Answer D. None of these. Question 18, 19 and 20 use the following information: T
ID: 2375218 • Letter: A
Question
D. None of these.
Question 18, 19 and 20 use the following information:
The following is Addison Corporation's contribution format income statement for last month:
Sales
$ 1,000,000
Variable expenses
700,000
Contribution margin
300,000
Fixed expenses
180,000
Net operating income
$ 120,000
The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month.
D. 30%
D. 12,000 units
D. 26,667
A. vary directly and proportionately with the level of activity.B. have a long-term planning horizon, generally encompassing many years.
C. are made up of plant, equipment, and basic organizational costs.
D. None of these.
Question 18, 19 and 20 use the following information:
The following is Addison Corporation's contribution format income statement for last month:
Sales
$ 1,000,000
Variable expenses
700,000
Contribution margin
300,000
Fixed expenses
180,000
Net operating income
$ 120,000
The company has no beginning or ending inventories. A total of 20,000 units were produced and sold last month.
A. 250%
B. 150%
C. 70%
D. 30%
A. 20,000 units
B. 0 units
C. 18,000 units
D. 12,000 units
A. 22,000
B. 37,500
C. 25,000
D. 26,667
Explanation / Answer
D)none of these
18) CM Ratio = Contribution margin%Sales = 300000/1000000 = 0.3 = 30%
Ans: D
19) Breakeven units
Selling price = 1000000 / 20000 = 50
Variable Expenses = 700000/20000 = 35
Unit sales to breakeven = Fixed expenses/Unit CM = 180000/(50 - 35) = 180000/15 = 12000
Ans: D
20)Units to attain desired profit= (Fixed costs+desired profit)/Contribution per unit
=(180000+150000)/15
=330000/15
=22000 units
Ans: A
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