Quiz Content

Listen

Question 10

Question 101 Point

Question 10

Marston Enterprises sells three chemicals: petrol, septine, and tridol. Petrol's unit contribution margin is higher than septine's, which is higher than tridol's. Which one of the following events is most likely to increase the company's overall break-even point?

Option A

A change in the relative market demand for the products, with the increase favouring petrol relative to septine and tridol.

Option B

The installation of new computer-controlled equipment and subsequent lay-off of assembly-line workers.

Option C

An increase in the overall market demand for septine.

Option D

A decrease in tridol's selling price.

Listen

Question 9

Question 91 Point

Question 9

Arthur Company had the following data for the year just ended:

Sales	4,000 units
Sales price	$60 per unit
Variable cost	$18 per unit
Fixed costs	$42,000

If the company's sales volume increases by 30% next year, all other factors remaining the same, by how much will its operating income increase?

Option A

$37,800.

Option B

$72,000.

Option C

$92,400.

Option D

$50,400.

Listen

Question 8

Question 81 Point

Question 8

The following is Addison Corporation's contribution format income statement for last month:

Sales	$1,000,000
Less: variable expenses	700,000
Contribution margin	300,000
Less: fixed expenses	180,000
Operating income	$120,000

The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month.

What is the company's degree of operating leverage?

Option A

0.4.

Option B

0.12.

Option C

2.5.

Option D

3.3.

Listen

Question 7

Question 71 Point

Question 7

Kern Company prepared the following tentative budget for next year:

Sales	$500,000
Selling price	$5 per unit
Variable expenses	$300,000
Fixed expenses	$150,000

The sales manager argues that the unit selling price could be increased by 20%, with an expected volume decrease of only 10%. If Kern incorporates these changes in its budget, what should be the budgeted operating income?

Option A

$66,000.

Option B

$120,000.

Option C

$90,000.

Option D

$145,000.

Listen

Question 6

Question 61 Point

Question 6

The following is last month's contribution format income statement:

Sales (15,000 units)	$1,500,000
Less: variable expenses	900,000
Contribution margin	600,000
Less: fixed expenses	500,000
Operating income	$100,000

What is the company's margin of safety in dollars?

Option A

$250,000.

Option B

$600,000.

Option C

$1,500,000.

Option D

$100,000.

Listen

Question 5

Question 51 Point

Question 5

The following information pertains to Rica Company:

Sales (50,000 units)	$1,000,000
Manufacturing costs:
Variable	340,000
Fixed	70,000
Selling and admin. Expenses:
Variable	10,000
Fixed	60,000

What is Rica's break-even point in units?

Option A

18,571 units.

Option B

9,848 units.

Option C

26,000 units.

Option D

10,000 units.

Listen

Question 4

Question 41 Point

Question 4

Wallace, Inc., prepared the following budgeted data based on a sales forecast of $6,000,000:

	Variable	Fixed
Direct materials	$1,600,000
Direct labour	1,400,000
Factory overhead	600,000	$900,000
Selling expenses	240,000	360,000
Administrative expenses	60,000	140,000
Total	$3,900,000	$1,400,000

What would be the amount of sales dollars at the break-even point?

Option A

$3,500,000.

Option B

$5,300,000.

Option C

$4,000,000.

Option D

$2,250,000.

Listen

Question 3

Question 31 Point

Question 3

Gerber Company is planning to sell 200,000 units for $2.00 a unit and will just break even at this level of sales. The contribution margin ratio is 25%. What are the company's fixed expenses?

Option A

$200,000.

Option B

$100,000.

Option C

$300,000.

Option D

$160,000.

Listen

Question 2

Question 21 Point

Question 2

Dodero Company produces a single product that sells for $100 per unit. Fixed expenses total $12,000 per month, and variable expenses are $60 per unit. The company's sales average 500 units per month. Which of the following statements is correct?

Option A

The company's break-even point is $12,000 per month.

Option B

The company's contribution margin ratio is 40%.

Option C

The fixed expenses remain constant at $24 per unit for any activity level within the relevant range.

Option D

Responses A, B, and C are all correct.

Listen

Question 1

Question 11 Point

Question 1

A company has provided the following data:

Sales	3,000 units
Sales price	$70 per unit
Variable cost	$50 per unit
Fixed cost	$25,000

If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, what will the outcome be for operating income?

Option A

Increase by $20,625.

Option B

Decrease by $31,875.

Option C

Decrease by $15,000.

Option D

Decrease by $3,125.