Question :
81. LeBlanc Manufacturing has the following product information available:
Sales price
$60 per : 1291705
81. LeBlanc Manufacturing has the following product information available:
Sales price
$60 per unit
Variable costs
$20 per unit
Fixed costs
$50,000
If LeBlanc is in the 30% tax bracket, how many units need to be sold in order to earn an after-tax target profit of $490,000? A. 17,500 unitsB. 18,750 unitsC. 19,286 unitsD. 9,450 units
82. Blinson Manufacturing has the following product information available:
Sales price
$75 per unit
Variable costs
$25 per unit
Before-tax profit
$180,000
If Blinson has calculated that it needs to sell 20,000 units in order to earn an after-tax target profit of $126,000, what were Blinson’s fixed costs? A. $54,000B. $1,180,000C. $820,000D. $874,000
83. Howard Enterprises has a contribution margin ratio of 65% and fixed costs of $15,000. What would sales have to be in order for Howard to earn an after-tax profit of $50,000? The company is in the 40% tax bracket. A. $23,077B. $100,000C. $151,282D. $75,000
84. Which of the following is an assumption of CVP analysis? A. Inventory levels increase at a constant rate.B. Costs are linear throughout the relevant range.C. The number of units sold is constant.D. Fixed costs increase as production increases.
85. Which of the following is not an assumption of CVP analysis? A. Selling prices change only at the end of the month.B. Costs can be thought of as fitting a linear function within the relevant range.C. Sales mix is constant.D. Inventory levels do not change.
86. One of the major assumptions used in CVP analysis is: A. that number of units sold each year remains the same.B. that in a multi-product environment, all products are assumed to be sold in identical proportion to total sales.C. that the tax rate is not known.D. that the sales price of a product will not change as volume changes.
87. Cost structure refers to the relative proportion of: A. variable costs to contribution margin.B. total costs to sales.C. fixed costs to variable costs.D. sales price per unit to variable costs per unit.
88. Operating leverage measures: A. how sensitive profit is to a change in fixed costs.B. how sensitive profit is to a change in sales volume.C. how sensitive profit is to a change in sales price per unit.D. how sensitive profit is to a change in tax rates.
89. Carson Cabana’s Inc. has the following information available regarding last year’s operations:
Sales
$1,500,000
Variable costs
600,000
Contribution margin
900,000
Fixed costs
300,000
Net operating income
$ 600,000
The company’s operating leverage was: A. 1.50.B. 0.67.C. 2.50.D. 0.60.
90. Hillary’s Restaurant has the following information available regarding last year’s operations:
Sales
$900,000
Variable costs
300,000
Contribution margin
600,000
Fixed costs
175,000
Net operating income
$425,000
The company’s operating leverage was: A. 0.71.B. 1.50.C. 2.12.D. 1.41.
91. Which of the following statements is most likely true if Red Inc. has an operating leverage of 2.0 while Blue Corp. has an operating leverage of 1.4? A. Red Inc. is selling its products for a higher sales price than Blue Corp.B. Red Inc.’s net operating income will be less sensitive to a change in sale volume than Blue Corp.C. Blue Corp.’s fixed costs in relation to variable costs are lower than Red Inc.’s.D. Blue Corp. has a lower contribution margin per unit than Red Inc.
92. A company with a high level of operating leverage will: A. experience fewer fluctuations in income as sales fluctuate than a company with a low level of operating leverage.B. experience wider fluctuations in income as sales fluctuate than a company with a low level of operating leverage.C. earn higher profits than a company with a low level of operating leverage.D. earn lower profits than a company with a low level of operating leverage.
