COST-VOLUME-PROFIT ANALYSIS mcq homework

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a111. The one primary difference between variable
and absorption costing is that under

a. variable
costing, companies charge the fixed manufacturing overhead as an expense in the
current period.

b. absorption
costing, companies charge the fixed manufacturing overhead as an expense in the
current period.

c. variable
costing, companies charge the variable manufacturing overhead as an expense in
the current period.

d. absorption
costing, companies charge the variable manufacturing overhead as an expense in
the current period.

a112. Net income under absorption costing is higher than net income
under variable costing

a. when
units produced exceed units sold.

b. when
units produced equal units sold.

c. when
units produced are less than units sold.

d. regardless
of the relationship between units produced and units sold.

a113. Some fixed manufacturing overhead costs of
the current period are deferred to future periods under

a. absorption
costing.

b. variable
costing.

c. both
absorption and variable costing.

d. neither
absorption nor variable costing.

a114. Nielson Corp. sells its
product for $8,800 per unit. Variable costs per unit are: manufacturing, $4,800,
and selling and administrative, $100. Fixed costs are: $24,000 manufacturing
overhead, and $32,000 selling and administrative. There was no beginning
inventory at 1/1/12. Production was 20 units per year in 2012 –2014. Sales was
20 units in 2012, 16 units in 2013, and 24 units in 2014. Income under
absorption costing for 2013 is

a. $6,400.

b. $11,200.

c. $12,800.

d. $17,600.

a115. Nielson Corp. sells its
product for $8,800 per unit. Variable costs per unit are: manufacturing, $4,800,
and selling and administrative, $100. Fixed costs are: $24,000 manufacturing
overhead, and $32,000 selling and administrative. There was no beginning
inventory at 1/1/12. Production was 20 units per year in 2012 –2014. Sales was
20 units in 2012, 16 units in 2013, and 24 units in 2014. Income under
absorption costing for 2014 is

a. $26,400.

b. $31,200.

c. $32,800.

d. $37,600.

a116. Nielson Corp. sells its
product for $8,800 per unit. Variable costs per unit are: manufacturing, $4,800,
and selling and administrative, $100. Fixed costs are: $24,000 manufacturing
overhead, and $32,000 selling and administrative. There was no beginning inventory
at 1/1/12. Production was 20 units per year in 2012 –2014. Sales was 20 units
in 2012, 16 units in 2013, and 24 units in 2014. Income under variable
costing for 2013 is

a. $6,400.

b. $11,200.

c. $12,800.

d. $17,600.

a 117. Nielson Corp. sells its product for $8,800
per unit. Variable costs per unit are: manufacturing, $4,800, and selling and
administrative, $100. Fixed costs are: $24,000 manufacturing overhead, and $32,000
selling and administrative. There was no beginning inventory at 1/1/12.
Production was 20 units per year in 2012 –2014. Sales was 20 units in 2012, 16
units in 2013, and 24 units in 2014. Income under variable costing for 2014
is

a. $26,400.

b. $31,200.

c. $32,800.

d. $37,600.

a118. Nielson
Corp. sells its product for $8,800 per unit. Variable costs per unit are:
manufacturing, $4,800, and selling and administrative, $100. Fixed costs are: $24,000
manufacturing overhead, and $32,000 selling and administrative. There was no
beginning inventory at 1/1/12. Production was 20 units per year in 2012 –2014.
Sales was 20 units in 2012, 16 units in 2013, and 24 units in 2014. For
the three years 2012–2014,

a. absorption
costing income exceeds variable costing income by $8,000.

b. absorption
costing income equals variable costing income.

c. variable
costing income exceeds absorption costing income by $8,000.

d. absorption
costing income may be greater than, equal to, or less than variable costing
income, depending on the situation.

a119. When production exceeds sales,

a. some
fixed manufacturing overhead costs are deferred until a future period under
absorption costing.

b. some
fixed manufacturing overhead costs are deferred until a future period under
variable costing.

c. variable
and fixed manufacturing overhead costs are deferred until a future period under
absorption costing.

b. variable
and fixed manufacturing overhead costs are deferred until a future period under
variable costing.

a120. When production exceeds sales,

a. ending
inventory under variable costing will exceed ending inventory under absorption
costing.

b. ending
inventory under absorption costing will exceed ending inventory under variable
costing.

c. ending
inventory under absorption costing will be equal to ending inventory under
variable costing.

d. ending
inventory under absorption costing may exceed, be equal to, or be less than
ending inventory under variable costing.

a121. Management may be tempted to overproducewhen
using

a. variable
costing, in order to increase net income.

b. variable
costing, in order to decrease net income.

c. absorption
costing, in order to increase net income.

d. absorption
costing, in order to decrease net income.

a122. If a division manager’s compensation is based upon the division’s
net income, the manager may decide to meet the net income targets by increasing
productionwhen using

a. variable
costing, in order to increase net income.

b. variable
costing, in order to decrease net income.

c. absorption
costing, in order to increase net income.

d. absorption
costing, in order to decrease net income.

a123. Expected sales for next year for the Beresford
Company is 150,000 units. Curt Planters, manager of the Beresford Division, is
under pressure to improve the performance of the Division. As he plans for next
year, he has to decide whether to produce 150,000 units or 180,000 units. The Beresford
Company will have higher net income if Curt Planters decides to produce

a. 180,000
units if income is measured under absorption costing.

b. 180,000
units if income is measured under variable costing.

c. 150,000
units if income is measured under absorption costing.

d. 150,000
units if income is measured under variable costing.

a124. Which of the following is a potential
advantage of variable costing relative to absorption costing?

a. Net
income is affected by changes in production levels.

b. The
use of variable costing is consistent with cost-volume-profit analysis.

c. Net
income computed under variable costing is not closely tied to changes in sales
levels.

d. More
than one of the above.

a125. Companies that use just-in-time processing
techniques will

a. have
greater differences between absorption and variable costing net income.

b. have
smaller differences between absorption and variable costing net income.

c. not
be able to use absorption costing.

d. not
be able to use variable costing.

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71. A shift from low-margin sales to high-margin sales

a. may
increase net income, even though there is a decline in total units sold.

b. will
always increase net income.

c. will
always decrease net income.

d. will
always decrease units sold.

72. A shift from high-margin sales to low-margin sales

a. may
decrease net income, even though there is an increase in total units sold.

b. will
always decrease net income.

c. will
always increase net income.

d. will
always increase units sold.

73. MacCloud
Industries has two divisions—Standard and Premium. Each division has hundreds
of different types of tennis racquets and tennis products. The following
information is available:

Standard Division Premium Division Total

Sales $400,000 $600,000 $1,000,000

Variable costs 280,000 360,000

Contribution
margin $120,000 $240,000

Total fixed costs $320,000

What
is the weighted-average contribution margin ratio?

a. 34%

b. 35%

c. 36%

d. 50%

74. MacCloud
Industries has two divisions—Standard and Premium. Each division has hundreds
of different types of tennis racquets and tennis products. The following
information is available:

Standard Division Premium Division Total

Sales $400,000 $600,000 $1,000,000

Variable costs 280,000 360,000

Contribution
margin $120,000 $240,000

Total fixed costs $320,000

What
is the break-even point in dollars?

a. $115,200

b. $888,889

c. $914,286

d. $941,117

75. The sales mix percentages for Novotna’s Boston
and Seattle Divisions are 70% and 30%. The contribution margin ratios are: Boston
(40%) and Seattle (30%). Fixed costs are $1,110,000. What is Novotna’s break-even
point in dollars?

a. $388,500

b. $3,000,000

c. $3,171,428

d. $3,363,636

76. A company can sell all the units it can produce of
either Product A or Product B but not both. Product A has a unit contribution
margin of $16 and takes two machine hours to make and Product B has a unit
contribution margin of $30 and takes three machine hours to make. If there are 3,000
machine hours available to manufacture a product, income will be

a. $6,000
more if Product A is made.

b. $6,000
less if Product B is made.

c. $6,000
less if Product A is made.

d. the
same if either product is made.

77. Brooks Corporation can sell
all the units it can produce of either Plain or Fancy but not both. Plain has a
unit contribution margin of $120 and takes two machine hours to make and Fancy
has a unit contribution margin of $150 and takes three machine hours to make.
There are 2,400 machine hours available to manufacture a product. What should Brooks
do?

a. Make Fancy
which creates $30 more profit per unit than Plain
does.

b. Make Plain
which creates $10 more profit per machine hour than Fancy does.

c. Make Plain
because more units can be made and sold than Fancy.

d. The same total profits exist regardless of
which product is made.

78. What
is the key factor in determining sales mix if a company has limited resources?

a. Contribution margin per unit of limited
resource

b. The amount of fixed costs per unit

c. Total contribution margin

d. The cost of limited resources

79. Greg’s Breads can produce and sell only one of the following two
products:

Oven Contribution

Hours
Required
Margin Per Unit

Muffins 0.2 $3

Coffee Cakes 0.3 $4

The company has
oven capacity of 1,200 hours. How much will contribution margin be if it
produces only the most profitable product?

a. $12,000

b. $16,000

c. $18,000

d. $24,000

80. Curtis Corporation’s contribution margin is $20 per
unit for Product A and $24 for Product B.
Product A requires 2 machine hours and Product B requires 4 machine
hours. How much is the contribution margin per unit of limited resource for
each product?


A
B

a. $10.00 $6.00

b. $10.00 $6.66

c. $8.00 $6.00

d. $8.00 $6.66

81. Cost structure

a. refers to the
relative proportion of fixed versus variable costs that a company incurs.

b. generally
has little impact on profitability.

c. cannot
be significantly changed by companies.

d. refers
to the relative proportion of operating versus nonoperating costs that a
company incurs.

82. Outsourcing production will

a. reduce
fixed costs and increase variable costs.

b. reduce
variable costs and increase fixed costs.

c. have
no effect on the relative proportion of fixed and variable costs.

d. make
the company more susceptible to economic swings.

83. Reducing reliance on human workers and
instead investing heavily in computers and online technology will

a. reduce
fixed costs and increase variable costs.

b. reduce
variable costs and increase fixed costs.

c. have
no effect on the relative proportion of fixed and variable costs.

d. make
the company less susceptible to economic swings.

84. Cost
structure refers to the relative proportion of

a. selling
expenses versus administrative expenses.

b. selling
and administrative expenses versus cost of goods sold.

c. contribution
margin versus sales.

d. none
of the above.

85. Mercantile Corporation has sales of $2,000,000,
variable costs of $1,100,000, and fixed costs of $750,000. Mercantile’s
degree of operating leverage is

a. 1.22.

b. 1.47.

c. 1.20.

d. 6.00.

Ans: d, LO: 5, Bloom: AP, Difficulty: Medium, Min: 2,
AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement,
AICPA PC: Problem Solving/Decision Making, IMA: Business Economics

86. Mercantile Corporation has sales of $2,000,000,
variable costs of $1,100,000, and fixed costs of $750,000. Mercantile’s
margin of safety ratio is

a. .08.

b. .17.

c. .20.

d. .83.

87. Which
of the following statements is
not true?

a. Operating
leverage refers to the extent to which a company’s net income reacts to a given
change in sales.

b. Companies
that have higher fixed costs relative to variable costs have higher operating
leverage.

c. When
a company’s sales revenue is increasing, high operating leverage is good
because it means that profits will increase rapidly.

d. When
a company’s sales revenue is decreasing, high operating leverage is good
because it means that profits will decrease at a slower pace than revenues
decrease.

88. Miller
Manufacturing’s degree of operating leverage is 1.5. Warren Corporation’s
degree of operating leverage is 6. Warren’s earnings would go up (or down) by
________ as much as Miller’s with an equal increase (or decrease) in sales.

a. 1/4

b. 4.5
times

c. 4 times

d. 7.5
times

89. The
margin of safety ratio

a. is
computed as actual sales divided by break-even sales.

b. indicates
what percent decline in sales could be sustained before the company would
operate at a loss.

c. measures
the ratio of fixed costs to variable costs.

d. is
used to determine the break-even point.

90. A cost structure which relies more heavily on fixed costs makes
the company

a. more
sensitive to changes in sales revenue.

b. less
sensitive to changes in sales revenue.

c. either
more or less sensitive to changes in sales revenue, depending on other factors.

d. have
a lower break-even point.

91. A company with a higher contribution margin ratio is

a. more
sensitive to changes in sales revenue.

b. less
sensitive to changes in sales revenue.

c. either
more or less sensitive to changes in sales revenue, depending on other factors.

d. likely
to have a lower breakeven point.

92. The degree of operating
leverage

a. does notprovide a
reliable measure of a company’s earnings volatility.

b. cannot be used to compare companies.

c. is
computed by dividing total
contribution margin by net income.

d. measures
how much of each sales dollar is available to cover fixed expenses.

a93. Only direct materials, direct labor, and
variable manufacturing overhead costs are considered product costs when using

a. full
costing.

b. absorption
costing.

c. variable
costing.

d. product
costing.

a94. When a company assigns the costs of direct
materials, direct labor, and both variable
and fixed manufacturing overhead to products, that company is using

a. operations
costing.

b. absorption
costing.

c. variable
costing.

d. product
costing.

a95. Companies recognize fixed manufacturing
overhead costs as period costs (expenses) when incurred when using

a. full
costing.

b. absorption
costing.

c. product
costing.

d. variable
costing.

a96. Under absorption costing and variable
costing, how are fixed manufacturing costs treated?

Absorption Variable

a. Product Cost Product Cost

b. Product Cost Period Cost

c. Period Cost Product Cost

d. Period Cost Period Cost

a97. Under absorption costing and variable
costing, how are variable manufacturing costs treated?

Absorption Variable

a. Product Cost Product Cost

b. Product Cost Period Cost

c. Period Cost Product Cost

d. Period Cost Period Cost

a98. Under absorption costing and variable
costing, how are direct labor costs treated?

Absorption Variable

a. Product Cost Product Cost

b. Product Cost Period Cost

c. Period Cost Product Cost

d. Period Cost Period Cost

a99. Fixed selling expenses are period costs

a. under
both absorption and variable costing.

b. under
neither absorption nor variable costing.

c. under
absorption costing, but not under variable costing.

d. under
variable costing, but not under absorption costing.

a100. Which cost is not charged to the product under variable costing?

a. Direct
materials

b. Direct
labor

c. Variable
manufacturing overhead

d. Fixed
manufacturing overhead

a101. Which cost is charged to the product under variable costing?

a. Variable
manufacturing overhead

b. Fixed
manufacturing overhead

c. Variable
administrative expenses

d. Fixed
administrative expenses

a102. Variable costing

a. is
used for external reporting purposes.

b. is
required under GAAP.

c. treats
fixed manufacturing overhead as a period cost.

d. is
also known as full costing.

a103. Sprinkle Co. sells its
product for $20 per unit. During 2013, it produced 60,000 units and sold 50,000
units (there was no beginning inventory). Costs per unit are: direct materials
$5, direct labor $3, and variable overhead $1. Fixed costs are: $240,000
manufacturing overhead, and $30,000 selling and administrative expenses. The
per unit manufacturing cost under absorption costing is

a. $8.

b. $9.

c. $13.

d. $14.

a104. Sprinkle
Co. sells its product for $20 per unit. During 2013, it produced 60,000 units
and sold 50,000 units (there was no beginning inventory). Costs per unit are:
direct materials $5, direct labor $3, and variable overhead $1. Fixed costs
are: $240,000 manufacturing overhead, and $30,000 selling and administrative
expenses. The per unit manufacturing cost under variable costing is

a. $8.

b. $9.

c. $13.

d. $14.

a105. Sprinkle
Co. sells its product for $20 per unit. During 2013, it produced 60,000 units
and sold 50,000 units (there was no beginning inventory). Costs per unit are:
direct materials $5, direct labor $3, and variable overhead $1. Fixed costs
are: $240,000 manufacturing overhead, and $30,000 selling and administrative
expenses. Cost of goods sold under absorption costing is

a. $450,000.

b. $540,000.

c. $650,000.

d. $520,000.

a106. Sprinkle Co. sells its
product for $20 per unit. During 2013, it produced 60,000 units and sold 50,000
units (there was no beginning inventory). Costs per unit are: direct materials
$5, direct labor $3, and variable overhead $1. Fixed costs are: $240,000
manufacturing overhead, and $30,000 selling and administrative expenses. Ending
inventory under variable costing is

a. $90,000.

b. $130,000.

c. $200,000.

d. $450,000.

a107. Sprinkle
Co. sells its product for $20 per unit. During 2013, it produced 60,000 units
and sold 50,000 units (there was no beginning inventory). Costs per unit are:
direct materials $5, direct labor $3, and variable overhead $1. Fixed costs
are: $240,000 manufacturing overhead, and $30,000 selling and administrative
expenses. Under absorption costing, what amount of fixed overhead is
deferred to a future period?

a. $10,000

b. $40,000

c. $50,000

d. $240,000

a108. Net income under absorption costing is gross
profit less

a. cost
of goods sold.

b. fixed
manufacturing overhead and fixed selling and administrative expenses.

c. fixed
manufacturing overhead and variable manufacturing overhead.

d. variable
selling and administrative expenses and fixed selling and administrative expenses.

a109. Net income under variable costing is
contribution margin less

a. cost
of goods sold.

b. fixed
manufacturing overhead and fixed selling and administrative expenses.

c. fixed
manufacturing overhead and variable manufacturing overhead.

d. variable
selling and administrative expenses and fixed selling and administrative
expenses.

a110. The manufacturing cost per unit for
absorption costing is

a. usually,
but not always, higher than manufacturing cost per unit for variable costing.

b. usually,
but not always, lower than manufacturing cost per unit for variable costing.

c. always
higher than manufacturing cost per unit for variable costing.

d. always
lower than manufacturing cost per unit for variable costing.

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31. Cost-volume-profit
analysis is the study of the effects of

a. changes
in costs and volume on a company’s profit.

b. cost, volume, and profit on the cash budget.

c. cost, volume, and profit on various ratios.

d. changes in costs and
volume on a company’s profitability ratios.

32. The CVP income statementclassifies
costs

a. as
variable or fixed and computes contribution
margin.

b. by function and computes a
contribution margin.

c. as
variable or fixed and computes gross margin.

d. by function and computes a gross
margin.

33. Contribution marginis the
amount of revenue remaining after deducting

a. cost
of goods sold.

b. fixed
costs.

c. variable
costs.

d. contra-revenue.

34. Moonwalker’s CVP income statement included
sales of 4,000 units, a selling price of $100, variable expenses of $60 per
unit, and fixed expenses of $88,000. Contribution margin is

a. $400,000.

b. $240,000.

c. $160,000.

d. $72,000.

35. Moonwalker’s CVP income statement included
sales of 4,000 units, a selling price of $100, variable expenses of $60 per
unit, and fixed expenses of $88,000. Net income is

a. $400,000.

b. $160,000.

c. $152,000.

d. $72,000.

36. For Buffalo Co., at a sales level of 5,000
units, sales is $75,000, variable expenses total $50,000, and fixed expenses
are $21,000. What is the contribution margin per unit?

a. $4.20

b. $5.00

c. $10.00

d. $15.00

37. If contribution margin is $120,000, sales
is $300,000, and net income is $40,000, then variable and fixed expenses are

Variable Fixed

a. $180,000 $260,000

b. $180,000 $80,000

c. $80,000 $180,000

d. $420,000 $260,000

38. In a CVP income statement, cost of goods
sold is generally

a. completely
a variable cost.

b. completely
a fixed cost.

c. neither
a variable cost nor a fixed cost.

d. partly
a variable cost and partly a fixed cost.

39. In a CVP income statement, a selling expense
is generally

a. completely
a variable cost.

b. completely
a fixed cost.

c. neither
a variable cost nor a fixed cost.

d. partly
a variable cost and partly a fixed cost.

40. Hinge Manufacturing’s cost of goods sold is
$420,000 variable and $240,000 fixed. The company’s selling and administrative
expenses are $300,000 variable and $360,000 fixed. If the company’s sales is
$1,480,000, what is its contribution margin?

a. $160,000

b. $760,000

c. $820,000

d. $880,000

41. Hinge Manufacturing’s cost of goods sold is
$420,000 variable and $240,000 fixed. The company’s selling and administrative
expenses are $300,000 variable and $360,000 fixed. If the company’s sales is
$1,480,000, what is its net income?

a. $160,000

b. $760,000

c. $820,000

d. $880,000

42. Woolford’s CVP income statement included
sales of 4,000 units, a selling price of $50, variable expenses of $30 per
unit, and net income of $25,000. Fixed expenses are

a. $55,000.

b. $80,000.

c. $120,000.

d. $200,000.

43. The contribution margin ratio is

a. sales
divided by contribution margin.

b. sales
divided by fixed expenses.

c. sales
divided by variable expenses.

d. contribution
margin divided by sales.

44. For Pierce Company, sales is $500,000, variable
expenses are $330,000, and fixed expenses are $140,000. Pierce’s contribution
margin ratio is

a. 10%.

b. 28%.

c. 34%.

d. 66%.

45. For Sanborn Co., sales is $1,000,000, fixed
expenses are $300,000, and the contribution margin per unit is $48. What is the
break-even point?

a. $2,083,334
sales dollars

b. $625,000
sales dollars

c. 20,834
units

d. 6,250
units

46. For Franklin, Inc., sales is $1,500,000,
fixed expenses are $450,000, and the contribution margin ratio is 36%. What is
net income?

a. $90,000

b. $162,000

c. $378,000

d. $540,000

47. For Franklin, Inc., sales is $1,500,000,
fixed expenses are $450,000, and the contribution margin ratio is 36%. What are
the total variable expenses?

a. $288,000

b. $540,000

c. $960,000

d. $1,500,000

48. In 2013, Teller Company sold 3,000 units at
$400 each. Variable expenses were $280 per unit, and fixed expenses were $160,000.
What was Teller’s 2013 net income?

a. $200,000

b. $360,000

c. $840,000

d. $1,200,000

49. In 2012, Teller Company sold 3,000 units at
$400 each. Variable expenses were $280 per unit, and fixed expenses were $180,000.
The same selling price, variable expenses, and fixed expenses are expected for 2013.
What is Teller’s break-even point in sales dollars for 2013?

a. $600,000

b. $1,800,000

c. $1,200,000

d. $1,714,286

50. In 2012, Teller Company sold 3,000 units at
$400 each. Variable expenses were $280 per unit, and fixed expenses were $180,000.
The same selling price, variable expenses, and fixed expenses are expected for 2013.
What is Teller’s break-even point in units for 2013?

a. 1,500

b. 3,375

c. 4,500

d. 7,500

51. The required sales in units to achieve a
target net income is

a. (sales
+ target net income) divided by contribution margin per unit.

b. (sales
+ target net income) divided by contribution margin ratio.

c. (fixed
cost + target net income) divided by contribution margin per unit.

d. (fixed
cost + target net income) divided by contribution margin ratio.

52. For Wickham Co., sales is $2,000,000, fixed
expenses are $600,000, and the contribution margin ratio is 36%. What is
required sales in dollars to earn a target net income of $400,000?

a. $1,111,111

b. $1,666,666

c. $2,777,778

d. $5,555,556

53. Warner Manufacturing reported sales of
$2,000,000 last year (100,000 units at $20 each), when the break-even point was
75,000 units. Warner’s margin of safety ratio is

a. 25%.

b. 33%.

c. 75%.

d. 125%.

54. For Wilder Corporation, sales is $1,200,000
(6,000 units), fixed expenses are $360,000, and the contribution margin per
unit is $80. What is the margin of safety in dollars?

a. $60,000

b. $300,000

c. $540,000

d. $840,000

55. Margin of safety in dollars is

a. expected
sales divided by break-even sales.

b. expected
sales less break-even sales.

c. actual
sales less expected sales.

d. expected
sales less actual sales.

56. The margin of safety ratio is

a. expected
sales divided by break-even sales.

b. expected
sales less break-even sales.

c. margin
of safety in dollars divided by expected sales.

d. margin
of safety in dollars divided by break-even sales.

57. In 2012, Hagar Corp. sold 3,000 units at
$500 each. Variable expenses were $350 per unit, and fixed expenses were $455,000.
The same variable expenses per unit and fixed expenses are expected for 2013.
If Hagar cuts selling price by 4%, what is Hagar’s break-even point in units
for 2013?

a. 3,033

b. 3,159

c. 3,360

d. 3,500

58. In 2012, Carow sold 3,000 units at $500
each. Variable expenses were $250 per unit, and fixed expenses were $250,000. The
same selling price is expected for 2013. Carow is tentatively planning to
invest in equipment that would increase fixed costs by 20%, while decreasing
variable costs per unit by 20%. What is Carow’s break-even point in units for 2013?

a. 1,000

b. 1,200

c. 1,250

d. 1,500

Ans: a, LO: 2, Bloom: AP, Difficulty: Medium, Min: 3,
AACSB: Analytic, AICPA BB: Industry/Sector Perspective, AICPA FN: Risk
Analysis, AICPA PC: Problem Solving/Decision Making, IMA: Business Economics

59. In 2012, Raleigh sold 1,000 units at $500
each, and earned net income of $50,000. Variable expenses were $300 per unit,
and fixed expenses were $150,000. The same selling price is expected for 2013. Raleigh’s
variable cost per unit will rise by 10% in 2013 due to increasing material
costs, so they are tentatively planning to cut fixed costs by $15,000. How many
units must Raleigh sell in 2013 to maintain the same income level as 2012?

a. 794

b. 971

c. 1,176

d. 1,088

60. Sales mixis

a. the
relative percentage in which a company sells its multiple products.

b. the
trend of sales over recent periods.

c. the
mix of variable and fixed expenses in relation to sales.

d. a
measure of leverage used by the company.

61. In
a sales mix situation, at any level of units sold, net income will be higher if

a. more
higher contribution margin units are sold than lower contribution margin units.

b. more
lower contribution margin units are sold than higher contribution margin units.

c. more
fixed expenses are incurred.

d. weighted-average
unit contribution margin decreases.

62. Ramirez
Corporation sells two types of computer chips. The sales mix is 30% (Q-Chip)
and 70% (Q-Chip Plus). Q-Chip has variable costs per unit of $60 and a selling
price of $100. Q-Chip Plus has variable costs per unit of $70 and a selling
price of $130. The weighted-average unit contribution margin for Ramirez is

a. $46.

b. $50.

c. $54.

d. $100.

63. Capitol Manufacturing sells 3,000 units of
Product A annually, and 7,000 units of Product B annually. The sales mix for
Product A is

a. 30%.

b. 43%.

c. 70%.

d. Cannot
determine from information given.

64. Ramirez Corporation sells two types of
computer chips. The sales mix is 30% (Q-Chip) and 70% (Q-Chip Plus). Q-Chip has
variable costs per unit of $60 and a selling price of $100. Q-Chip Plus has
variable costs per unit of $70 and a selling price of $130. Ramirez’s fixed
costs are $540,000. How many units of Q-Chip would be sold at the break-even
point?

a. 3,000

b. 3,522

c. 5,000

d. 7,000

65. Roosevelt
Corporation has a weighted-average unit contribution margin of $40 for its two
products, Standard and Supreme. Expected sales for Roosevelt are 40,000
Standard and 60,000 Supreme. Fixed expenses are $1,800,000. How many Standards
would Roosevelt sell at the break-even point?

a. 18,000

b. 27,000

c. 30,000

d. 45,000

66. Roosevelt
Corporation has a weighted-average unit contribution margin of $40 for its two
products, Standard and Supreme. Expected sales for Roosevelt are 40,000
Standard and 60,000 Supreme. Fixed expenses are $1,800,000. At the expected
sales level, Roosevelt’s net income will be

a. $(200,000).

b. $
– 0 -.

c. $2,200,000.

d. $4,000,000.

67. Swanson Company has two divisions; Sporting Goods and Sports Gear.
The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs
$4,440,000 in fixed costs. The contribution margin ratio for Sporting Goods is
30%, while for Sports Gear it is 50%.The weighted-average contribution margin
ratio is

a. 37%.

b. 40%.

c. 43%.

d. 50%.

68. Swanson Company has two divisions; Sporting Goods and Sports Gear.
The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs
$4,440,000 in fixed costs. The contribution margin ratio for Sporting Goods is
30%, while for Sports Gear it is 50%.The break-even point in dollars is

a. $1,642,800.

b. $10,325,582.

c. $11,100,000.

d. $12,000,000.

69. Swanson
Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65%
for Sporting Goods and 35% for Sports Gear. Swanson incurs $4,440,000 in fixed
costs. The contribution margin ratio for Sporting Goods is 30%, while for
Sports Gear it is 50%.What will sales be for the Sporting Goods Division
at the break-even point?

a. $3,600,000

b. $4,200,000

c. $6,711,628

d. $7,800,000

70. Swanson Company has two divisions; Sporting Goods and Sports Gear.
The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs
$4,440,000 in fixed costs. The contribution margin ratio for Sporting Goods is
30%, while for Sports Gear it is 50%.What will be the total contribution margin
at the break-even point?

a. $3,820,466

b. $4,440,000

c. $4,480,000

d. $5,160,000

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