Question 1

Alpha Inc.operated at 75% of capacity for the past year during which fixed costs were $225,000,variable costs were 70% of sales,and sales were $850,000.Operating profit was:
A)$ 225,000
B)$595,000
C)$56,250
D)$30,000.

Accepted Answer

Operating profit is calculated as sales minus total costs (fixed and variable). Variable costs are 70% of sales, so they are $595,000 (70% of $850,000). Total costs are $595,000 (variable) + $225,000 (fixed) = $820,000. Operating profit is $850,000 (sales) - $820,000 (total costs) = $30,000.

Question 2

Currently,fixed costs are $540,000,the unit selling price is $95,and the unit variable cost is $60.What would be the break-even sales (in units),if the unit selling price is increased by $10?
A)5,294 units
B)9,000 units
C)12,857 units
D)12,000 units

Accepted Answer

The answer of Currently,fixed costs are $540,000,the unit selling price...

Question 3

Foggy Co.has the following operating data for its manufacturing operations:
A)increase by 400 units.
B)increase by 640 units.
C)decrease by 640 units.
D)increase by 800 units.

Accepted Answer

The answer of Foggy Co.has the following operating data for...

Question 4

Currently,fixed costs are $810,000,the unit selling price is $60,and the unit variable cost is $48.What would be the break-even sales (in units),if the variable cost is increased by $2?
A)16,200 units
B)57,875 units
C)81,000 units
D)67,500 units

Accepted Answer

The answer of Currently,fixed costs are $810,000,the unit selling price...

Question 5

If sales are $820,000,variable costs are 68% of sales,and operating income is $260,000,what is the contribution margin ratio?
A)53%
B)38%
C)47%
D)32%

Accepted Answer

The answer of If sales are $820,000,variable costs are 68%...

Question 6

If fixed costs are $550,000 and the unit contribution margin is $15,what amount of units must be sold in order to realize an operating income of $125,000?
A)45,000 units
B)10,417 units
C)45,833 units
D)28,333 units

Accepted Answer

Fixed costs = $550,000Unit contribution margin = $15Operating income = $125,000Units to be sold = Fixed costs / (Unit contribution margin - Operating income)= 550,000 / (15 - 125,000)= 550,000 / (-110,000)= 5= 45,000 units

Question 7

Variable costs as a percentage of sales for Protoveo Inc.are 65%,sales are $500,000,and fixed costs are $125,000.How much would operating income change if sales decrease by $10,000?
A)$3,500 increase
B)$3,500 decrease.
C)$3,250 decrease
D) $3,500 increase.

Accepted Answer

First, we need to calculate Protoveo Inc.'s current operating income:
Total Variable Costs = 65% of $500,000 = $325,000
Total Fixed Costs = $125,000
Operating Income = Sales - (Variable Costs + Fixed Costs)
Operating Income = $500,000 - ($325,000 + $125,000)
Operating Income = $50,000

Next, we need to calculate the new operating income if sales decrease by $10,000:
New Sales = $500,000 - $10,000 = $490,000
New Operating Income = New Sales - (Variable Costs + Fixed Costs)
New Operating Income = $490,000 - ($318,500 + $125,000)
New Operating Income = $46,500

The change in operating income is:
Change in Operating Income = New Operating Income - Current Operating Income
Change in Operating Income = $46,500 - $50,000
Change in Operating Income = -$3,500

Since the change in operating income is negative, this means that operating income would decrease by $3,500 if sales decrease by $10,000. Therefore, the best answer is B) $3,500 decrease.

Question 8

If fixed costs are $750,000 and variable costs are 60% of sales,what is the break-even point (in dollars)?
A)$1,875,000
B)$1,250,000
C)$1,666,667
D)$1,350,000

Accepted Answer

The answer of If fixed costs are $750,000 and variable...

Question 9

What is the contribution margin ratio of SuperGalaxy Enterprises with sales of $120,000,65% of sales are variable costs,and operating income of $24,000?
A)56%
B)35%
C)20%
D)25%

Accepted Answer

The contribution margin ratio is calculated as 1 minus the variable cost percentage. Since 65% of sales are variable costs, the contribution margin ratio is 35% (100% - 65%).

Question 10

The contribution margin ratio is:
A)the same as the variable cost ratio.
B)the same as profit.
C)the portion of equity contributed by the stockholders.
D)the same as the profit-volume ratio.

Accepted Answer

The answer of The contribution margin ratio is:
A)the same as...

Question 11

Currently,fixed costs are $500,000 and the unit contribution margin is $40.What would be the break-even point in units if fixed costs are reduced by $80,000?
A)14,500 units
B)20,000 units
C)10,500 units
D)12,500 units

Accepted Answer

The answer of Currently,fixed costs are $500,000 and the unit...

Question 12

Omega Inc.is expecting a reduction of $25,000 in fixed costs of $725,000.What will be the change in break-even sales( in units),if selling price per unit is $50 and the unit variable cost is $35?
A)48,333 units
B)46,667 units
C)1,667 units
D)2,500 units

Accepted Answer

The change in break-even sales in units due to a reduction in fixed costs can be calculated using the formula for break-even point in units, which is Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). With a $25,000 reduction in fixed costs, the new break-even point will be lower. The difference in break-even points is $25,000 / ($50 - $35) = $25,000 / $15 = 1,667 units.

Question 13

If fixed costs are $250,000,the unit selling price is $105,and the unit variable cost is $65,what is the break-even sales (in units)?
A)6,250 units
B)2,381 units
C)10,000 units
D)3,846 units

Accepted Answer

Break-even sales (in units) = Fixed costs / (Unit selling price - Unit variable cost)= 250,000 / (105 - 65)= 250,000 / 40= 6,250 units

Question 14

If fixed costs are $350,000,the unit selling price is $80,and the unit variable cost is $30,what is the break-even sales (in units)?
A)3,200 units
B)7,000 units
C)11,667 units
D)4,375 units

Accepted Answer

The answer of If fixed costs are $350,000,the unit selling...

Question 15

Wiles Inc.'s unit selling price is $40,the unit variable costs is $30,fixed costs are $135,000,and current sales are 10,000 units.How much would operating income change if sales increase by 5,000 units?
A)$50,000 increase
B)$65,000 decrease
C)$100,000 increase
D)$50,000 decrease

Accepted Answer

The operating income change is calculated by the contribution margin per unit times the change in units sold. The contribution margin per unit is the selling price minus the variable cost ($40 - $30 = $10). With an increase of 5,000 units, the operating income would increase by $10 * 5,000 = $50,000.

Question 16

If fixed costs are $790,000 and the unit contribution margin is $60,what amount of units must be sold in order to have a zero profit?
A)8,353 units
B)13,167 units
C)6,570 units
D)65,833 units

Accepted Answer

To achieve zero profit, the number of units sold must cover the fixed costs. The break-even point in units is calculated by dividing the fixed costs by the unit contribution margin: $790,000 / $60 = 13,167 units.

Question 17

In cost-volume-profit analysis,all costs are classified into the following two categories:
A)mixed costs and variable costs.
B)sunk costs and fixed costs.
C)discretionary costs and sunk costs.
D)variable costs and fixed costs.

Accepted Answer

In cost-volume-profit analysis, costs are classified into two basic categories: variable costs and fixed costs. Variable costs vary in total directly and proportionately with changes in the activity level. Fixed costs, on the other hand, remain unchanged in total regardless of changes in activity level within a relevant range. Therefore, the best choice is D, variable costs and fixed costs.

Question 18

Compute the break-even point(in dollars)if fixed costs are $540,000 and variable cost are 70% of sales.
A)$3,850,000
B)$1,800,000
C)$1,650,000
D)$900,000

Accepted Answer

The break-even point in dollars is calculated using the formula: Break-even point = Fixed Costs / (1 - Variable Cost Percentage). Here, it's $540,000 / (1 - 0.70) = $540,000 / 0.30 = $1,800,000.

Question 19

Snower Corporation sells product G for $150 per unit,the variable cost per unit is $105,and the fixed costs are $720,000.What is the sales (in dollars)required to realize income from operations of $40,000?
A)$2,533,333
B)$1,773,333
C)$2,400,000
D)$1,680,000

Accepted Answer

To find the required sales, use the formula: Sales = (Fixed Costs + Desired Income) / Contribution Margin Ratio. Contribution Margin per unit = Selling Price - Variable Cost = $150 - $105 = $45. Contribution Margin Ratio = $45 / $150 = 0.3. Required Sales = ($720,000 + $40,000) / 0.3 = $2,533,333.

Question 20

Which ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?
A)Margin of safety ratio
B)Contribution margin ratio
C)Costs and expenses ratio
D)Profit ratio

Accepted Answer

The contribution margin ratio indicates the percentage of each sales dollar that is available to cover fixed costs and provide a profit. It is calculated by dividing the contribution margin (sales revenue minus variable costs) by sales revenue.

Quiz 11: Cost Behavior and Cost-Volume-Profit Analysis

Alpha Inc.operated at 75% of capacity for the past year during which fixed costs were $225,000,variable costs were 70% of sales,and sales were $850,000.Operating profit was:

Currently,fixed costs are $540,000,the unit selling price is $95,and the unit variable cost is $60.What would be the break-even sales (in units) ,if the unit selling price is increased by $10?

Foggy Co.has the following operating data for its manufacturing operations:

Currently,fixed costs are $810,000,the unit selling price is $60,and the unit variable cost is $48.What would be the break-even sales (in units) ,if the variable cost is increased by $2?

If sales are $820,000,variable costs are 68% of sales,and operating income is $260,000,what is the contribution margin ratio?

If fixed costs are $550,000 and the unit contribution margin is $15,what amount of units must be sold in order to realize an operating income of $125,000?

Variable costs as a percentage of sales for Protoveo Inc.are 65%,sales are $500,000,and fixed costs are $125,000.How much would operating income change if sales decrease by $10,000?

If fixed costs are $750,000 and variable costs are 60% of sales,what is the break-even point (in dollars) ?

What is the contribution margin ratio of SuperGalaxy Enterprises with sales of $120,000,65% of sales are variable costs,and operating income of $24,000?

The contribution margin ratio is:

Currently,fixed costs are $500,000 and the unit contribution margin is $40.What would be the break-even point in units if fixed costs are reduced by $80,000?

Omega Inc.is expecting a reduction of $25,000 in fixed costs of $725,000.What will be the change in break-even sales( in units) ,if selling price per unit is $50 and the unit variable cost is $35?

If fixed costs are $250,000,the unit selling price is $105,and the unit variable cost is $65,what is the break-even sales (in units) ?

If fixed costs are $350,000,the unit selling price is $80,and the unit variable cost is $30,what is the break-even sales (in units) ?

Wiles Inc.'s unit selling price is $40,the unit variable costs is $30,fixed costs are $135,000,and current sales are 10,000 units.How much would operating income change if sales increase by 5,000 units?

If fixed costs are $790,000 and the unit contribution margin is $60,what amount of units must be sold in order to have a zero profit?

In cost-volume-profit analysis,all costs are classified into the following two categories:

Compute the break-even point(in dollars) if fixed costs are $540,000 and variable cost are 70% of sales.

Snower Corporation sells product G for $150 per unit,the variable cost per unit is $105,and the fixed costs are $720,000.What is the sales (in dollars) required to realize income from operations of $40,000?

Which ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?