Batch 1 - Section C -
Part 2 - CVP
Total points 6/10
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Shruti
Questions 6 of 10 points
A company makes a product that *1/1
sells for $30. During the coming year,
fixed costs are expected to be
$180,000, and variable costs are
estimated at $26 per unit. How many
units must the company sell to break
even?
A. 6,924
B. 45,000
C. 6,000
D. None of the answers are correct.
Which of the following is a *1/1
characteristic of a contribution
income statement?
A. Fixed and variable manufacturing costs
are combined as one line item, but Lxed
operating expenses are shown separately
from variable operating expenses.
B. Fixed expenses are listed separately
from variable expenses.
C. Fixed and variable operating expenses
are combined as one line item, but Lxed
manufacturing expenses are shown
separately from variable manufacturing
expenses.
D. Fixed and variable expenses are
combined as one line.
A company uses cost-volume-profit *0/1
analysis to evaluate a new product.
The total fixed costs of production
per year are $160,000. The unit
variable cost is $50. Which one of the
following combinations of unit selling
price and breakeven number of units
sold per year is correct?
A. $70 selling price and 8,000 breakeven
number of units.
B. $25 selling price and 6,400 breakeven
number of units.
C. $100 selling price and 1,600 breakeven
number of units.
D. $50 selling price and 3,200 breakeven
number of units.
Correct answer
A. $70 selling price and 8,000 breakeven
number of units.
A company plans to offer a product *1/1
for sale at $9 per unit. What would be
the product’s contribution margin per
unit if variable costs per unit are $4,
fixed costs per unit are $3, and the
company’s marginal income tax rate
is 20%?
A. $2.
B. $6.
C. $4.
D. $5.
*0/1
Jeffries Company sells its single
product for $30 per unit. The
contribution margin ratio is 45%, and
fixed costs are $10,000 per month.
Sales were 3,000 units in April and
4,000 units in May. How much
greater is the May income than the
April income?
A. 10,000.
B. $30,000.
C. $16,500.
D. $13,500.
Correct answer
D. $13,500.
Breakeven quantity is defined as the *1/1
volume of output at which revenues
are equal to
A. Lxed costs.
B. marginal costs.
C. variable costs.
D. total costs.
Breeze Company has a contribution *1/1
margin of $4,000 and fixed costs of
$1,000. If the total contribution
margin increases by $1,000,
operating profit would
A. decrease by $1,000.
B. increase by more than $1,000.
C. increase by $1,000.
D. remain unchanged.
A company produces and sells 2,000 *0/1
units of finished goods and incurs
$60,000 of fixed costs annually. The
contribution margin is $60 per unit,
and variable cost is $40 per unit. If
the company expects sales
quantities to increase by 10% next
year, the operating profit will be
A. $60,000.
B. $72,000.
C. $132,000.
D. $120,000.
Correct answer
B. $72,000.
A company sells a single product at *1/1
$50 per unit. The company has
budgeted to sell 600,000 units in the
coming year. The company’s
budgeted income statement for the
coming year is as follows:
Cost of sales consists of 75% variable cost and
25% Lxed cost. Sales, general, and administrative
expenses are 40% variable cost and 60% Lxed cost.
Management wants to know how low sales volume
can go without the company having an operating
loss.
What is the company’s breakeven point in revenue?
A. $28,500,000
B. $25,000,000
C. $22,500,000
D. $23,750,000
Barnes Corporation manufactures *0/1
skateboards and is in the process of
preparing next year's budget. The pro
forma income statement for the
current year is presented as follows.
Sales
$1,500,000
Costofsalesi
Directmaterials 250,000
Directlabor 150,000
Variableoverhead 75,000
Fixedoverhead 100,000
Grossprofit $925,000
SellingandG&AVariable 200,000
SellingandG&AFixed 250,000
Operatingincome $475,000
The breakeven point (rounded to the nearest
dollar) for Barnes Corporation for the current year
is
A. $636,364.
B. $146,341.
C. $729,730.
D. $181,818.
Correct answer
A. $636,364.
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