Question :
21) Fine Suiting Company sells shirts for men and boys. : 1212047
21) Fine Suiting Company sells shirts for men and boys. The average selling price and variable cost for each product are as follows:
Men’sBoys’
Selling Price$25.00Selling Price$24.00
Variable Cost$15.40Variable Cost$16.00
Fixed costs are $35,200.
Required:
a.What is the breakeven point in units for each type of shirt, assuming the sales mix is 1:1?
b.What is the operating leverage, assuming the sales mix is 2:1 in favor of men’s shirts, and sales total 5,000 shirts?
22) Mount Carmel Company sells only two products, Product A and Product B.
Product A
Product B
Total
Selling price
$40
$50
Variable cost per unit
$24
$40
Total fixed costs
$840,000
Mount Carmel sells two units of Product A for each unit it sells of Product B. Mount Carmel faces a tax rate of 30%.
Required:
a.What is the breakeven point in units for each product assuming the sales mix is 2 units of Product A for each unit of Product B?
b.What is the breakeven point if Mount Carmel’s tax rate is reduced to 25%, assuming the sales mix is 2 units of Product A for each unit of Product B?
c.How many units of each product would be sold if Mount Carmel desired an after-tax net income of $73,500, facing a tax rate of 30%?
23) Atlanta Radio Supply sells only two products, Product X and Product Y.
Product X
Product Y
Total
Selling price
$25
$45
Variable cost per unit
$20
$35
Total fixed costs
$350,000
Atlanta Radio Supply sells three units of Product X for each two units it sells of Product Y. Atlanta Radio Supply has a tax rate of 25%.
Required:
a.What is the breakeven point in units for each product, assuming the sales mix is 3 units of Product X for each two units of Product Y?
b.How many units of each product would be sold if Atlanta Radio Supply desired an after-tax net income of $210,000, using its tax rate of 25%?
24) What is sales mix? How do companies choose their sales mix?
25) Stella Company sells only two products, Product A and Product B.
Product A
Product B
Total
Selling price
$40
$50
Variable cost per unit
$24
$40
Total fixed costs
$840,000
Stella sells two units of Product A for each unit it sells of Product B. Stella faces a tax rate of 30%. Stella desires a net after-tax income of $73,500. The breakeven point in units would be ________.
A) 21,750 units of Product A and 43,500 units of Product B
B) 22,500 units of Product A and 45,000 units of product B
C) 43,500 units of Product A and 21,750 units of Product B
D) 45,000 units of Product A and 22,500 units of Product B
Objective 3.8
1) Multiple cost drivers ________.
A) have only one revenue driver
B) can utilize the simple CVP formula
C) have no unique breakeven point
D) are the result of multiple products
2) A nonprofit organization aids the unemployed by supplementing their incomes by $5,000 annually, while they seek new employment skills. The organization has fixed costs of $200,000 and the budgeted appropriation for the year totals $700,000. How many individuals can receive financial assistance this year?
A) 115 people
B) 110 people
C) 100 people
D) 95 people
3) Helping Hands is a nonprofit organization that supplies electric fans during summer for individuals in need. Fixed costs are $225,000. The fans cost $25.00 each. The organization has a budgeted appropriation of $675,000. How many people can receive a fan during summer?
A) 15,000 people
B) 18,000 people
C) 22,000 people
D) 16,000 people
4) To apply CVP analysis in not-for profit organization ________.
A) managers need to focus on the customer base rather than the cost drivers
B) managers need to focus on measuring their output, which is the same as tangible units sold by manufacturing and merchandising companies
C) managers need to focus on measuring their input, which is different from the tangible units consumed by manufacturing and merchandising companies
D) managers need to focus on measuring their output, which is different from the tangible units sold by manufacturing and merchandising companies
5) Which of the following is an output measure for a hospital?
A) number of doctors needed to cater to patients
B) number of patients admitted every day in a hospital
C) number of days spent by a patient in a hospital
D) charges applicable on the number of days spent by a patient in a hospital
