Question :
61.Falls Company has a contribution margin of $32 per unit : 1257114
61.Falls Company has a contribution margin of $32 per unit and fixed costs of $500,000, and it desires to earn a profit of $100,000. What is the sales volume in units required to achieve this desired profit?
A. 3,125 units
B. 18,750 units
C. 15,625 units
D. 12,500 units
62.At the break-even point:
A. Sales would be equal to total costs.
B. Contribution margin would be equal to total fixed costs.
C. Sales would be equal to fixed costs.
D. Both Sales would be equal to total costs and Contribution margin would be equal to total fixed costs are correct.
63.Which of the following statements regarding Company A is incorrect?
A. If Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its break-even volume in units is 36,000 units.
B. If Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its variable expenses must be $20 per unit.
C. If Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, once it has covered its fixed costs, net income will increase by $30 for each additional unit sold.
D. Both if Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its break-even volume in units is 36,000 units and if Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its variable expenses must be $20 per unit are incorrect.
64.Which of the following statements about a cost-volume-profit graph is correct?
A. A cost-volume-profit graph is prepared with activity (number of units) on the vertical axis.
B. The intersection of the total sales line and the total cost line represents the break-even point.
C. The area above the break-even point represents the area of loss.
D. The total cost line intersects the vertical axis at the dollar amount of total variable costs.
65.Bloom Company has variable cost per unit of $20 and a sales price of $35 per unit. Its total fixed costs are $240,000. Which of the following is a correct statement?
A. Company D’s break-even point is 12,000 units.
B. If budgeted sales are 25,000 units, D’s margin of safety is 10,000 units.
C. If Company D’s variable cost per unit increases and nothing else changes, the margin of safety will decrease.
D. If Company D’s variable cost per unit decreases and nothing else changes, the break-even point will stay the same.
66.Joseph Company has variable costs of $80 per unit, total fixed costs of $200,000, and a break-even volume of 5,000 units. If the variable cost per unit decreases by $8, how many units must Joseph Company sell to break-even?
A. 2,778 units
B. 2,500 units
C. 6,250 units
D. 4,167 units
67.Sharon Company has variable costs of $80 per unit, total fixed costs of $200,000, and a break-even volume of 5,000 units. If the sales price per unit is increased by $10, how many units must Sharon Company sell to break-even?
A. 4,000 units
B. 5,000 units
C. 6,000 units
D. 3,000 units
68.Select the incorrect statement regarding cost-volume-profit relationships for multiple products.
A. For a company that sells many different products, the level of the break-even point is affected by the company’s sales mix.
B. An increase in sales volume accompanied by a change in sales mix could cause a company’s profits to decrease.
C. For a multi-product company, cost-volume-profit analysis can be done using the contribution margin ratio of the most profitable product.
D. None of these answers is correct.
69.Select the correct statement regarding break-even point analysis.
A. The break-even volume in dollars equals total fixed costs divided by contribution margin per unit.
B. An increase in fixed costs causes the break-even point to increase.
C. An increase in contribution margin per unit causes the break-even volume in units to increase.
D. A decrease in the variable cost per unit causes the break-even volume in units to increase.
70.Which of the following statements regarding cost-volume-profit analysis is incorrect?
A. Cost-volume-profit analysis assumes that fixed cost per unit is constant.
B. Cost-volume-profit analysis assumes that the selling price cost per unit is constant.
C. An increase in inventory during a period will affect cost-volume-profit relationships.
D. Although cost-volume-profit analysis is based on assumptions that seldom will be perfectly achieved, the technique is still useful to managers.
71.Rose Corporation sells backpacks. Variable costs for this product are $30 per unit, and the sales price per unit is $50 per unit. Total fixed costs amount to $100,000. How many backpacks does Rose need to sell to achieve a desired profit of $60,000?
A. 2,000 units
B. 5,000 units
C. 5,333 units
D. 8,000 units
72.Martinez Company sells one product that has a sales price of $20 per unit, variable costs of $8 per unit, and total fixed costs of $200,000, what is the contribution margin ratio?
A. 40%
B. 60%
C. 50%
D. 66%
73.Ng Company sells one product that has a sales price of $20 per unit, variable costs of $12 per unit, and total fixed costs of $300,000. What is the amount of sales volume in dollars necessary to attain a desired profit of $100,000?
A. $250,000
B. $750,000
C. $1,000,000
D. $666,667
74.Select the correct statement regarding the contribution margin ratio.
A. The contribution margin ratio can be calculated using either total amounts or per unit amounts.
B. The contribution margin ratio equals contribution margin per unit divided by variable cost per unit.
C. Total fixed costs divided by the contribution margin ratio equals the break-even point in units.
D. An increase in variable cost per unit will cause the contribution margin ratio to increase.
