The following costs related to Wintertime Company for a relevant range of up to 20,000
units annually:
Variable Costs:
Direct materials
Direct labor
Manufacturing Overhead
Selling and administrative
Fixed Costs:
Manufacturing overhead
Selling and Administrative
$2.50
0.75
1.25
1.50
$10,000
5,000
The selling price per unit of product is $15.00.
At a sales volume of 15,000 units, what is the total profit for Wintertime Company?
Select one:
A. $225,000
B. $120,000
C. $130,000
D. $150,000
Salvador Company sells two products, as follows:
Product Y
Product Z
Selling Price per Unit
Variable Expense per Unit
$300
$150
700
300
Fixed expenses total $500,000 annually. The expected sales mix in units is 60% for Product
Y and 40% for Product Z.
How much is Salvador Company's expected break-even sales in dollars?
Select one:
A. $920,000
B. $414,000
C. $555,882
D. $900,000
Which of the following would be classified as a fixed selling and administrative cost?
Select one:
A. Sales Commissions
B. Depreciation on office equipment
C. Depreciation on factory equipment
D. Wages of production supervisor
Sales mix refers to
Select one:
A. the portion of unit variable costs that are consumed by each product.
B. the absolute portion of total variable costs consumed by each product.
C. the relative portion of unit or dollar sales that are derived from each product.
D. none of the above.
The following information is available for Redwood Corporation for a sales volume of 500
stereo speakers for the past month:
Sales
Less: Variable expenses
Contribution margin
Less: Fixed expenses
Net operating income
Total
$112,500
40,000
$ 72,500
$ 17,500
$ 55,000
Per Unit
$225
80
$145
If sales increase by $51,750, net income will increase by what amount?
Select one:
A. $22,000
B. $20,000
C. $30,000
D. $33,350
Adam Company sells one product at a price of $50 per unit. Variable expenses are 40
percent of sales, and fixed expenses are $50,000. The sales dollars level required to break
even are:
Select one:
A. $41,667
B. $83,333
C. $ 2,500
D. $10,000
In a cost-volume profit graph
Select one:
A. the total revenue line is plotted above the total cost line.
B. the slope of the total revenues line is the contribution margin per unit.
C. the total costs line normally begins at zero.
D. the slope of the total cost line is dependent on the variable cost per unit.
Peak Company sells three different products that are similar, but are differentiated by
various product features. Budgeted sales by product and in total for the coming year are
shown below:
Percentage of total sales
Sales
Less: Variable costs
Contribution margin
Less: Fixed expenses
Net operating income
Standard
48%
$120,000
36,000
$ 84,000
Product
Deluxe
20%
$50,000
40,000
$10,000
Premium
32%
$80,000
44,000
$36,000
Total
100%
$250,000
120,000
$130,000
$117,000
$ 13,000
The break-even point in sales dollars for Peak Company is:
Select one:
A. $449,231
B. $500,000
C. $225,000
D. $250,000
The contribution margin ratio is
Select one:
A. the percentage difference between sales and cost of goods sold.
B. the portion (or percent) of revenues available for covering fixed costs and providing a
profit.
C. the difference between price and variable cost per unit.
D. the percentage difference between total revenues and total costs.
Which of the following is an assumption used in cost-volume-profit analysis?
Select one:
A. All costs are classified as fixed or variable.
B. The total cost function is linear.
C. The total revenue function is linear.
D. All of the above.