Cost chapter 16

Summersville Production Company had the following projected information for the current year: Selling price per unit $ 150 Variable cost per unit $ 90 Total fixed costs $300,000 What is the profit when one unit more than the break-even point is sold? a. $60 b. $150 c. $1,500,150 d. $600,060

a

The Cumberland Company provides the following information: Sales (250,000 units) $625,000 Manufacturing costs: Variable 212,500 Fixed 37,500 Selling and administrative costs: Variable 100,000 Fixed 25,000 Chapter 16 Copyright Cengage Learning. Powered by Cognero. Page 26 What is the contribution margin per unit for Cumberland? a. $1.25 b. $0.85 c. $2.50 d. $1.65

a

The Cumberland Company provides the following information: Sales (250,000 units) $625,000 Manufacturing costs: Variable 212,500 Fixed 37,500 Selling and administrative costs: Variable 100,000 Fixed 25,000 What is the variable cost per unit for Cumberland? a. $1.25 b. $0.85 c. $0.40 d. $0.75

a

The DesMaris Company had the following income statement for the month of November 2018: DesMaris Company Income Statement For the Month of November 2018 Sales ($60 × 10,000) $600,000 Cost of goods sold: Direct materials ($12 × 10,000) $120,000 Direct labor ($9 × 10,000) 90,000 Variable factory overhead ($7.50 × 10,000) 75,000 Fixed factory overhead 120,000 405,000 Gross profit $195,000 Selling and administrative expenses: Variable ($1.50 × 10,000) $ 15,000 Fixed 90,000 105,000 Operating income $ 90,000 If the monthly sales volume increases by 450 units, DesMaris Company's monthly profits will increase by a. $13,500.00. b. $1,282.50. c. $9,450.00. d. $14,175.00.

a

The contribution margin at the break-even point a. equals total fixed costs. b. is zero. c. plus total fixed costs equals total revenues. d. is greater than variable costs.

a

The following data pertain to the three products produced by Beta Corporation: A B C Selling price per unit $6.00 $8.00 $9.00 Variable costs per unit 4.00 4.00 4.00 Contribution margin per unit $2.00 $4.00 $5.00 Fixed costs are $77,000 per month. Twenty percent of all units sold are Product A, fifty-five percent are Product B, and twenty-five percent are Product C. What is the monthly break-even point for total units? a. 20,000 units b. 32,000 units c. 51,000 units d. 45,000 units

a

The following diagram is a cost-volume-profit graph for a manufacturing company:The difference between line AB and line AC (area BAC) is the a.total variable cost. b.contribution ratio. c.total fixed cost. d.contribution margin per unit.

a

What is the break-even point in sales dollars for Cumberland? a. $125,000 b. $100,000 c. $37,500 d. $300,000

a

Assume the following information: Variable cost ratio 80% Total fixed costs $60,000 What volume of sales dollars is needed to break even? a. $75,000 b. $300,000 c. $48,000 d. $12,000

b

Information about the Harmonious Company's two products includes: Product X Product Y Unit selling price $ 11.25 $11.25 Unit variable costs: Manufacturing $ 5.25 $ 6.75 Selling .75 .75 Total $ 6.00 $ 7.50 Monthly fixed costs are as follows: Manufacturing $ 82,500 Selling and administrative 45,000 Total $ 127,500 If the sales mix in units is 50 percent Product X and 50 percent Product Y, the monthly break-even total sales dollars is a. $75,000. b. $318,746. c. $275,000. d. $315,000.

b

Information about the Harmonious Company's two products includes: Product X Product Y Unit selling price $11.25 $11.25 Unit variable costs: Manufacturing $ 5.25 $ 6.75 Selling .75 .75 Total $ 6.00 $ 7.50 Monthly fixed costs are as follows: Manufacturing $ 82,500 Selling and administrative 45,000 Total $127,500 What is the total monthly sales volume in units required to break even when the sales mix in units is 70 percent Product X and 30 percent Product Y? a. 4,333 units b. 26,563 units c. 8,667 units d. 28,667 units

b

Information about the Harmonious Company's two products includes: Product X Product Y Unit selling price$11.25$11.25Unit variable costs: Manufacturing$5.25$6.75Selling.75.75Total$6.00$7.50 Monthly fixed costs are as follows: Manufacturing$82,500 Selling and administrative45,000 Total$127,500 What is the total monthly sales volume in units required to break even when the sales mix in units is 70 percent Product X and 30 percent Product Y? a.28,667 units b.26,563 units c.4,333 units d.8,667 units

b

Jamie Quinn, a sole proprietor, has the following projected figures for next year: Selling price per unit $ 150.00 Contribution margin per unit $45.00 Total fixed costs $630,000 How many units must be sold to obtain a target before-tax profit of $270,000? a. 6,000 units b. 20,000 units c. 8,572 units d. 14,000 units

b

Summersville Production Company had the following projected information for the current year: Selling price per unit $ 150 Variable cost per unit $90 Total fixed costs $300,000 What is the break-even point in units? a. 2,000 units b. 5,000 units c. 3,333 units d. 60,000 units

b

Summersville Production Company had the following projected information for the current year:Selling price per unit$150Variable cost per unit$90Total fixed costs$300,000What is the contribution margin ratio? a.1.667 b.0.400 c.2.500 d.0.600

b

The Cumberland Company provides the following information: Sales (250,000 units) $625,000 Manufacturing costs: Variable 212,500 Fixed 37,500 Selling and administrative costs: Variable 100,000 Fixed 25,000 What is the break-even point in units for Cumberland? a. 41,668 units b. 50,000 units c. 125,000 units d. 250,000 units

b

Tiramisu Company projected the following information for next year:Selling price per unit$60.00Contribution margin per unit$30.00Total fixed costs$100,000Tax rate20%How many units must be sold to obtain an after-tax profit of $40,000? a.5,167 units b.5,000 units c.5,625 units d.3,750 units

b

Victoria Company produces two products, X and Y, which account for 60 percent and 40 percent, respectively, of total sales dollars. Contribution margin ratios are 50 percent for X and 25 percent for Y. Total fixed costs are $120,000. What is Patricia's break-even point in sales dollars? a. $328,767 b. $300,000 c. $342,856 d. $375,000

b

Which of the following formulas is used to calculate break-even point in units? a.Break-even point in units = Sales / Unit variable cost b.Break-even point in units = Total fixed costs / (Price − Unit variable cost) c.Break-even point in units = Total costs / Unit contribution margin d.Break-even point in units = Sales / Fixed costs

b

Which of the following formulas is used to compute operating income? a. Operating income = Sales revenues − Depreciation expenses − Fixed expenses b. Operating income = Sales revenues − Variable expenses − Fixed expenses c. Operating income = Sales revenues + Fixed expenses − Target profit d. Operating income = Sales revenues − Tangible expenses − Target profit

b

Assume the following cost behavior data for Alpha Arts Company: Sales price $ 20.00 per unit Variable costs $ 15.00 per unit Fixed costs $20,000 Tax rate 30% What volume of sales dollars is required to earn a before-tax income of $25,000? a. $290,000 b. $140,000 c. $180,000 d. $250,000

c

Emerald Printing Company projected the following information for next year: Selling price per unit $ 60.00 Contribution margin per unit $ 45.00 Total fixed costs $150,000 Tax rate 30% What is the break-even point in dollars? a. $415,000 b. $110,000 c. $200,000 d. $320,000

c

In a profit-volume graph, the slope of the profit line represents a.the variable cost per unit. b.total contribution margin. c.the selling price per unit. d.the contribution margin per unit.

c

Nonesuch Company sells only one product at a regular price of $7.50 per unit. Variable expenses are 60 percent of sales and fixed expenses are $30,000. Management has decided to decrease the selling price to $6.00 in hopes of increasing its volume of sales.What is the sales dollars level required to break even at the old price of $7.50? a.$12,000 b.$50,000 c.$75,000 d.$18,000

c

The Cumberland Company provides the following information: Sales (250,000 units) $625,000 Manufacturing costs: Variable 212,500 Fixed 37,500 Selling and administrative costs: Variable 100,000 Fixed 25,000 What is the operating income for Cumberland? a. $625,000 b. $312,500 c. $250,000 d. $62,500

c

The Cumberland Company provides the following information:Sales (250,000 units)$625,000Manufacturing costs: Variable212,500Fixed37,500Selling and administrative costs: Variable100,000Fixed25,000What is the contribution margin ratio for Cumberland? a.0.76 b.0.34 c.0.50 d.0.16

c

Using cost-volume-profit analysis, we can conclude that a 20 percent reduction in variable costs will a. reduce the break-even sales volume by 20 percent. b. reduce total costs by 20 percent. c. reduce the slope of the total cost line by 20 percent. d. not affect the break-even sales volume if there is an offsetting 20 percent increase in fixed costs

c

Which of the following statements is TRUE in a cost-volume-profit graph? a.The total cost line normally begins at zero. b.The total revenue line typically begins above zero. c.The slope of the total cost line is dependent on the variable cost per unit. d.The slope of the total revenue line is the contribution margin per unit.

c

Assume the following information: Selling price per unit $ 180 Contribution margin ratio 48% Total fixed costs $270,000 How many units must be sold to generate a before-tax profit of $54,000? a. 4,000 units b. 2,750 units c. 3,570 units d. 3,750 units

d

Biscuit Company sells its product for $50. In addition, it has a variable cost ratio of 45 percent and total fixed costs of $6,875. What is the break-even point in units for Biscuit Company? a.3,600 units b.375 units c.2,400 units d.250 units

d

Hologram Printing Company projected the following information for next year: Selling price per unit $ 75.00 Contribution margin per unit $ 30.00 Total fixed costs $120,000 Tax rate 40% How many units must be sold to obtain an after-tax profit of $67,500? a. 3,750 units b. 5,167 units c. 5,625 units d. 7,750 units

d

In multiple-product analysis, direct fixed costs are a. fixed costs that are not traceable to the segments and would remain even if one of the segments were eliminated. b. fixed costs which can be traced to each segment and would remain even if one of the segments were eliminated. c. fixed costs that are not traceable to the segments and would be avoided if the segment did not exist. d. the fixed costs which can be traced to each segment and would be avoided if the segment did not exist.

d

Sales × Contribution Margin is a short-cut of what formula? a.Fixed Costs / Unit Contribution Margin b.Sales − (Fixed Costs + Variable Costs) c.Sales / Fixed Costs d.Sales − (Variable cost ratio × Sales)

d

Summersville Production Company had the following projected information for the current year: Selling price per unit $ 150 Variable cost per unit $ 90 Total fixed costs $300,000 Chapter 16 Copyright Cengage Learning. Powered by Cognero. Page 33 What level of sales dollars is needed to obtain a target before-tax profit of $75,000? a. $375,000 b. $625,000 c. $750,000 d. $937,500

d

The Des Maris Company had the following income statement for the month of November 2018:DesMaris Company Income Statement For the Month of November 2018Sales ($60 × 10,000) $600,000Cost of goods sold: Direct materials ($12 × 10,000)$120,000 Direct labor ($9 × 10,000)90,000 Variable factory overhead ($7.50 × 10,000)75,000 Fixed factory overhead120,000405,000Gross profit $195,000Selling and administrative expenses: Variable ($1.50 × 10,000)$15,000 Fixed90,000105,000Operating income $90,000What is the sales volume required to earn an operating profit of $9,000? a.3,300 units b.4,300 units c.10,000 units d.7,300 units

d

Which of the following equations is TRUE? a. Contribution margin = Sales revenue × Variable cost ratio b. Contribution margin ratio = Contribution margin/Variable costs c. Contribution margin = Fixed costs d. Contribution margin ratio = 1 − Variable cost ratio

d

Which of the following is a TRUE statement about sales mix? a.Profits may decline with an increase in total dollars of sales if the sales mix shifts to sell more of the high contribution margin product. b.Profits will remain constant with an increase in total dollars of sales if the total sales in units remains constant. c.Profits will remain constant with a decrease in total dollars of sales if the sales mix also remains constant. d.Profits may decline with an increase in total dollars of sales if the sales mix shifts to sell more of the lower contribution margin product.

d