14. The Absolate Most Brllat Profesor Mallen Coempuny\'s activity for the fist m

Question

14. The Absolate Most Brllat Profesor Mallen Coempuny's activity for the fist months of 2011 are as follows Machine Hours Electrical Cost January February March 2,100 2,600 2,900 $4,800 $5,800 $6,400 Using the high-low method, how much is the variable cost (V/C) per machine hour? A) $2.00 B) $3.00 C) $2 26 D) $1.78 15. If a company had a contribution margin (CM) of $300,000 and a contribution margin (CM) ratio of 40%, total variable costs (VC) must have been A) $450,000, B) $180,000. C) $730,000 D) $120,000. 16. A company has contribution margin (Uait CM) per unit of $60 and a contribution margin (CM) ratio of 40%, what is the unit selling or sales price (SP) ? A)$100 B) $150 C) $24 D) Cannot be determined. 17. The Most Excellent and Genius Professor Mullen, Inc. has a product with a selling price per unit (Unit SP) of $200, the unit variable cost (V/C) is $110, and the total monthly fixed costs (F/C) are $300,000. How much is The Most Excellent and Genius Professor Mullen's contribution margin ratio (CM%? A) B) C) D) 45% 55% 150% 90% 18. Most Brilliant Professor of All Time Mullen Company has a contribution margin of (CM) S21 0,000 andacontribution margin (CM) ratio of 30% variable costs (V/C)? A) $63,000 B) $490,000 C) $147,000 D) $700,000 How much are total Page 4

Explanation / Answer

14. Variable cost per unit under high low method:

= (Highest cost – lowest cost)/ (highest machine hours – lowest machine hours)

= (6,400 -4,800)/ (2,900 -2,100)

=$2.00 per machine hours

Solution = A. $2.00

15. Contribution margin ratio = [Contribution margin / sales] * 100

40 = [300,000/sales] * 100

Sales = (300,000/40) *100

Sales = $750,000

Variable cost = Sales – Contribution Margin

= 750,000 – 300,000

= $450,000

Solution = A) 450,000

16. Contribution margin ratio = [Contribution margin per unit / sales per unit] * 100

40 = (60/sales price per unit) * 100

Sales price per unit = (60/40) *100 = $150 per unit

Solution = B) $150

17. Contribution margin ratio = [Contribution margin per unit / sales per unit] * 100

Contribution margin per unit =Sales price per unit – Variable cost per unit

= $200 - $110

=$90

Contribution margin ratio = (90/200) *100 = 45%

Solution = A) 45%

18.) Contribution margin ratio = [Contribution margin / sales] * 100

30 = [210,000/sales] * 100

Sales = (210,000/30) *100

Sales = $700,000

Variable cost = Sales – Contribution Margin

= 700,000 – 210,000

= $490,000

Solution = B) $490,000

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