13. A company sells two products - X and Y. Product X is sold at a price of $50

Question

13. A company sells two products - X and Y. Product X is sold at a price of $50 and has a variable cost of $25. Product Y is sold at a price of $25 and has a variable cost of $20. Product X and Y are sold in equal amounts. How many units of Product X must be sold in order to breakeven if the company has $100,000 in fixed costs?

a. 3,333
b. 5,000
c. 6,667
d. 2,000

14. Cost-Volume Profit analysis cannot be performed when:

a. Costs can be accurately separated into fixed and variable components.
b. Fixed and variable costs change over different activity levels.
c. Contribution margin is based on the difference between selling price and variable costs.
d. Breakeven point is calculated based upon the fixed costs divided by the contribution margin.

15. A company produces products A, B, and C. The company has excess capacity. Products A, B, and C have a contribution margin of 10, 15, and 20, respectively. Products A, B, and C have a contribution margin per hour of 10, 5, and 6.67 per contribution margin per hour, respectively. Assume that the scarce resource for the firm is time, that is if an hour more is spent on producing one more product, there would be an hour less spent on producing another product. The company should produce:

a. Product A because it has the highest contribution margin per hour.
b. Product C because it has the highest contribution margin.
c. Either Product A or C because they have the highest contribution margin or contribution margin per hour.
d. The answer cannot be determined because we do not know the number of available machine hours.

Explanation / Answer

13.Option " A" is the correct answer. = Fixed cost / Contribution margine = $100000 / (25+5) = 3333.33 units 14.option "B" is the correct answer. Fixed and variable costs change over different activity levels.
If the cost are varried it is not poosible to predict Break even. first ,through this Cvp analysis is not possibles. 15.Option "B" is the correct answers. Product C because it has the highest contribution margin Obiously High Contirbution gives high Margine..

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