Question : 138.If a company sells many different types of products, A.it will : 1302732

 

 

138.If a company sells many different types of products,

A.it will have high operating leverage.

B.the contribution margin ratio approach may be used to calculate the break-even point.

C.it cannot use cost-volume-profit analysis.

D.its margin of safety will be negative.

 

139.A company that sells many different types of products should approach CVP analysis by assuming that

A.all products will have the same contribution margin ratio.

B.products will be sold in a constant mix.

C.fixed costs per unit will remain constant over the relevant range..

D.the company will sell equal amounts of each product each period.

 

140.Tonto Rain Shields sells 3 types of umbrellas. Umbrella A sells for $20 and has variable cost of $9.00 per unit. Umbrella B sells for $17.00 and has variable cost of $12.00 per unit. Umbrella C sells for $9.00 and has variable costs of $6.00 per unit. The company sells in a mix of 2 units of A, 3 units of B, and 5 units of C. What is the weighted average contribution margin per unit for Tonto?

A.$5.20

B.$13.60

C.$10.00

D.$6.33

 

141.              Mexi-Foods produces tacos and burritos. Its financial information follows for the month of June:

TacosBurritos

Sales revenue              $40,000              $160,000

Fixed costs              8,000              40,000

Variable costs              15,000                75,000

Income              $17,000              $45,000

 

How much is the break-even point in total sales dollars for Mexi-Foods assuming the sales mix is stable?

A.$120,000

B.$87,273

C.$83,027

D.None of these answer choices are correct..

 

142.Beach Time produces two models of beach chairs, Lay Back and Easy Rest. Information regarding these products for May follows:

Lay BackEasy Rest

Number of units              6,000              14,000

Sales revenue              $120,000              $140,000

Fixed costs              24,000              50,000

Variable costs                 60,000                 42,000

Net Income              $  36,000              $  48,000

Selling price per unit              $20              $10

 

How much is Beach Time’s weighted average contribution margin ratio?

A.60.00%

B.32.31%

C.60.77%

D.71.53%

 

143.Idol Creations produces two models of keyboards, compact and deluxe. Information regarding the products is summarized for the month of April in the following table:

 

CompactDeluxeTotal

Number of units              600              400              1,000

Sales              $48,000              $36,000              $84,000

Variable costs               15,000              12,000              27,000

Fixed costs                21,000              20,000                41,000

Profit               $12,000              $  4,000              $16,000

Profit per unit $20.00$10.00

 

If the company’s weighted average contribution margin ratio is 67.86%, and the weighted average contribution margin per unit is $57.00, how much will Idol Creation’s total sales be at break-even?

A.$60,419

B.$122,281

C.$68,000

D.$60,552

 

144.Briggs Tools makes 2 products, snips and cutters. Snips have a contribution margin per unit of $8.00 and cutters have a contribution margin per unit of $12.00. Briggs has annual fixed costs of $117,600. Briggs’ historical sales data indicates that snips and cutters are sold in a 2 to 1 sale mix. How many snips will be sold at break-even?

A.4,200 snips

B.8,400 snips

C.14,700 snips

D.12,600 snips

 

145.Briggs Tools makes 2 products, snips and cutters. Snips have a contribution margin per unit of $8.00 and cutters have a contribution margin per unit of $12.00. Briggs has annual fixed costs of $117,600. Briggs’ historical sales data indicates that snips and cutters are sold in a 2 to 1 sale mix. Each snip takes 2 machine hours and each cutter takes 4 machine hours. Demand for both products is unlimited but the company must produce at least 1,000 units of each to stay competitive. Briggs is limited to 24,000 machine hours per month. How many units of each product should be produced each month?

A.20,000 snips, 1,000 cutters

B.10,000 snips, 4,000 cutters

C.12,000 snips, 6,000 cutters

D.10,000 snips, 1,000 cutters

 

146.Yogurt Palace produces two flavors of low-fat frozen yogurt: Blueberry and Raspberry. Information regarding the products is summarized for the month of January in the following table:

BlueberryRaspberry

Number of units                                  6,000          2,000

Sales revenue$90,000 $20,000

Fixed costs20,0009,000

Variable costs  36,000  5,000

Profit$34,000 $  6,000

Amount of processing time per unit1.4 hours1.1 hours

Contribution margin per unit$9.00 $7.50

Profit per unit$5.67 $3.00

 

Yogurt Palace determined it will have only 9,040 hours of processing time during February for which it can produce yogurt, and it must produce a minimum number of each flavor to remain competitive. Of which flavor should Yogurt Palace produce the most units and why?

A.Raspberry. It will contribute a larger amount towards profit for each unit of resource available.

B.Blueberry. It will contribute a larger amount towards profit for each unit of resource available.

C.Blueberry. It generates a higher contribution margin per unit.

D.Raspberry. Fewer units will need to be produced using fewer hours, allowing excess hours for other products.

 

147.Which of the following is not an assumption underlying CVP analysis?

A.Costs can be accurately separated into their fixed and variable components.

B.Fixed costs remain constant over the relevant range.

C.Variable costs per unit change over the relevant range.

D.The sales mix remains constant.