# Quiz 5: Cost-Volume-Profit Analysis

Business

Q 1Q 1

Kuldip's factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. What is the break-even point in units per month?
A) 2,100 units
B) 2,375 units
C) 2,300 units
D) 2`,450 units
E) 2,575 units

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Multiple Choice

B

Q 2Q 2

Kuldip's factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. What is the break-even point in revenue per month?
A) $70,000
B) $75,480
C) $71,121
D) $73,215
E) $71,500

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Multiple Choice

C

Q 3Q 3

Kuldip's factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. What would unit sales have to be to attain a net income over $8,000?
A) 2,700 units
B) 2,650 units
C) 2,756 units
D) 2,797 units
E) 2,765 units

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Multiple Choice

D

Q 4Q 4

Kuldip's factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. What would unit sales have to be to attain a net income over $12,000?
A) 3,050 units
B) 2,900 units
C) 2,950 units
D) 2,996 units
E) 3,008 units

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Multiple Choice

Q 5Q 5

Kuldip's factory manufactures toys that sell for $29.95 each. The variable cost per toy is $11, and the total fixed costs for the month are $45,000. Calculate the unit contribution margin.
A) $18.95
B) $17.95
C) $19.00
D) $17.50
E) $11.00

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Multiple Choice

Q 6Q 6

A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1,500 units per month, and sell the product for $125 each. What is the break-even point as a percent of capacity?
A) 81.2%
B) 76.9%
C) 75%
D) 72.4%
E) 63%

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Multiple Choice

Q 7Q 7

A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1,500 units per month, and sell the product for $125 each. What would be the net income at 90% capacity?
A) $10,000
B) $15,000
C) $12,750
D) $12,225
E) $16,000

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Multiple Choice

Q 8Q 8

A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1,500 units per month, and sell the product for $125 each. What would be the net income at 75% capacity?
A) loss $3,500
B) loss $250
C) loss $1,800
D) loss $1,875
E) loss $2,025

Free

Multiple Choice

Q 9Q 9

A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1500 units per month, and sell the product for $125 each. What sales would result in a net income of $16,000?
A) 1200 units
B) 1250 units
C) 1300 units
D) 1375 units
E) 1400 units

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Multiple Choice

Q 10Q 10

A manufacturing company is considering producing a new product. The variable cost of the new product is $60 per unit, and the total fixed costs are $75,000 for a month. The company could produce 1,500 units per month, and sell the product for $125 each. Calculate the unit contribution margin.
A) 65
B) 50
C) 60
D) 125
E) 80

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Multiple Choice

Q 11Q 11

M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1,000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. Calculate the break-even point as a percentage of capacity.
A) 34.5%
B) 65.5%
C) 50%
D) 60%
E) 62.5%

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Multiple Choice

Q 12Q 12

M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1,000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. How many cameras must be sold per month to have a net income of $40,000?
A) 850
B) 900
C) 800
D) 750
E) 825

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Multiple Choice

Q 13Q 13

M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1,000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. If fixed costs increase by 10%, what will be the net income at full capacity?
A) $85,000
B) $75,000
C) $80,000
D) $77,000
E) $75,500

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Multiple Choice

Q 14Q 14

M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1,000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. If fixed costs increase by 10%, how many cameras per month would have to be sold to maintain a net income of $49,500?
A) 950 units
B) 875 units
C) 850 units
D) 925 units
E) 900 units

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Multiple Choice

Q 15Q 15

M Studios retails their own brand of camera that they manufacture in their plant for $500. The plant capacity is 1,000 units per month and variable costs are $225 per camera. Total fixed costs for the year are $2.16 million. Calculate the contribution margin per camera.
A) 275
B) 250
C) 225
D) 300
E) 325

Free

Multiple Choice

Q 16Q 16

How many units must be sold per month to break even?
A) 167
B) 500
C) 400
D) 250
E) none of these

Free

Multiple Choice

Q 17Q 17

Determine the monthly profit (loss) if it sells 325 units per month.
A) $1,500
B) ($1,500)
C) $3,000
D) $0
E) none of these

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Multiple Choice

Q 18Q 18

How many units must be sold per month to earn a profit of $7,000?
A) 342
B) 425
C) 675
D) 575
E) none of these

Free

Multiple Choice

Q 19Q 19

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the contribution margin per unit.
A) $24
B) $9
C) $8
D) $6
E) $5

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Multiple Choice

Q 20Q 20

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the break-even point in units per month.
A) 320
B) 533
C) 800
D) 200
E) 400

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Multiple Choice

Q 21Q 21

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the revenue per month required to break-even.
A) $4,800
B) $7,200
C) $12,000
D) $14,400
E) $16,000

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Multiple Choice

Q 22Q 22

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the number of units that must be sold to return a net income of $2,100 per month.
A) 1,400
B) 1,150
C) 767
D) 533
E) 350

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Multiple Choice

Q 23Q 23

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the net income on sales of 850 units per month.
A) $12,750
B) $7,950
C) $5,100
D) $1,150
E) $300

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Multiple Choice

Q 24Q 24

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the net income on revenue of $10,000 per month.
A) $4,000
B) $5,200
C) $1,200
D) ($800) Loss
E) ($1,200) Loss

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Multiple Choice

Q 25Q 25

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the contribution margin rate.
A) 30%
B) 40%
C) 50%
D) 60%
E) 70%

Free

Multiple Choice

Q 26Q 26

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the budgeted net income.
A) $6,400,000
B) $2,400,000
C) $1,200.000
D) $800,000
E) ($4,000,000) Loss

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Multiple Choice

Q 27Q 27

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate break-even revenue per year.
A) $7,200,000
B) $7,000,000
C) $5,600,000
D) $3,200,000
E) $8,000,000

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Multiple Choice

Q 28Q 28

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the net income if total revenue for the year exceeds the budget by $1,000,000.
A) $2,400,000
B) $2,200,000
C) $2,000,000
D) $1,800,000
E) $1,600,000

Free

Multiple Choice

Q 29Q 29

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the net income if total revenue for the year falls below the budget by $1,000,000.
A) $400,000
B) $0
C) ($200,000) Loss
D) ($220,000) Loss
E) ($800,000) Loss

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Multiple Choice

Q 30Q 30

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the total sales revenue for the year that would be needed for a profit of $2,750,000.
A) $10,437,500
B) $9,387.500
C) $8,250,000
D) $9,750,000
E) $10,750,000

Free

Multiple Choice

Q 31Q 31

The current annual budget for Armstrong Ltd. indicates total revenue of $8,000,000. The total variable costs are $1,600,000 and fixed costs are $5,600,000. Calculate the contribution rate.
A) 20%
B) 40%
C) 50%
D) 70%
E) 80%

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Multiple Choice

Q 32Q 32

Ace Corporation's variable costs are equal to 43% of sales revenue. Their fixed costs per month are $600,000. Calculate total revenue at the break-even point.
A) $1,395,349
B) $858,000
C) $942,000
D) $1,052,632
E) $1,355,400

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Multiple Choice

Q 33Q 33

Ace Corporation's variable costs are equal to 43% of sales revenue. Their fixed costs per month are $600,000. Calculate the net income on sales of $2,000,000 per month.
A) $540,000
B) $260,000
C) $798,000
D) $1,140,000
E) $280,000

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Multiple Choice

Q 34Q 34

Ace Corporation's variable costs are equal to 43% of sales revenue. Their fixed costs per month are $600,000. Calculate the contribution rate.
A) 22%
B) 34%
C) 43%
D) 53%
E) 57%

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Multiple Choice

Q 35Q 35

Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. How many hot dogs must Weiner sell in a month to break even?
A) 1,800
B) 2,000
C) 2,400
D) 2,750
E) 720

Free

Multiple Choice

Q 36Q 36

Weiner's Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. How much profit should Weiner realize on the sale of 3,000 hot dogs?
A) $7,500
B) $1,500
C) $1,016
D) $850
E) $450

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Multiple Choice

Q 37Q 37

Weiner's Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. If Weiner's fixed cost per month was to increase to $2,880, to what level would he have to reduce his variable cost per hot dog in order to maintain the current break-even point in units?
A) $1.20
B) $1.30
C) $1.40
D) $1.50
E) $1.60

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Multiple Choice

Q 38Q 38

At this time, Weiner's Hot Dog Stand sells hot dogs for $2.50 each. The variable cost per hot dog is $1.75 and fixed costs per month are $1,800. Weiner is considering some changes. If Weiner increases his selling price to $2.75 per hot dog, and reduce his variable cost per hot dog to $1.15, what level of fixed cost per month would reduce his break-even point in units by 50% from what it is now?
A) $900
B) $1,050
C) $1,450
D) $1,920
E) $2,400

Free

Multiple Choice

Q 39Q 39

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. What is the break-even point expressed in dollars of revenue?
A) $12,000
B) $10,000
C) $15,000
D) $12,500
E) $14,750

Free

Multiple Choice

Q 40Q 40

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. What is the break-even point expressed as a percent of capacity?
A) 75%
B) 80%
C) 70%
D) 85%
E) 65%

Free

Multiple Choice

Q 41Q 41

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. How many dolls must be sold each week to produce a net income of $1125?
A) 400 dolls
B) 425 dolls
C) 450 dolls
D) 475 dolls
E) 375 dolls

Free

Multiple Choice

Q 42Q 42

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. How many dolls must be sold each week to produce a net income of $2250?
A) 375 dolls
B) 400 dolls
C) 425 dolls
D) 500 dolls
E) 525 dolls

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Multiple Choice

Q 43Q 43

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. If fixed costs are increased by 10% per week, by how much will this lower the net income?
A) $750
B) $1,000
C) $1250
D) $800
E) $900

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Multiple Choice

Q 44Q 44

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2,000 meals per month. At full capacity, what is Cliff's net income?
A) $12,000
B) $10,000
C) $15,000
D) $7500
E) $14,500

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Multiple Choice

Q 45Q 45

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2,000 meals per month. At 75% capacity, what is Cliff's net income?
A) $4,800
B) $6,000
C) $7,200
D) $7,800
E) $8,400

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Multiple Choice

Q 46Q 46

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2,000 meals per month. What is the break-even point expressed as a percent of capacity?
A) 75%
B) 80%
C) 50%
D) 60%
E) 70%

Free

Multiple Choice

Q 47Q 47

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2,000 meals per month. What number of meals must be sold to break-even?
A) 1,200 meals
B) 1,400 meals
C) 1,500 meals
D) 1,000 meals
E) 1,250 meals

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Multiple Choice

Q 48Q 48

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2,000 meals per month. What number of meals must be sold to generate a net income of $7,800?
A) 1,550 meals
B) 1,600 meals
C) 1,700 meals
D) 1,750 meals
E) 1,650 meals

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Multiple Choice

Q 49Q 49

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. What is the break-even volume per month?
A) 750 lamps
B) 800 lamps
C) 900 lamps
D) 1,000 lamps
E) 600 lamps

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Multiple Choice

Q 50Q 50

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. What is the monthly net income at a volume of 1800 lamps per month?
A) $76,000
B) $84,000
C) $80,000
D) $88,000
E) $72,000

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Multiple Choice

Q 51Q 51

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. What is the monthly net income if Cando operates at 60% capacity?
A) $44,000
B) $84,000
C) $36,000
D) $52,000
E) $28,000

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Multiple Choice

Q 52Q 52

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. At what percent utilization would the monthly net income be $44,000?
A) 60%
B) 55%
C) 50%
D) 65%
E) 70%

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Multiple Choice

Q 53Q 53

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. At what percent utilization would the monthly net income be $52,000?
A) 55%
B) 65%
C) 75%
D) 80%
E) 70%

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Multiple Choice

Q 54Q 54

Juniper Ltd. Manufactured 98,000 units of a product last year and identified the following manufacturing and overhead costs (V denotes variable cost and F denotes fixed cost). If variable cost and fixed costs remain unchanged, calculate the total cost to produce 62,000 units.
A) $1,286,000
B) $1,486,000
C) $1,686,000
D) $1,976,000
E) $2,076,000

Free

Multiple Choice

Q 55Q 55

Anderson Ltd. Manufactured 10,000 units of a product last year and identified the following manufacturing and overhead costs (V denotes variable cost and F denotes fixed cost). If variable cost and fixed costs remain unchanged, calculate the total cost to produce 12,000 units.
A) $698,000
B) $699,000
C) $700,000
D) $701,000
E) $702,000

Free

Multiple Choice

Q 56Q 56

Mentis Ltd. Manufactured 350,000 units of a product last year and identified the following manufacturing and overhead costs (V denotes variable cost and F denotes fixed cost). If variable cost and fixed costs remain unchanged, calculate the total cost to produce 385,000 units.
A) $39,970,000
B) $40,170,000
C) $41,370,000
D) $43,670,000
E) $44,440,000

Free

Multiple Choice

Q 57Q 57

Sherry Tomason is considering the start-up of a delivery company service. She has compiled information on costs as follows: With the cost data provided, determine the fixed costs per month.
A) $5,680
B) $7,130
C) $8,840
D) $3,160
E) $6,640

Free

Multiple Choice

Q 58Q 58

Mike Babchuck is considering the start-up of a service company. He has compiled information on costs as follows: With the cost data provided, determine the variable cost per km.
A) $1.348
B) $1.161
C) $1.087
D) $1.031
E) $0.825

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Multiple Choice

Q 59Q 59

Shannon Vale is considering the start-up of a service company. She has compiled information on costs as follows: With the cost data provided, determine the fixed costs and variable cost per km.
A) Fixed costs: $4425; Variable costs: $1.031
B) Fixed costs: $5,186; Variable costs: $0.818
C) Fixed costs: $6,200; Variable costs: $0.966
D) Fixed costs: $5,726; Variable costs: $0.952
E) Fixed costs: $7,752; Variable costs: $1.048

Free

Multiple Choice

Q 60Q 60

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $80. The new production line would manufacture up to 9,000 units at a variable cost of $15 per unit. Fixed costs would be $150,000. Variable selling and administration expenses would amount to $5. Determine the break-even point as a percent of capacity.
A) 27.78%
B) 28.55%
C) 29.32%
D) 32.45%
E) 41.62%

Free

Multiple Choice

Q 61Q 61

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $75. The new production line would manufacture up to 150,000 units at a variable cost of $47 per unit. Fixed costs would be $975,000. Variable selling and administration expenses would amount to $15. Determine the break-even point as a percent of capacity.
A) 30%
B) 40%
C) 50%
D) 60%
E) 70%

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Multiple Choice

Q 62Q 62

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $105. The new production line would manufacture up to 825,000 units at a variable cost of $64 per unit. Fixed costs would be $1,515,000. Variable selling and administration expenses would amount to $18. Determine the units needed to earn operating income of $4,000,000.
A) 241,571
B) 166,276
C) 527,685
D) 239,783
E) 313,913

Free

Multiple Choice

Q 63Q 63

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $24. The new production line would manufacture up to 19,500 units at a variable cost of $7.80 per unit. Fixed costs would be $72,500. Variable selling and administration expenses would amount to $2.20. Determine the units needed to earn operating income of $75,000.
A) 14,970
B) 13,869
C) 12,758
D) 11,647
E) 10,536

Free

Multiple Choice

Q 64Q 64

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $100. The new production line would manufacture up to 42,000 units at a variable cost of $67 per unit. Fixed costs would be $580,000. Variable selling and administration expenses would amount to $12. Determine operating income at 80% of capacity.
A) $124,700
B) $125,600
C) $126,500
D) $127,400
E) $128,300

Free

Multiple Choice

Q 65Q 65

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $56. The new production line would manufacture up to 95,000 units at a variable cost of $35 per unit. Fixed costs would be $400,000. Variable selling and administration expenses would amount to $7. Determine operating income at 95% capacity.
A) $863,500
B) $874,500
C) $885,500
D) $895,500
E) $905,500

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Multiple Choice

Q 66Q 66

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $18.50. The new production line would manufacture up to 14,500 units at a variable cost of $6.25 per unit. Fixed costs would be $34,000. Variable selling and administration expenses would amount to $3. Determine the dollar sales needed to earn operating loss of $2,500.
A) $66,000
B) $65,000
C) $64,000
D) $63,000
E) $62,000

Free

Multiple Choice

Q 67Q 67

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $7. The new production line would manufacture up to 19,250 units at a variable cost of $1.85 per unit. Fixed costs would be $50,000. Variable selling and administration expenses would amount to $1.15. Determine the dollar sales needed to earn operating loss of $4,000.
A) $81,000
B) $80,500
C) $80,000
D) $79,500
E) $79,000

Free

Multiple Choice

Q 68Q 68

A new product is expected to sell for $12. The company would manufacture up to 22,000 units at a variable cost of $5 per unit. Fixed costs would be $150,000. Variable selling and administration expenses would amount to $2.50. Determine the contribution margin per unit and contribution margin rate.
A) Per unit CM $4.50; CM rate = .375
B) Per unit CM $5.50; CM rate = .395
C) Per unit CM $6.50; CM rate = .415
D) Per unit CM $7.50; CM rate = .435
E) Per unit CM $8.50; CM rate = .455

Free

Multiple Choice

Q 69Q 69

A new product is expected to sell for $20. The company would manufacture up to 46,500 units at a variable cost of $8 per unit. Fixed costs would be $220,000. Variable selling and administration expenses would amount to $3. Determine the contribution margin per unit and contribution margin rate.
A) Per unit CM $9.00; CM rate = .45
B) Per unit CM $9.50; CM rate = .47
C) Per unit CM $9.75; CM rate = .49
D) Per unit CM $10.00; CM rate = .51
E) Per unit CM $10.50; CM rate = .53

Free

Multiple Choice

Q 70Q 70

Triax Corp. produced 50,000 gizmos at a total cost of $1,600,000 (including $400,000 of fixed costs) in the fiscal year just completed. If fixed costs and unit variable costs do not change next year, how much will it cost to produce 60,000 gizmos?

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Short Answer

Q 71Q 71

Dynacan Ltd. manufactured 10,000 units of product last year and identified the following manufacturing and overhead costs. (V denotes "variable cost" and F denotes "fixed cost.")

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Essay

Q 72Q 72

Use the Texas Instruments BAII plus break-even worksheet to solve the following.
Recall:
FC: total fixed costs
VC: Variable costs per unit
P: Selling price per unit (S in textbook)
PFT: Profit or Net Income
Q: Number of units sold (x in textbook)
Toys-4-U manufactures a toy that it sells for $65.00 each. The variable cost per toy is $15 and the fixed costs for this product line are $250,000 per year. What number of sales would generate a profit of $5000?

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Short Answer

Q 73Q 73

Samantha manufactures rings which sell in her boutique for $60 each. For 100 rings, the material cost is $15 each, and estimated fixed costs are $900. How many rings must Larissa sell to beak-even?

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Short Answer

Q 74Q 74

Once a business is operating beyond the break-even point, why doesn't each additional dollar of revenue add a dollar to net income?

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Q 75Q 75

The Woodstock plant of Goodstone Tires manufactures a single line of automobile tires. In its first fiscal quarter, the plant had total revenue of $4,500,000 and net income of $900,000 from the production and sale of 60,000 tires. In the subsequent quarter, the net income was $700,000 from the production and sale of 50,000 tires. Calculate the unit selling price, the total revenue in the second quarter, the variable costs per tire, and the total fixed costs per calendar quarter.

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Q 76Q 76

The Kelowna division of Windstream RVs builds the Wanderer model. The division had total revenue of $4,785,000 and a profit of $520,000 on the sale of 165 units in the first half of its financial year. Sales declined to 117 units in the second half of the year, resulting in a profit of only $136,000. Determine the selling price per unit, the total revenue in the second half, the unit variable costs, and the annual fixed costs.

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Q 77Q 77

Use the graphical approach to CVP analysis to solve the following problem.
Canada Bagel Company manufactures packages of bagels that it sells for $2.50. The variable costs per package are $1.00.
a) To just break even, how many packages of bagels must be sold per month if the fixed costs are $60,000 per month?
b) What must unit sales be in order to have a profit of $7,500 per month?

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Q 78Q 78

Use the graphical approach to CVP analysis to solve the following problem.
Home Security Systems Inc. assembles and packages home security systems from brand-name components. Its basic home security system is sold to customers who prefer to install the system themselves in their own home. Each system is assembled from components costing $1400 per system and sells for $2,000. Labour costs for assembly are $100 per system. This product line's share of overhead costs is $10,000 per month.
a) How many basic security systems must be sold each month to break even on this product line?
b) What will be the profit or loss for a month in which 15 basic home security systems are sold?

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Q 79Q 79

Use the graphical approach to CVP analysis to solve the following problem.
Huntsville Office Supplies (HOS) is evaluating the profitability of leasing a photocopier for its customers to use on a self-serve basis at 10¢ per copy. The copier may be leased for $300 per month plus 1.5¢ per copy on a full-service contract. HOS can purchase paper at $5 per 500-sheet ream. Toner costs $100 per bottle, which in normal use will last for 5,000 pages. HOS is allowing for additional costs (including electricity) of 0.5¢ per copy.
a) How many copies per month must be sold in order to break even?
b) What will be the increase in monthly profit for each 1,000 copies sold above the break-even point?

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Q 80Q 80

Use the graphical approach to CVP analysis to solve the following problem.
Jordan is developing a business plan for a residential building inspection service he wants to start up. Rent and utilities for an office would cost $1,000 per month. The fixed costs for a vehicle would be $450 per month. He estimates that the variable office costs (word processing and supplies) will be $50 per inspection and variable vehicle costs will be $25 per inspection. Jordan would also spend $200 per month to lease a computer, and $350 per month for advertising.
a) If he charges $275 per inspection, how many inspections per month are required before he can "pay himself?"
b) How many inspections per month are required for Jordan to be able to draw a salary of $4,000 per month?

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Q 81Q 81

Use the graphical approach to CVP analysis to solve the following problem.
A small manufacturing operation can produce up to 250 units per week of a product that it sells for $20 per unit. The variable cost per unit is $12, and the fixed costs per week are $1200.
a) How many units must the firm sell per week to break even?
b) Determine the firm's weekly profit or loss if it sells:
(i) 120 units per week (ii) 250 units per week
c) At what level of sales will the net income be $400 per week?

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Q 82Q 82

Use the graphical approach to CVP analysis to solve the following problem.
Valley Peat Ltd. sells peat moss for $10 per bag. Variable costs are $7.50 per bag and annual fixed costs are $100,000.
a) How many bags of peat must be sold to break even?
b) What will be the net income for a year in which 60,000 bags of peat are sold?
c) How many bags must be sold for a net income of $60,000 in a year?
d) What volume of sales would produce a loss of $10,000?

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Q 83Q 83

Once a business is operating beyond the break-even point, why doesn't each additional dollar of revenue add a dollar to net income?

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Q 84Q 84

A small business calculates that its monthly fixed costs are $3,200. If the business calculates it contribution rate to be 0.42, what level of monthly sales must be generated in order to break even?

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Q 85Q 85

A company makes gadgets selling for $15 each. For 20,000 gadgets, the cost is $3 each, and the estimated fixed costs are $150,000. What is the break-even volume and revenue?

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Q 86Q 86

M Studios estimates that it can sell 1,500 camera lenses at $150 each. Total fixed costs are $120,000, and variable costs are $30 per lens. What unit sales are required to break even? What is the profit generated if all units are sold?

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Q 87Q 87

A company expects to sell 30,000 ball hats at $35 each. The estimated variable cost of each hat is $12.50, and the fixed costs are estimated to be $450,000. Calculate the contribution margin per unit and the break-even point in units and revenue.

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Q 88Q 88

Durable Toys Inc. wants to calculate from recent production data the monthly fixed costs and unit variable costs on its Mountain Trike product line. In the most recent month, it produced 530 Trikes at a total cost of $24,190. In the previous month, it produced 365 Trikes at a total cost of $18,745. What are the fixed costs per month and the unit variable costs?

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Q 89Q 89

Larissa manufactures rings which sell in her boutique for $60 each. For 100 rings, the material cost is $15 each, and estimated fixed costs are $900. How many rings must Larissa sell to break even? Use the graphical approach to CVP analysis to solve.

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Q 90Q 90

A company makes gadgets selling for $15 each. For 20,000 gadgets, the cost is $3 each, and the estimated fixed costs are $150,000. What is the break-even volume and revenue? Use the graphical approach to CVP analysis to solve.

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Q 91Q 91

M Studios estimates that it can sell 1,500 camera lenses at $150 each. Total fixed costs are $120,000, and variable costs are $30 per lens. What unit sales are required to break even? What is the revenue generated if all units are sold? Use the graphical approach to CVP analysis to solve.

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Q 92Q 92

A company expects to sell 30,000 hats at $35 each. The estimated variable cost of each hat is $12.50, and the fixed costs are estimated to be $450,000. Calculate the break-even point in units and revenue. Use the graphical approach to CVP analysis to solve.

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Q 93Q 93

Enrique is studying the feasibility of producing a new product. His existing facilities could be expanded to manufacture 2,000 new units per month. The unit cost is $75. Estimated fixed costs are $3.36 mil per year and variable costs are $25 per unit. Competitors sell a similar product for $350 each. Use the graphical approach to CVP analysis to solve the following:
a) What would the net income be at 80% capacity?
b) What would unit sales have to be to attain a net income of $100,000?
c) If sales dropped to 60% of capacity, what would the resulting net income be?

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Q 94Q 94

Sam manufactures a product that is selling so well, he has decided to expand his operation to 50,000 units per month. The unit cost is $7, estimated fixed costs are $1.8 mil per year and variable costs are $5 per unit. The product currently sells for $20. Use the graphical approach to CVP analysis to solve the following:
a) What is the break-even point as a percent of capacity?
b) What would the net income be at 75% capacity?
c) What would unit sales have to be to attain a net income of $100,000?
d) If sales dropped to 50% of capacity, what would the resulting net income be?

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Q 95Q 95

Use the graphical approach to CVP analysis to solve the following problem.
Reflex Manufacturing Corp. manufactures borgels at a unit variable cost of $43. It sells them for $70 each. It can produce a maximum of 3,200 borgels per month. Annual fixed costs total $648,000.
a) What is the break-even volume per month?
b) What is the monthly net income at a volume of 2500 borgels per month?
c) What is the monthly net income if Reflex operates at 50% of capacity during a recession?

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Q 96Q 96

A small business calculates that its monthly fixed costs are $4,200. If the business calculates it contribution rate to be 0.32, what level of monthly sales must be generated in order to break even?

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