Date Company makes calendars. Information on cost per unit is as follows: Fixed marketing expense totalled $13,000, and fixed administrative expense totalled $35,000. The price per calendar is $10. $\begin{array}{lr} \text { Direct materials } & \$ 1.50 \\ \text { Direct labour } & 1.20 \\ \text { Variable overhead } & 0.90 \\ \text { Variable marketing expense } & 0.40 \end{array}$ -Refer to the Figure.How many units must be sold to yield a targeted income of $36,000?

A) 5,833 B) 6,000 C) 12,000 D) 14,000 A) 5,833 B) 6,000 C) 12,000 D) 14,000

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

A) 36% B) 40% C) 46% D) 50% A) 36% B) 40% C) 46% D) 50%

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

The answer of Follett Company expects to produce and sell...

Exam 4: Costvolumeprofit Analysis: a Managerial Planning Tool

Roundstreet Company sells a product for $14.Variable costs are $7 per unit,and total fixed costs are $7,000.What is the break-even point in units?

(Multiple Choice)

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Question 21

East Side Company produces two products,X and Y,which account for 60% and 40%,respectively,of total sales dollars.Contribution margin ratios are 50% for X and 25% for Y.Total fixed costs are $120,000.What is East Side's break-even point in sales dollars?

(Multiple Choice)

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Question 22

What is total contribution margin divided by sales revenue?

(Multiple Choice)

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Question 23

Which is characteristic of operating leverage?

(Multiple Choice)

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Question 24

Firm X and Firm Y compete within the same industry.Firm X manufactures its product using large amounts of direct labour.Firm Y has replaced direct labour with investment in machinery.Projected sales for both firms are 15% less than in the previous year.What will be the projected profits for Firm X compared to Firm Y?

(Multiple Choice)

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Question 25

The following data pertain to the three products produced by Rona Corporation: 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? Selling price per unit \ 5.00 \ 7.00 \ 6.00 Variable costs per unit 4.00 5.00 3.00 Contribution margin per unit \ 1.00 \ 2.00 \ 3.00

(Multiple Choice)

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Question 26

If fixed costs increase,the break-even point also increases.

(True/False)

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Question 27

Match each item with the correct statement below. -Variable cost per unit

(Multiple Choice)

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Question 28

Date Company makes calendars. Information on cost per unit is as follows: Fixed marketing expense totalled $13,000, and fixed administrative expense totalled $35,000. The price per calendar is $10. Direct materials \ 1.50 Direct labour 1.20 Variable overhead 0.90 Variable marketing expense 0.40 -Refer to the Figure.How many units must be sold to yield a targeted income of $36,000?

(Multiple Choice)

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Question 29

The following information was extracted from the accounting records of Gumbo Corporation: Selling price per unit \ 60 Variable cost per unit \ 20 Total fixed costs \ 480,000 A. What is Gumbo's break-even point in units? B. How many units must be sold to earn operating income of $\$ 80,000$ ? C. What is Gumbo's break-even point in units is the selling price increases by $20 \%$ and the variable costs decrease by $20 \%$ ? D. Using the information in part $\mathrm { C }$ , what sales level in dollars is needed to earn an operating income of $\$ 80,000 ?$

(Essay)

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Question 30

What is the formula to calculate the margin of safety in dollars?

(Multiple Choice)

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Question 31

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

(Multiple Choice)

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Question 32

Green Acres Company provides home health care. Green Acres charges $35 per hour for professional care. Variable casts are $21 per hour and fixed costs are $78,000. Next year, Green Acres expects to charge out 12,000 hours of home health care. -Refer to the Figure.What is the budgeted operating income?

(Multiple Choice)

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Question 33

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

(Essay)

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Question 34

Suppose the contribution margin ratio increases.What will be the effect on the break-even point in sales dollars?

(Multiple Choice)

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Question 35

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

(True/False)

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Question 36

Which of the following distinguishes a profit-volume graph from a cost-volume-profits graph?

(Multiple Choice)

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Question 37

What formula is used to calculate contribution margin ratio?

(Multiple Choice)

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Question 38

If a multi-product company simply wants to know the overall break-even point,it is easiest to use the break-even in sales revenue approach.

(True/False)

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Question 39

The HandyTool Manufacturing Company produces the following three products: Fixed costs are $76,000 per year. Of all units sold,50% are hammers,30% are screwdrivers,and 20% are saws. Required: Calculate the following values: Hammers Screwdrivers Saws Selling price per unit \ 40 \ 16 \ 50 Variable costs per unit 28 12 30 Contribution per unit \ 12 \ 4 \ 20 A. $\quad$ Break-even point in total units B. Number of hammers that will be sold at break-even C. Total sales in units to obtain a before-tax profit of $\$ 19,000$

(Essay)

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(80)

Question 40

Roundstreet Company sells a product for $14.Variable costs are $7 per unit,and total fixed costs are $7,000.What is the break-even point in units?

East Side Company produces two products,X and Y,which account for 60% and 40%,respectively,of total sales dollars.Contribution margin ratios are 50% for X and 25% for Y.Total fixed costs are $120,000.What is East Side's break-even point in sales dollars?

What is total contribution margin divided by sales revenue?

Which is characteristic of operating leverage?

If fixed costs increase,the break-even point also increases.

Match each item with the correct statement below. -Variable cost per unit

What is the formula to calculate the margin of safety in dollars?

Suppose the contribution margin ratio increases.What will be the effect on the break-even point in sales dollars?

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

Which of the following distinguishes a profit-volume graph from a cost-volume-profits graph?

What formula is used to calculate contribution margin ratio?

If a multi-product company simply wants to know the overall break-even point,it is easiest to use the break-even in sales revenue approach.

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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