1. Payton Industries has fixed costs of $490,000, the unit selling price is $35,
ID: 2423083 • Letter: 1
Question
1.
Payton Industries has fixed costs of $490,000, the unit selling price is $35, and the unit variable costs are $20. What is the break-even sales (units) if fixed costs are reduced by $40,000?
32,667 units
14,000 units
24,500 units
30,000 units
2.
Rusty Co. sells two products, X and Y. Last year, Rusty sold 5,000 units of X and 35,000 units of Y. Related data are:
Unit Selling Price
Unit Variable
Unit Contribution
Product
Price
Cost
Margin
X
$110.00
$70.00
$40.00
Y
70.00
50.00
20.00
What was Rusty Co.’s weighted average unit contribution margin?
$20.00
$22.50
$60.00
$40.00
3.
Charlotte Co. has budgeted salary increases to factory supervisors totaling 9%. If selling prices and all other cost relationships are held constant, next year's break-even point
cannot be determined from the data given
will increase by 9%
will decrease by 9%
will increase at a rate greater than 9%
4.
Flying Cloud Co. has the following operating data for its manufacturing operations:
$250
100
$840,000
The company has decided to increase the wages of hourly workers which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be
increased by 800 units
increased by 640 units
increased by 400 units
decreased by 640 units
5.
Given the following cost and activity observations for Bounty Company’s utilities, use the high-low method to calculate Bounty’ variable utilities costs per machine hour. Round your answer to the nearest cent.
Cost
Machine Hours
March
$3,100
15,000
April
2,700
10,000
May
2,900
12,000
June
3,600
18,000
$10.00
$0.11
$0.63
$0.67
6.
Costs that remain constant in total dollar amount as the level of activity changes are called
variable costs
mixed costs
product costs
fixed costs
7.
Lee Industry sales are $525,000, variable costs are 53% of sales, and operating income is $19,000. What is the contribution margin ratio?
47%
26.5%
53%
9.5%
8.
If Kaden Company's fixed costs are $46,800, the unit selling price is $42, and the unit variable costs are $24. What is the break-even sales (units)?
1,950
1,114
2,400
2,600
9.
Contribution margin is
the same as sales revenue
the excess of sales revenue over variable cost
another term for volume in the "cost-volume-profit" analysis
profit
a.32,667 units
b.14,000 units
c.24,500 units
d.30,000 units
Explanation / Answer
1
1.
Break even sales in units= Fixed cost/ Contribution per unit=[$490,000-$40,000]/15=30,000 units
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2.
(Aggregate sales - Aggregate variable expenses) / Number of units sold
(Aggregate contribution ) / Number of units sold
=[5,000 x 40 +35,000 x 20]/[5,000+35,000]
=900,000/40,000=22.5
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3.Break even sales in units= Fixed cost/ Contribution per unit
Let us assume Fixed cost as $100
And Contribution per unit =$40
Existing Break even poing=100/40=2.5
If Fixed cost goes up by 9% means $109
New break even point=109/40=2.725
Increase in %=2.725-2.5/2.5 x 100=9% increase
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4.
Existing Break even point in Units= Fixed cost/ Contribution per unit
=$840,000/($250-$100)
=5600 units
If Variable cost increases by 10%= i.e $110
Fixed cost increases by 10%= i.e. $840,000 x 104%=$873,600
New Break even point= $873,000/$250-$110=6240 units
Hence increase is =6240-5600 =640 increase
5.
Variable cost per unit high low method
Lowest cost=2700
Highest cost=3600
Lowers Volume=10000
Highest Volume =18000
=3600-2700/18000-10000
=900/8000=$0.11
6.
Total of Fixed remains constant
Eg. Rent of Building
7.
Contribution Margin=sales-variable cost=100%-53%=47%
8.
Break even point in Units= Fixed cost/ Contribution per unit
=$46,800/[42-24]
=2600 units
9.
Contribution margin= Sales- variable cost
the excess of sales revenue over variable cost
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