accounting ch 4

Variable cost ratio 75% Total fixed costs $50,000 What volume of sales dollars is needed to break even?

$200,000

Delta Company makes calendars. Information on cost per unit is as follows: Direct materials $1.50 Direct labor 1.20 Variable overhead 0.90 Variable marketing expense 0.40 Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. Refer to Figure 4-3. What is the variable product expense per unit?

$3.60

Delta Company makes calendars. Information on cost per unit is as follows: Direct materials $1.50 Direct labor 1.20 Variable overhead 0.90 Variable marketing expense 0.40 Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. Refer to Figure 4-3. What is the variable cost per unit?

$4.00

A company 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 Figure 4-8. What is the break-even point in sales dollars?

$400,000

Delta Company makes calendars. Information on cost per unit is as follows: Direct materials $1.50 Direct labor 1.20 Variable overhead 0.90 Variable marketing expense 0.40 Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. Refer to Figure 4-3. What is the contribution margin per unit?

$6.00

Delta Company makes calendars. Information on cost per unit is as follows: Direct materials $1.50 Direct labor 1.20 Variable overhead 0.90 Variable marketing expense 0.40 Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. Refer to Figure 4-3. What is the break-even point in sales dollars?

$80,000

Delta Company makes calendars. Information on cost per unit is as follows: Direct materials $1.50 Direct labor 1.20 Variable overhead 0.90 Variable marketing expense 0.40 Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. Refer to Figure 4-3. How many units must be sold to yield targeted income of $36,000?

14,000

Delta Company makes calendars. Information on cost per unit is as follows: Direct materials $1.50 Direct labor 1.20 Variable overhead 0.90 Variable marketing expense 0.40 Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. Refer to Figure 4-3. What is the variable expense ratio?

40%

Delta Company makes calendars. Information on cost per unit is as follows: Direct materials $1.50 Direct labor 1.20 Variable overhead 0.90 Variable marketing expense 0.40 Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. Refer to Figure 4-3. What is the contribution margin ratio?

60%

Delta Company makes calendars. Information on cost per unit is as follows: Direct materials $1.50 Direct labor 1.20 Variable overhead 0.90 Variable marketing expense 0.40 Fixed marketing expense totaled $13,000 and fixed administrative expense totaled $35,000. The price per calendar is $10. Refer to Figure 4-3. What is the break-even point in units?

8,000

If the selling price per unit increases, the break-even point in units will

a. decrease

Contribution margin ratio can be calculated in all of the following ways except a. fixed costs/Contribution margin per unit. b. 1 - Variable cost ratio. c. contribution margin per unit/price. d. total contribution margin/Total sales. e. All of these are correct.

a. fixed costs / contribution margin per unit

total contribution margin divided by total sales is the

contribution margin ratio

Which of the following equations is true? a. Contribution margin = Sales revenue x Variable cost ratio b. Contribution margin ratio = Contribution margin/Variable costs c. Contribution margin = Fixed costs d. Contribution margin ratio = Contribution margin/Sales

d. Contribution margin ratio = Contribution margin/Sales

If variable costs per unit decrease, sales volume at the break-even point will

decrease

If fixed costs increase, the break-even point decreases.

false

If one increases variable costs per unit, the break-even point will decrease.

false

In the equation to determine the number of units that must be sold to earn a target income, targeted income is subtracted from fixed expense in the numerator.

false

Most firms would like to earn operating income equal to the break-even point.

false

The break-even point in sales dollars is equal to the break-even units multiplied by cost.

false

Variable expense per unit consists only of direct materials, direct labor, and variable overhead.

false

break even point is when

total revenue equals total cost

The break-even point is where total sales revenue equals total cost.

true

The contribution margin ratio can be calculated by subtracting the variable cost ratio from one.

true

The linear equation for total cost is (Unit variable cost x Units) + Fixed cost.

true

The margin of safety measures the units sold or the revenue earned above the break-even volume.

true