr} \text { Sales } & \$ 540,000 \\ \text { Variable costs } & \$ 378,000 \\ \text { Fixed costs } & \$ 120,000 \\ \text { Expected production and sales in units } & 40,000 \end{array}$ -Refer to Plastic Gym. The company expects tree house demand to increase from 4,000 to 8,000 units. Given that demand for tree houses has doubled, what is the sales revenue at break-even assuming the new sales mix?

A) $140,000 B) $253,700 C) $411,250 D) $665,000 A) $140,000 B) $253,700 C) $411,250 D) $665,000

Follett Company expects to produce and sell 1,000 units next month. Data on costs follows: $\begin{array}{l} \text { Per unit costs: }\\ \begin{array}{ll} \text { Sales price } & \$ 10 \\ \text { Variable manufacturing costs } & \$ 1.50 \\ \text { Variable selling costs } & \$ 0.50 \end{array}\\ \text { Total costs: }\\ \text { Fixed manufacturing costs } & \$ 3,000 \\ \text { Fixed selling costs } & \$ 150 \end{array}$ A. Calculate the variable cost per unit. B. Calculate contribution margin per unit. C. Calculate the variable cost ratio. D. Calculate the contribution margin ratio.

A. Variable cost per unit = $1.50 + $0.5

Date Company Date Company makes calendars. Information on cost per unit is as follows: \[\begin{array} { l l } \text { Direct materials } & \$ 1.50 \\ \text { Direct labour } & \$ 1.20 \\ \text { Variable overhead } & \$ 0.90 \\ \text { Variable marketing expense } & \$ 0.40 \end{array}\] Fixed marketing expense totalled $13,000, and fixed administrative expense totalled $35,000. The sales price per calendar is $10. -Refer to Date Company. What is the break-even point in sales dollars?

A) $21,670 B) $28,000 C) $58,330 D) $80,000 A) $21,670 B) $28,000 C) $58,330 D) $80,000

Information about the K-9 Salon's two products is as follows: $\begin{array}{lc} &\underline{\text {Dog Brush}}&\underline{\text { Cat Toy}}\\ \text { Unit sales price }&\$9.00&\$9.00 \\ \text { Unit variable costs: }\\ \text { Manufacturing } & \$ 5.25&\$6.75 \\ \text { Selling } & \underline{.75} & \underline{.75} \\ \text { Total }&\$6.00&\$7.50\\ \\ \text { Monthly fixed costs are as follows: }\\ \text { Manufacturing } & \$ 82,500 \\ \text { Selling and administrative } & \$ 45,000 \\ \text { Total } & \$ 127,500 \end{array}$ Suppose the sales mix in units is 70% Product X and 30% Product Y. What total monthly sales volume in units is required to break even?

A) 8,333 units B) 16,667 units C) 50,000 units D) 56,667 units A) 8,333 units B) 16,667 units C) 50,000 units D) 56,667 units

The following data pertain to the three products produced by Rona Corporation: $\begin{array}{lrrr} &\underline{A} & \underline{B} &\underline{C}\\ \text { Sales price per unit } & \$ 5.00 & \$ 7.00 & \$ 6.00 \\ \text { Variable costs per unit } & \underline{4.00} & \underline{5.00} & \underline{3.00} \\ \text { Contribution margin per unit } & \underline{\$ 1.00} & \underline{\underline{\$ 2.00}} & \underline{\underline{\$ 3.00}} \end{array}$ Fixed costs are $90,000 per month. Of all units sold, 60% are Product A, 30% are Product B, and 10% are Product C. What is the monthly break-even point for total units?

A) 36,000 units B) 45,000 units C) 60,000 units D) 180,000 units A) 36,000 units B) 45,000 units C) 60,000 units D) 180,000 units

Exam 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool

Better Bonds Better Bonds provided the following data: Sales \ 540,000 Variable costs \ 378,000 Fixed costs \ 120,000 Expected production and sales in units 40,000 -Refer to Plastic Gym. The company expects tree house demand to increase from 4,000 to 8,000 units. Given that demand for tree houses has doubled, what is the sales revenue at break-even assuming the new sales mix?

(Multiple Choice)

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(63)

Question 41

By what amount can sales decline before losses are incurred?

(Multiple Choice)

4.9/5

(78)

Question 42

At the break-even point, revenue is equal to the contribution margin.

(True/False)

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(89)

Question 43

Match each following terms with their correct description from the items listed below. -Variable cost per unit

(Multiple Choice)

4.7/5

(75)

Question 44

If fixed costs increase, the break-even point will decrease.

(True/False)

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(80)

Question 45

Follett Company expects to produce and sell 1,000 units next month. Data on costs follows: Per unit costs: Sales price \ 10 Variable manufacturing costs \ 1.50 Variable selling costs \ 0.50 Total costs: Fixed manufacturing costs \ 3,000 Fixed selling costs \ 150 A. Calculate the variable cost per unit. B. Calculate contribution margin per unit. C. Calculate the variable cost ratio. D. Calculate the contribution margin ratio.

(Essay)

4.8/5

(90)

Question 46

Date Company Date Company makes calendars. Information on cost per unit is as follows: Direct materials \ 1.50 Direct labour \ 1.20 Variable overhead \ 0.90 Variable marketing expense \ 0.40 Fixed marketing expense totalled $13,000, and fixed administrative expense totalled $35,000. The sales price per calendar is $10. -Refer to Date Company. What is the break-even point in sales dollars?

(Multiple Choice)

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Question 47

What measures the sensitivity of profit changes to changes in sales volume?

(Multiple Choice)

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Question 48

Refer to Desjardin Tools. What is the contribution margin?

(Multiple Choice)

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Question 49

Which formulat calculates the contribution margin?

(Multiple Choice)

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Question 50

Information about the K-9 Salon's two products is as follows: Unit sales price \9 .00 \9 .00 Unit variable costs: Manufacturing \ 5.25 \6 .75 Selling Total \6 .00 \7 .50 Monthly fixed costs are as follows: Manufacturing \ 82,500 Selling and administrative \ 45,000 Total \ 127,500 Suppose the sales mix in units is 70% Product X and 30% Product Y. What total monthly sales volume in units is required to break even?

(Multiple Choice)

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(75)

Question 51

What formula is used to calculate contribution margin ratio?

(Multiple Choice)

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Question 52

What formula calculates the sales dollars needed to earn a desired profit?

(Multiple Choice)

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Question 53

What are two concepts useful to management when assessing risk?

(Essay)

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Question 54

Match each following terms with their correct description from the items listed below. -Fixed costs that are directly traceable to a given segment and, consequently, disappear if the segment is eliminated

(Multiple Choice)

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Question 55

What is characteristic of operating leverage?

(Multiple Choice)

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Question 56

The following data pertain to the three products produced by Rona Corporation: Sales price per unit \ 5.00 \ 7.00 \ 6.00 Variable costs per unit Contribution margin per unit Fixed costs are $90,000 per month. Of all units sold, 60% are Product A, 30% are Product B, and 10% are Product C. What is the monthly break-even point for total units?

(Multiple Choice)

4.7/5

(74)

Question 57

The Monterra Company provided the following information: Sales $500,000 Variable costs $100,000 Fixed costs $200,000 A. Calculate the contribution margin ratio. B. Calculate the level of sales in dollars necessary to generate a profit of $40,000?. C. Calculate the contribution margin ratio if the sales sales price is increased by 10%. D. Using the information in part C, calculate the level of sales in dollars is necessary to generate a profit of $40,000.

(Essay)

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(79)

Question 58

Which of the following reflects the ratio of fixed costs to the contribution margin ratio?

(Multiple Choice)

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Question 59

If variable costs per unit increase, the break-even point will increase.

(True/False)

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(94)

Question 60

By what amount can sales decline before losses are incurred?

At the break-even point, revenue is equal to the contribution margin.

Match each following terms with their correct description from the items listed below. -Variable cost per unit

If fixed costs increase, the break-even point will decrease.

What measures the sensitivity of profit changes to changes in sales volume?

Refer to Desjardin Tools. What is the contribution margin?

Which formulat calculates the contribution margin?

What formula is used to calculate contribution margin ratio?

What formula calculates the sales dollars needed to earn a desired profit?

What are two concepts useful to management when assessing risk?

Match each following terms with their correct description from the items listed below. -Fixed costs that are directly traceable to a given segment and, consequently, disappear if the segment is eliminated

What is characteristic of operating leverage?

Which of the following reflects the ratio of fixed costs to the contribution margin ratio?

If variable costs per unit increase, the break-even point will increase.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, Production, Cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

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