Managerial Accounting Chapter 18

A manufacturing company incurs rent costs of $12,500 per month. The company manufactured 250,000 units in May and 300,000 units in June. The cost per unit in May and June, respectively, is:

$0.05 and $0.04 explanation ~May=$12,500/ 250,000 ~June=$12,500/ 300,000

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. RST desires to earn a profit of $20,000. The sales level in dollars to achieve the desired profit is $

125,000

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. RST desires to earn a profit of $20,000. The sales level in units to achieve the desire profit is ______ units.

12500

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. RST desires to earn a profit of $20,000. The sales level in units to achieve the desire profit is

12500 explanation (30000+20000)/ (10-6)= 12500

RST Company produces a product that has expected sales of $75,000 and break-even sales of $50,000. The margin of safety is $

25000 (75000-50000)/ 75000=1/3*75000=25000

A company produces a product with variable costs of $2.50 per unit. The product sells for $5.00 per unit. The company has fixed costs of $3,000 and desires a profit of $10,000. The sales level in dollars to achieve the desired profit is $

26000 explanation (3000+10000)/ 50%= 26000

A company sells two models of a product—basic and premium. If the company sells 5,000 basic models and 2,500 premium models, then the sales mix can be expressed as:

2:1 explanation 5,000/2,500= 2:1

A manufacturing company incurs depreciation costs of $6,000 per month on manufacturing machinery. The depreciation cost per unit is $_______ when the company manufactures 2,000 units.

3 explanation $6,000/2,000

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. RST desires to earn a profit of $20,000. The contribution margin per unit is $

4 explanation 10-6

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. RST desires to earn a profit of $20,000. The contribution margin ratio is ____%

40 10-6=4 4/10=40%

A company has fixed costs of $50,000 while manufacturing a product that has variable costs of $4 per unit and sells for $14 per unit. The break-even point is ________ units.

5,000 explanation 50,000/($14-4)

A company produces a product with variable costs of $2.50 per unit. The product sells for $5.00 per unit. The company has fixed costs of $3,000 and desires a profit of $10,000. The sales level in units to achieve the desired profit is

5200

A company produces a product with variable costs of $2.50 per unit. The product sells for $5.00 per unit. The company has fixed costs of $3,000 and desires a profit of $10,000. The sales level in units to achieve the desired profit is _______ units.

5200 explanation (3,000+10,000)/ (5.00-2.50)=5,200

A company has sales of $125,000, variable costs of $45,000 and fixed costs of $30,000. The contribution margin ratio is ______%

64 explanation (125,000-45,000) /125,000= 64%

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. The break-even point in sales dollars is $

75,000 explanation 10-6=4 4-10=40% 30,000/40%= $75,000

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. How many units must be produced to break-even _________?

7500 explanation ($30,000)/(10-6)= 7500

match fixed/variable/mixed~ to these ~ depreciation, $4,500 per month/ Direct materials, $25 per unit/ Water and sewer, $50 per month plus $0.10 per gallon

Fixed- depreciation, $4,500 per month Variable- Direct materials, $25 per unit Mixed- Water and sewer, $50 per month plus $0.10 per gallon

In CVP analysis, the relevant range of operations is the ______ operating range for a business.

normal capacity

the normal operating range for a business is called the

relevant range

LMN Company produces a product that sells for $1. The company has production costs of $600,000, half of which are fixed costs. Assuming production and sales of 750,000 units, the contribution margin per unit is $

0.60 600,000/2= 300,000 300,000/750,000= $0.4 1-0.4= 0.60

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. If the company sells 15,000 units, the degree of operating leverage is

2

A company has sales of $125,000, variable costs of $45,000 and fixed costs of $30,000. The break-even point in sales dollars is $

46875 explanation 30000/((125000-45000)/125000)=30000/64%= 46875

A company sells two models of a product—Alpha and Omega. If the company sells 10,000 Alpha models and 2,500 Omega models, then the sales mix can be expressed as:

4:1 explanation 10000/2500

A company has break-even sales of $200,000. If the company expects sales of $500,000, the margin of safety is _________%.

60 explanation (500,000-200,000)/ 500,000= 60%

Maker's Company produces a product that has a variable cost of $4 per unit. The company's fixed costs are $40,000. The product sells for $12 per unit. The company is considering purchasing a new manufacturing machine which would improve efficiency. The new machine would decrease the variable cost to $3, but increase fixed costs by $5,000. The revised break-even point in dollars is $

60000

RST Company produces a product that has a variable cost of $6 per unit. The company's fixed costs are $30,000. The product sells for $10 per unit. The company is considering purchasing a new manufacturing machine which would improve efficiency. The new machine would decrease the variable cost to $4, but increase fixed costs by $15,000. The revised break-even point in dollars is $

75000 explanation (30000+15000)/ (10-4)/10= 45000/60%= 75000

Match fixed/ mixed/ variable to production supervisor's salary/ production line worker's pay, which is an hourly wage/ sales rep's pay which includes salary plus commission

fixed- production supervisor's salary mixed- sales rep's pay which includes salary plus commission variable- production line worker's pay, which is an hourly wage

A company has a degree of operating leverage of 2.5. If sales increase by 10%, then profits will:

increase by 25%