Accounting 5 MCQs



1. Tynex Inc makes a product that sells for $61 and has $42 per unit in variable costs. Annual fixed costs are $24,000. If K-Randy’s sells 10 units less than break-even. How much loss would the company realize on its income statement?
A) $275
B) $260
C) $240
D) $190

2. Della’s Furniture has a contribution margin ratio of 15%. If fixed costs are $175,500, how many dollars of revenue must the company generate in order to reach the break-even point?
A) $1,111,333
B) $1,211,333
C) $1,170,000
D) $2,111,450

3. Max’s Pizza produced and sold 1,000 pizzas last month and had total variable ingredients that cost $4,575. If production and sales are expected to increase by 17% next month, which of the following statements is true?
A) Total variable materials costs are expected to be $4,779.50
B) Variable material cost per unit is expected to be $4.99.
C) Total variable materials costs are expected to be $4,345
D) Total variable materials costs are expected to be $5,352.75

4. One Small Grill Company is a start up with the following profile:
Unit selling price = $230; Variable cost per unit = $130; Fixed Costs = $36,000;
Tax rate = 40%. How many units should Small Grill sell to achieve an after-tax target
income of $6,000?
A) 200
B) 460
C) 230
D) 300

5. Western Apparel Company owns two stores and management is considering eliminating the East store due to declining sales. Segmented contribution income statements are as follows and common fixed costs are allocated on the basis of sales.
West East Total
Sales $500,500 90,000 $590,500
Variable costs 262,500 45,000 307,500
Direct fixed costs 62,500 25,000 87,500
Segment margin 175,500 20,000 195,500
Allocated fixed costs 137,500 35,000 172,500
Net Income $38,000 ($15,000) $23,000

Western feels that if they eliminate the East store that sales in the West store will decline by 15%. If they close the East store, overall company net income will:
A) decline by $90,000.
B) decline by $62,000.
C) decline by $85,625.
D) decline by $55,700.


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