ACG 2071–Spring 2016
Tiny Test #1 - 10 points participation + 2 points bonus
SOLUTION
1. AT Division had total sales of $350,000 in 2015. Total fixed costs are $120,000, the contribution margin per
unit is $14, and the contribution margin ratio is 45.25%. Show the calculation of the amount by which
profit will increase if AT’s sales increase by $250. Circle your answer.
$250*45.25% = $113.13
2. Lansing Company produced and sold 1,800 buckets. At this level of production, each bucket has a selling
price of $11, a variable cost of $4, and total fixed costs of $2,405. Show the calculation of the number of
buckets that must be produced and sold to arrive at a profit of $6,100. Circle your final answer.
11.00x – 4.00x – 2,405 = 6,100
X = 1,215 buckets
3. Version A: Dart Company had the following income statement:
Sales revenue (400 units)
Cost of goods sold:
Fixed costs
Variable costs
Gross profit
Operating expenses:
Fixed costs
Variable costs
Operating income
$72,000
$14,000
18,000
15,000
14,200
32,000
40,000
Show the calculations of all components of the cost
equation here:
VC/unit = ($18,000 + $14,200)/400 = $80,50 per unit
TFC = $14,000 + $15,000 = $29,000
29,200
$10,800
Write Dart Company’s cost equation in
standard form in this answer box here 
TC = 80.50 + 29,000
Version B:
Sales revenue (800 units)
Cost of goods sold:
Fixed costs
Variable costs
Gross profit
Operating expenses:
Fixed costs
Variable costs
Operating income
$72,000
$17,000
18,000
13,000
14,200
35,000
37,000
Show the calculations of all components of the cost
equation here:
VC/unit = ($18,000 + $14,200)/800 = $40,25 per unit
TFC = $17,000 + $13,000 = $30,000
27,200
$9,800
Write Dart Company’s cost equation in
standard form in this answer box here 
TC = 40.25 + 30,000
4. DynaWhite had a selling price per unit of $8.00, a contribution margin per unit of $5.40, and monthly fixed
costs of $1.50 per unit during June when it sold 1,400 widgets. Show the calculation of the sales revenue
that DynaWhite will generate at breakeven for June. Circle your final answer.
TFC = 1,400*$1.50 = $2,100
CMR = $5.40/$8,00 = 67.50%
BEP in sales dollars:
0.6750x – 2,100 = 0
$x = $3,111.11
Or BEP in units: 5.40x – 2,100 = 0
X = 388.89 = 389 units
BEP in sales dollars = 389*$8 = $3,112