Reference no: EM132452357
Questions -
Q1. If a company decreases its fixed costs for producing its only product and all other things remain unchanged, then sales revenue per unit at the breakeven point will
A. increase.
B. decrease.
C. remain the same.
D. More information is needed.
Q2. Worst Appliances provided the following information about its operations:
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Variable Manufacturing Overhead
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$10 per unit
|
|
Variable Selling and Administrative Costs
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$16 per unit
|
|
Prime Costs
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$8 per unit
|
|
Fixed Manufacturing Costs
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$900,000
|
|
Fixed Selling and Administrative Costs
|
$600,000
|
What is the contribution margin ratio if the company sells its only product for $80 each?
A. 67.5%
B. 57.5%
C. 42.5%
D. 32.5%
Q3. ComCom Company has fixed costs that total $1,225,000 per month. The selling price for its only product is $70, and the unit variable cost is $45. How much revenue must ComCom generate to earn $840,000 in operating income next month?
A. $8,260,000
B. $5,782,000
C. $2,352,000
D. $2,065,000
Q4. On a CVP graph, the total cost line intersects the total revenue line at the
A. breakeven point.
B. origin.
C. level of the fixed costs.
D. level of the variable costs.
Q5. If a company increases unit variable costs for its only product and all other things remain unchanged, then the breakeven quantity will
A. increase.
B. decrease.
C. remain the same.
D. More information is needed.
Q6. Operating leverage for ACDC Company is 3.5 for current sales of $100,000 and current net income of $20,000. Which of the following statements (I, II) is/are true?
I. If sales increase by 2%, net income will increase by 7%.
II. Current contribution margin is $70,000.
A. Only statement I is true.
B. Only statement II is true.
C. Neither statement is true.
D. Both statements I and II are true.
Q7. Best Appliances had the following revenue over the past five years:
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2011
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$900,000
|
|
2012
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1,100,000
|
|
2013
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1,300,000
|
|
2014
|
1,300,000
|
|
2015
|
1,400,000
|
To predict revenues for 2016, Best Appliances uses the average for the past five years. The company's breakeven revenue is $700,000 per year. What is the company's predicted margin of safety for 2016?
A. $700,000
B. $620,000
C. $600,000
D. $500,000
Q8. Bijou Museum sells 75% of its tickets for the regular price of $14. The remaining discount tickets are sold for the price of $10. Variable cost per guest is $2 for both groups, and fixed costs total $66,000 per month. What are the number of regular-price guests and discount guests at the breakeven point?
Regular Discount
A. 6,600 2,200
B. 6,000 2,000
C. 4,500 1,500
D. 4,125 1,375