Question : 120.Swisher, Incorporated reports the following annual cost data for its : 1258585

 

120.Swisher, Incorporated reports the following annual cost data for its single product: 

Normal production level30,000 units

Direct materials$6.40 per unit

Direct labor$3.93 per unit

Variable overhead$5.80 per unit

Fixed overhead$150,000 in total

This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company’s gross margin increase or decrease under absorption costing?    

A. $60,000 decrease.

B. $90,000 decrease.

C. There is no change in gross margin.

D. $90,000 increase.

E. $60,000 increase.

121.Swisher, Incorporated reports the following annual cost data for its single product: 

Normal production level30,000 units

Direct materials$6.40 per unit

Direct labor$3.93 per unit

Variable overhead$5.80 per unit

Fixed overhead$150,000 in total

This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company’s gross margin increase or decrease under variable costing?  A. $60,000 decrease.

B. $90,000 decrease.

C. There is no change in gross margin.

D. $90,000 increase.

E. $60,000 increase.

122.Swola Company reports the following annual cost data for its single product. 

Normal production level75,000 units

Direct materials$1.25 per unit

Direct labor$2.50 per unit

Variable overhead$3.75 per unit

Fixed overhead$300,000 in total

This product is normally sold for $25 per unit. If Swola increases its production to 200,000 units, while sales remain at the current 75,000 unit level, by how much would the company’s gross marginA.               $187,500 increase.

B. $112,500 increase.

C. There will be no change in gross margin.

D. $112,500 decrease.

E. $187,500 decrease.

123.Swola Company reports the following annual cost data for its single product. 

Normal production level75,000 units

Direct materials$1.25 per unit

Direct labor$2.50 per unit

Variable overhead$3.75 per unit

Fixed overhead$300,000 in total

This product is normally sold for $25 per unit. If Swola increases its production to 200,000 units, while sales remain at the current 75,000 unit level, by how much would the company’s gross margin increase or decrease under variable costing?    

A. $187,500 increase.

B. $112,500 increase.

C. There will be no change in gross margin.

D. $112,500 decrease.

E. $187,500 decrease.

124.What is the Red and White’s contribution margin for this month if 980 units were sold?    

A. $38,000

B. $18,620

C. $24,500

D. $50,000

E. $21,560

125.What is Red and White’s net income under absorption costing if 980 units are sold and operating expenses are $12,000?    

A. ($1,380)

B. ($2,000)

C. $2,700

D. $6,620

E. $10,620

126.What is Red and White’s net income under variable costing if 980 units are sold and operating expenses are $12,000?    

A. ($1,380)

B. ($2,000)

C. $2,700

D. $6,620

E. $10,620

127.Decko Industries reported the following monthly data: 

Units produced52,000 units

Sales price$33 per unit

Direct materials$1.50 per unit

Direct labor$2.50 per unit

Variable overhead$3.50 per unit

Fixed overhead$234,000 in total

What is the company’s contribution margin for this month if 50,000 units were sold?    

A. $1,326,000

 

B. $1,716,000

 

C. $1,275,000

 

D. $1,650,000

E. $1,450,000

128.Assume that the following information was available for Guy Brown Company. How would Maria Teresa Vazquez and the other owners evaluate this information based on contribution margin ratio? 

Recycled Toner CartridgesOffice SuppliesFurniture

Sales$500,000$700,000$900,000

Variable expenses

Variable production$50,000$140,000$270,000

Variable advertising$5,000$14,000$36,000

Variable shipping$10,000$28,000$72,000

  

A. Recycled toner cartridges has the lowest contribution margin ratio.

B. Furniture has the highest contribution margin ratio.

C. Office supplies has the highest contribution margin ratio.

D. Recycled toner cartridges has the highest contribution margin ratio.

E. Based on contribution margin ratio, the owners should consider expanding the furniture line and scaling back on office supplies and recycled toner cartridges.

129.Assume that the following information was available for Daylight Enterprises, Inc. Which of the following statements is(are) true with regard to contribution margin ratio? 

Ceiling LightsTabletop LightsStand-Alone Lights

Sales$350,000$175,000$440,000

Variable expenses

Variable production$70,000$19,250$90,000

Variable advertising$10,500$3,500$22,000

Variable shipping $12,000   $14,000   $28,000

  

A. Tabletop lights has the lowest contribution margin ratio.

 

B. Ceiling lights has the highest contribution margin ratio.

C. Ceiling lights has the lowest contribution margin ratio.

D. Stand-alone lights has the highest contribution margin ratio.

E. Tabletop lights has the highest contribution margin ratio.

 

 

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