Question 1

McGordon Corporation has provided the following data:  
-The contribution margin is:

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 2

Rawlings Company prepared the following budget information for the coming year:   
The budget assumes the sale of 20,000 units of A, 100,000 units of B, and 80,000 units of C.
Required:
a. What is the company's break-even point given the sales mix above?
b. If the budgeted sales mix is maintained, what is the total contribution margin and net operating income if 300,000 units are sold?

Accepted Answer

a. @#IMG-DLM& Unit sales to break even = Fixed exp

Question 3

Yerkes Corporation makes a product that sells for $110 per unit. The product's current sales are 35,900 units and its break-even sales are 26,566 units.
Required:
Compute the margin of safety in both dollars and as a percentage of sales.

Accepted Answer

The answer of Yerkes Corporation makes a product that sells...

Question 4

Rosner Corporation sells a product for $150 per unit. The product's current sales are 32,500 units and its break-even sales are 24,050 units.
-The margin of safety as a percentage of sales is closest to:

Accepted Answer

A)  65% 
B)  26% 
C)  74% 
D)  35% 
A)  65% 
B)  26% 
C)  74% 
D)  35%

Question 5

Marston Enterprises sells three chemicals: petrol, septine, and tridol. Petrol's unit contribution margin is higher than septine's which is higher than tridol's. Which one of the following events is most likely to decrease the company's overall break-even point?

Accepted Answer

A)  The installation of new computer-controlled equipment that reduces variable costs and increases fixed costs. 
B)  A decrease in tridol's selling price. 
C)  An increase in the overall market demand for septine. 
D)  A change in the relative market demand for the products, with the increase favoring petrol relative to septine and tridol. 
A)  The installation of new computer-controlled equipment that reduces variable costs and increases fixed costs. 
B)  A decrease in tridol's selling price. 
C)  An increase in the overall market demand for septine. 
D)  A change in the relative market demand for the products, with the increase favoring petrol relative to septine and tridol.

Question 6

Hinsey Corporation produces and sells a single product. Data concerning the product appear below:   Fixed expenses are $300,000 per month. The company is currently selling 4,000 units per month. Consider each of the following questions independently.
-This question is to be considered independently of all other questions relating to Hinsey Corporation. Refer to the original data when answering this question.
The marketing manager would like to cut the selling price by $13 and increase the advertising budget by $21,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 900 units. What should be the overall effect on the company's monthly net operating income of this change?

Accepted Answer

A)  increase of $46,500 
B)  decrease of $46,500 
C)  increase of $165,300 
D)  decrease of $5,500 
A)  increase of $46,500 
B)  decrease of $46,500 
C)  increase of $165,300 
D)  decrease of $5,500

Question 7

Witczak Company has a single product and currently has a degree of operating leverage of 5. Which of the following will increase Witczak's degree of operating leverage?

Accepted Answer

A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D 
A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D

Question 8

Edmondson Inc. produces and sells a single product. The selling price of the product is $200.00 per unit and its variable cost is $50.00 per unit. The fixed expense is $205,500 per month.
-The break-even in monthly dollar sales is closest to:

Accepted Answer

A)  $205,500 
B)  $274,000 
C)  $822,000 
D)  $433,833 
A)  $205,500 
B)  $274,000 
C)  $822,000 
D)  $433,833

Question 9

Vandinter Corporation produces and sells a single product. Data concerning that product appear below:  
-The break-even in monthly dollar sales is closest to:

Accepted Answer

A)  $536,320 
B)  $670,400 
C)  $2,681,600 
D)  $1,296,160 
A)  $536,320 
B)  $670,400 
C)  $2,681,600 
D)  $1,296,160

Question 10

McGordon Corporation has provided the following data:  
-The break-even point in sales dollars is:

Accepted Answer

A)  $240,000 
B)  $560,000 
C)  $728,000 
D)  $408,000 
A)  $240,000 
B)  $560,000 
C)  $728,000 
D)  $408,000

Question 11

Which of the following is true regarding the contribution margin ratio of a single product company?

Accepted Answer

A)  As fixed expenses decrease, the contribution margin ratio increases. 
B)  The contribution margin ratio multiplied by the variable expense per unit equals the contribution margin per unit. 
C)  If sales increase, the dollar increase in net operating income can be computed by multiplying the contribution margin ratio by the dollar increase in sales. 
D)  The contribution margin ratio increases as the number of units sold increases. 
A)  As fixed expenses decrease, the contribution margin ratio increases. 
B)  The contribution margin ratio multiplied by the variable expense per unit equals the contribution margin per unit. 
C)  If sales increase, the dollar increase in net operating income can be computed by multiplying the contribution margin ratio by the dollar increase in sales. 
D)  The contribution margin ratio increases as the number of units sold increases.

Question 12

The contribution margin ratio measures the effect on the total contribution margin of a given change in total sales.

Accepted Answer

A) True 
 B)False

Question 13

Once the break-even point is reached:

Accepted Answer

A)  the total contribution margin changes from negative to positive. 
B)  net operating income will increase by the unit contribution margin for each additional item sold. 
C)  variable expenses will remain constant in total. 
D)  the contribution margin ratio begins to decrease. 
A)  the total contribution margin changes from negative to positive. 
B)  net operating income will increase by the unit contribution margin for each additional item sold. 
C)  variable expenses will remain constant in total. 
D)  the contribution margin ratio begins to decrease.

Question 14

Fletcher Company has three products with the following characteristics:  
-The overall contribution margin ratio for the company as a whole is (to the nearest tenth of a percent):

Accepted Answer

A)  25.3% 
B)  75.0% 
C)  25.0% 
D)  28.5% 
A)  25.3% 
B)  75.0% 
C)  25.0% 
D)  28.5%

Question 15

Lineman Corporation sells a product for $230 per unit. The product's current sales are 23,400 units and its break-even sales are 20,124 units.
What is the margin of safety in dollars?

Accepted Answer

A)  $3,588,000 
B)  $5,382,000 
C)  $753,480 
D)  $4,628,520 
A)  $3,588,000 
B)  $5,382,000 
C)  $753,480 
D)  $4,628,520

Question 16

Magers Corporation produces and sells a single product. Data concerning that product appear below:   
Required:
Determine the monthly break-even in either unit or total dollar sales. Show your work!

Accepted Answer

@#IMG-DLM& Unit sales to break even = Fi

Question 17

Knell Corporation sells a product for $230 per unit. The product's current sales are 33,000 units and its break-even sales are 26,400 units. The margin of safety as a percentage of sales is closest to:

Accepted Answer

A)  25% 
B)  75% 
C)  20% 
D)  80% 
A)  25% 
B)  75% 
C)  20% 
D)  80%

Question 18

Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800.
-The variable expense per unit is:

Accepted Answer

A)  $31.20 
B)  $24.00 
C)  $36.00 
D)  $28.80 
A)  $31.20 
B)  $24.00 
C)  $36.00 
D)  $28.80

Question 19

Mardist Corporation has sales of $100,000, variable expenses of $75,000, fixed expenses of $30,000, and a net loss of $5,000. How much would Mardist have to sell to achieve a profit of 10% of sales?

Accepted Answer

A)  $187,500 
B)  $200,000 
C)  $225,500 
D)  $180,000 
A)  $187,500 
B)  $200,000 
C)  $225,500 
D)  $180,000

Question 20

Moloney Corporation produces and sells a single product. Data concerning that product appear below:  
Fixed expenses are $898,000 per month. The company is currently selling 9,000 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $16 per unit. In exchange, the sales staff would accept a decrease in their salaries of $117,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 100 units. What should be the overall effect on the company's monthly net operating income of this change?

Accepted Answer

A)  increase of $115,400 
B)  decrease of $16,600 
C)  decrease of $250,600 
D)  increase of $1,063,400 
A)  increase of $115,400 
B)  decrease of $16,600 
C)  decrease of $250,600 
D)  increase of $1,063,400

Exam 6: Cost-Volume-Profit Relationship

McGordon Corporation has provided the following data: -The contribution margin is:

Yerkes Corporation makes a product that sells for $110 per unit. The product's current sales are 35,900 units and its break-even sales are 26,566 units. Required: Compute the margin of safety in both dollars and as a percentage of sales.

Rosner Corporation sells a product for $150 per unit. The product's current sales are 32,500 units and its break-even sales are 24,050 units. -The margin of safety as a percentage of sales is closest to:

Marston Enterprises sells three chemicals: petrol, septine, and tridol. Petrol's unit contribution margin is higher than septine's which is higher than tridol's. Which one of the following events is most likely to decrease the company's overall break-even point?

Witczak Company has a single product and currently has a degree of operating leverage of 5. Which of the following will increase Witczak's degree of operating leverage?

Edmondson Inc. produces and sells a single product. The selling price of the product is $200.00 per unit and its variable cost is $50.00 per unit. The fixed expense is $205,500 per month. -The break-even in monthly dollar sales is closest to:

Vandinter Corporation produces and sells a single product. Data concerning that product appear below: -The break-even in monthly dollar sales is closest to:

McGordon Corporation has provided the following data: -The break-even point in sales dollars is:

Which of the following is true regarding the contribution margin ratio of a single product company?

The contribution margin ratio measures the effect on the total contribution margin of a given change in total sales.

Once the break-even point is reached:

Fletcher Company has three products with the following characteristics: -The overall contribution margin ratio for the company as a whole is (to the nearest tenth of a percent):

Lineman Corporation sells a product for $230 per unit. The product's current sales are 23,400 units and its break-even sales are 20,124 units. What is the margin of safety in dollars?

Magers Corporation produces and sells a single product. Data concerning that product appear below: Required: Determine the monthly break-even in either unit or total dollar sales. Show your work!

Knell Corporation sells a product for $230 per unit. The product's current sales are 33,000 units and its break-even sales are 26,400 units. The margin of safety as a percentage of sales is closest to:

Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800. -The variable expense per unit is:

Mardist Corporation has sales of $100,000, variable expenses of $75,000, fixed expenses of $30,000, and a net loss of $5,000. How much would Mardist have to sell to achieve a profit of 10% of sales?

Managerial Accounting and the Business Environment

Managerial Accounting and Cost Concepts

Systems Design: Job-Order Costing

Systems Design: Process Costing

Cost Behavior Analysis and Use

Variable Costing: a Tool for Management

Activity Based Costing: a Tool to Aid Decision-Making

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Operating Performance Measures

Segment Reporting, Decentralization, and the Balanced Scorecard

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

How Well Am I Doing Financial Statement Analysis

Pricing Products and Services

Profitability Analysis

Further Classification of Labor Costs

Cost of Quality

the Predetermined Overhead Rate and Capacity

Fifo Method

Service Department Allocations

Least-Squares Regression Computations

Abc Action Analysis

Using a Modified Form of Activity-Based Costing to

Predetermined Overhead Rates and Overhead Analysis

Journal Entries to Record Variances

Transfer Pricing

Service Department Charges

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

The Direct Method of Determining the Net Cash Provided by

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