Multiple Choice

Use the information below to answer the following question(s).

Jupiter Inc. had the following activities in the year:

Direct materials balance:

Beginning inventory

$100,000

Purchases

308,000

Ending inventory

52,000

Direct manufacturing labour

80,000

Manufacturing overhead

60,000

Ending work in process inventory

20,000

Beginning work in process inventory

4,000

Ending finished goods inventory

80,000

Beginning finished goods inventory

120,000

1. What is Jupiter's cost of direct materials used during the year?

a. $356,000

b. $360,000

c. $308,000

d. $364,000

e. $372,000

2. What is Jupiter's cost of goods sold?

a. $520,000

b. $464,000

c. $440,000

d. $400,000

e. $516,000

3. What is Jupiter's cost of goods manufactured?

a. $536,000

b. $496,000

c. $480,000

d. $476,000

e. $512,000

Answer the following question(s) using the information below.

Burger Bobs Boathouse sells only one product. 7,000 units were sold In year resulting in $70,000 of sales revenue. Variable costs were $28,000 for the year, and fixed costs were $12,000.

4. Contribution margin per unit is

a. $4.00

b. $4.29

c. $6.00

d. $10.00

e. $5.71

5. Break-even point in volume is

a. 2,000 units.

b. 3,000 units.

c. 5,000 units.

d. 7,000 units.

e. 2,797 units.

6. The number of units required to be sold to achieve $60,000 of operating profit is

a. 10,000 units.

b. 11,666 units.

c. 15,000 units.

d. 18,000 units.

e. 12,000 units.

Short Answer

Julia Child Company sells baby car seats to retailers for an average of $85 each. The variable cost of each car seat is $48 and monthly fixed selling costs total $6,000. Other monthly fixed costs of the company total $7,000.

Required:

7. What is the breakeven point in number of car seats?

8. What is the margin of safety, assuming sales total $32,000?

9. What is the breakeven level in car seats, assuming variable costs increase by 20%?

10. What is the breakeven level in car seats, assuming the selling price goes up by 10%, fixed selling costs decline by 10%, and other fixed costs decline by $1,000?