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Exam 6: Cost-Volume-Profit

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Question 31

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Max Company's break-even point is 2,000 units, its contribution margin per unit is $2, and its selling price per unit is $12.If the company sell 10 more units, its net income will be $4,000.

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Question 32

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Sarks Company has a contribution margin of $150,000 and a contribution margin ratio of 30%.How much are total variable costs?

A) $45,000
B) $350,000
C) $105,000
D) $500,000

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Question 33

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Sutton Company produces flash drives for computers, which it sells for $20 each.Each flash drive costs $6 of variable costs to make.During April, 1,000 drives were sold.Fixed costs for April were $4.20 per unit for a total of $4,200 for the month.If variable costs decrease by 10%, what happens to the break-even level of units per month for Sutton Company?

A company sells a product which has a unit sales price of $9, unit variable cost of $6 and total fixed costs of $60,000.How many units must the company sell to break-even?

Which one of the following is true of the CVP income statement?

Which of the following is the correct formula for the contribution margin ratio?

Company A and Company B sell their products for exactly the same sales price.Both have the same annual fixed costs.Company A's variable and fixed costs at break-even total $60,000 and $30,000 respectively.Company B's variable and fixed costs at break-even total $30,000 and $60,000 respectively.Both companies have the same net income.If both companies experience an increase in sales, which company will have the higher net income?

Where is the break-even point located in a CVP graph?

Hardage Company has a contribution margin per unit of $15 and a contribution margin ratio of 60%.How much is the selling price of each unit?

CopperZ Company has variable costs which are 40% of its unit selling price and fixed costs of $30,000.How much sales will CopperZ report at its break-even point in dollars?

Which one of the following is the format of a CVP income statement?

Sutton Company produces flash drives for computers, which it sells for $20 each.The variable cost to make each flash drive is $6.During April, 700 drives were sold.Fixed costs for April were $2 per unit for a total of $1,400 for the month.How much is the monthly break-even level of sales in dollars for Sutton Company?

Needles, Inc.was evaluating its margin of safety.Which one of the following is true?

A company requires $600,000 in sales to meet its target net income after-tax.Its contribution margin is 40%, and fixed costs are $80,000.How much is the target net income, given that its after-tax rate is 70%?

Contribution margin equals the total variable costs plus total fixed costs at the break-even point.

Target net income is the income objective for a individual product line.

Organizer Company has fixed costs of $200,000 and variable costs are 60% of sales.How much will Organizer Company report as sales when its net income equals $20,000?

Weed, Inc.variable costs are 25% of sales.Its selling price is $95 per unit.If Weed sells one unit more than break-even units, how much will profit increase?

A CVP income statement classifies costs into two sections based on behaviour.

Which of the following is the correct formula for the contribution margin per unit?