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Exam 12: Budgetary Planning

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Question 1

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If variable costs per unit are 70% of sales fixed costs are $290000 and target net income is $70000 required sales are $1200000.

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Question 2

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Which of the following is not a fixed cost?

A) Direct materials
B) Depreciation
C) Lease charge
D) Property taxes

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Question 3

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Variable costs for Abbey Inc.are 25% of sales.Its selling price is $100 per unit.If Abbey sells one unit more than break-even units how much will profit increase?

Boswell company reported the following information for the current year: Sales (50000 units) $1000000 direct materials and direct labor $500000 other variable costs $50000 and fixed costs $360000.What is Boswell's break-even point in units?

Which of the following would not be an acceptable way to express contribution margin?

Murphy Company produces flash drives for computers which it sells for $20 each.Each flash drive costs $6 of variable costs to make.During April 700 drives were sold.Fixed costs for April were $4 per unit for a total of $2800 for the month.How much does Murphy's operating income increase for each $1000 increase in revenue per month?

Dunbar Manufacturing's variable costs are 30% of sales.The company is contemplating an advertising campaign that will cost $55000.If sales are expected to increase $100000 by how much will the company's net income increase?

A company has total fixed costs of $240000 and a contribution margin ratio of 20%.The total sales necessary to break even are

Farmers' Industries has fixed costs of $600000 and variable costs are 60% of sales.How much will Farmers report as sales when its net income equals $60000?

Bruno & Court is a nonprofit organization that captures stray deer bewildered within residential communities.Fixed costs are $20000.The variable cost of capturing each deer is $10 each.Bruno & Court is funded by a local philanthropy in the amount of $64000 for 2022.How many deer can Bruno & Court capture during 2022?

The break-even point is where total sales equal total fixed costs.

Stephanie Inc.sells its product for $40.The variable costs are $18 per unit.Fixed costs are $16000.The company is considering the purchase of an automated machine that will result in a $2 reduction in unit variable costs and an increase of $5000 in fixed costs.Which of the following is true about the break-even point in units?

The fixed cost element of a mixed cost is the cost of having a service available.

In applying the high-low method which months are relevant? $\begin{array}{llr}\text { Month } & \text { Miles } & \text { Total Cost } \\\text { January } & 80,000 & \$ 192,000 \\\text { February } & 50,000 & 160,000 \\\text { March } & 70,000 & 188,000 \\\text { April } & 90,000 & 260,000\end{array}$

Wilton Co.reported the following results from the sale of 5000 hammers in May: sales $200000 variable costs $120000 fixed costs $60000 and net income $20000.Assume that Wilton increases the selling price of hammers by 10% on June 1.How many hammers will have to be sold in June to maintain the same level of net income?

The break-even point is where total sales equal total variable costs.

Aero Inc.requires sales of $2000000 to cover its fixed costs of $600000 and to earn net income of $500000.What percent are variable costs of sales?

At the high level of activity in November 7000 machine hours were run and power costs were $18000.In April a month of low activity 2000 machine hours were run and power costs amounted to $9000.Using the high-low method the estimated fixed cost element of power costs is

A company has a unit contribution margin of $120 and a contribution margin ratio of 40%.What is the unit selling price?

A variable cost is a cost that