Question: a James Shaw owns several shaved ice stands that operate

a. James Shaw owns several shaved ice stands that operate in the summer along the Outer Banks of North Carolina. His contribution margin ratio is 60%. If James increases his sales revenue by $25,000 without any increase in fixed costs, by how much will his operating income increase? (a) $25,000; (b) $15,000; (c) $10,000; (d) $5,000.
b. Which of these events will decrease a company's breakeven point? (a) decrease in units sold; (b) increase in direct labor costs; (c) increase in sales price; (d) both (a) and (b).
c. Halloween, Inc. reported the following income statement data for February: Sales
$150,000; Total costs $170,000; Loss ($ 20,000). The firm's contribution margin percentage at its current selling price of $20 is 40%. What is the company's total fixed cost? (a) $20,000; (b) $90,000; (c) $60,000; (d) $80,000.
d. Refer to the information in part (c). What would be the change in income if the company paid $6,000 for a special advertising campaign and increased sales by 1,000 units, at $20 per unit? (a) $2,000 increase; (b) $14,000 increase; (c) $4,000 decrease; (d) $6,000 decrease.
e. A company's selling price is $50; its contribution margin ratio, 32%; its fixed costs, $200,000; and its income, $20,000. What is the company's breakeven point in units? (a) 11,250; (b) 13,750; (c) 12,500; (d) cannot be determined.

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  • CreatedFebruary 21, 2014
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