Question :
Objective 3.3
1) Stephanie’s Bridal Shoppe sells wedding dresses. The average : 1212036
Objective 3.3
1) Stephanie’s Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,000, variable costs are $400, and fixed costs are $90,000. How many dresses must the Bridal Shoppe sell to yield after-tax net income of $18,000, assuming the tax rate is 40%?
A) 200 dresses
B) 170 dresses
C) 150 dresses
D) 145 dresses
2) Zeta Corp’s most recent income statement is given below.
Sales (8,000 units)$160,000
Less variable expenses(68,000)
Contribution margin92,000
Less fixed expenses(50,000)
Net income$ 42,000
Required:
a.Contribution margin per unit is$ ________ per unit
b.If sales are doubled to $240,000,
total variable costs will equal$ ________
c.If sales are doubled to $240,000,
total fixed costs will equal$ ________
d.If 20 more units are sold, profits will increase by$ ________
e.Compute how many units must be sold to break even.# ________
f.Compute how many units must be sold
to achieve profits of $60,000. # ________
3) Black Pearl, Inc., sells a single product. The company’s most recent income statement is given below.
Sales$50,000
Less variable expenses(30,000)
Contribution margin20,000
Less fixed expenses(12,500)
Net income$ 7,500
Required:
a.Contribution margin ratio is________%
b.Breakeven point in total sales dollars is$ ________
c.To achieve $40,000 in net income, sales must total$ ________
d.If sales increase by $50,000, net income will increase by$ ________
4) The selling price per unit is $25, variable cost per unit $15, and fixed cost per unit is $4. When this company operates above the breakeven point, the sale of one more unit will increase net income by $6.
5) A company with sales of $50,000, variable costs of $35,000, and fixed costs of $25,000 will earn a net income of $15,000.
6) Which of the following statements about net income (NI) is true?
A) NI = operating income plus nonoperating revenue.
B) NI = operating income plus operating costs.
C) NI = operating income less income taxes.
D) NI = operating income less cost of goods sold.
Answer the following questions using the information below:
Assume the following cost information for Fernandez Company:
Selling price$120 per unit
Variable costs$80 per unit
Total fixed costs$80,000
Tax rate40%
7) What minimum volume of sales dollars is required to earn an after-tax net income of $30,000?
A) $465,000
B) $330,000
C) $390,000
D) $165,000
8) What is the number of units that must be sold to earn an after-tax net income of $42,000?
A) 3,750 units
B) 4,625 units
C) 3,050 units
D) 1,875 units
9) In CVP analysis, focusing on target net income rather than operating income ________.
A) will increase the breakeven point
B) will decrease the breakeven point
C) will not change the breakeven point
D) will help managers construct a better capital policy
10) Which of the following is true of net income?
A) Net income is operating income divided by income tax rate.
B) Net income is operating income plus operating revenues minus operating costs minus income taxes.
C) Net income is operating income plus nonoperating revenues minus nonoperating costs minus income taxes.
D) Net income is operating income minus nonoperating revenues minus nonoperating costs minus sales taxes.
