Question :
83. Company E has a contribution margin of $32 per unit : 1208152
83. Company E has a contribution margin of $32 per unit and fixed costs of $300,000, 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. 9,375 units
C. 6,250 units
D. 12,500 units
84. At the break-even point:
A. Sales would be equal to contribution margin.
B. Contribution margin would be equal to total fixed costs.
C. Sales would be equal to fixed costs.
D. None of the answers are correct.
85. 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 24,000 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 $24 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. None of the answers are correct.
86. 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 profit.
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 fixed costs.
87. Company D 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 16,000 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 increase.
D. If Company D’s variable cost per unit decreases and nothing else changes, the break-even point will stay the same.
88. Company C 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 $10, how many units must Company C sell to break-even?
A. 4,000 units
B. 5,000 units
C. 6,000 units
D. 3,000 units
89. Company C 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 Company C sell to break-even?
A. 5,000 units
B. 4,000 units
C. 3,000 units
D. 6,000 units
90. Select the incorrect statement regarding cost-volume-product 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 the answers are correct.
91. Select the correct statement regarding break-even point analysis.
A. The break-even volume in units equals total fixed costs divided by contribution margin per unit.
B. An increase in fixed costs causes the break-even point to decrease.
C. An decrease 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.
92. Which of the following statements regarding cost-volume profit analysis is incorrect?
A. Cost-volume-profit analysis assumes that the variable cost per unit is constant.
B. Cost-volume-profit analysis assumes that the fixed 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.
93. Rand Corporation sells perfume bottles. 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 perfume bottles does Rand need to sell to achieve a desired profit of $50,000?
A. 5,000 units
B. 7,500 units
C. 1,000 units
D. 2,000 units
94. Company F sells one product that has a sales price of $20 per unit, variable costs of $12 per unit, and total fixed costs of $200,000, what is the contribution margin ratio?
A. 40%
B. 60%
C. 50%
D. 66%
95. Company F sells one product that has a sales price of $20 per unit, variable costs of $12 per unit, and total fixed costs of $200,000. What is the amount of sales volume in dollars necessary to attain a desired profit of $100,000?
A. 500,000
B. $750,000
C. $300,000
D. $150,000
96. Select the correct statement regarding the contribution margin ratio.
A. The contribution margin ratio equals contribution margin divided by fixed costs.
B. The contribution margin ratio can be calculated using either total amounts or per unit amounts.
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.
