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Exam 6: Cost-Volume-Profit

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Question 31

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A company requires $600,000 in sales to meet its target net income after-tax.Its contribution margin is 40%, and fixed costs are $80,000.How much is the target net income, given that its after-tax rate is 70%?

A) $400,000
B) $160,000
C) $48,000
D) $112,000

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Question 32

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Weed, Inc.variable costs are 25% of sales.Its selling price is $95 per unit.If Weed sells one unit more than break-even units, how much will profit increase?

A) $71.25
B) $23.75
C) $32.50
D) $380.00

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Question 33

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Contribution margin equals the total variable costs plus total fixed costs at the break-even point.

Sutton Company produces flash drives for computers, which it sells for $20 each.The variable cost to make each flash drive is $6.During April, 700 drives were sold.Fixed costs for April were $2 per unit for a total of $1,400 for the month.How much is the monthly break-even level of sales in dollars for Sutton Company?

A CVP income statement classifies costs into two sections based on behaviour.

Which of the following is the correct formula for the contribution margin per unit?

CopperZ Company has variable costs which are 40% of its unit selling price and fixed costs of $30,000.How much sales will CopperZ report at its break-even point in dollars?

Which of the following is the correct formula for the contribution margin ratio?

Max Company's break-even point is 2,000 units, its contribution margin per unit is $2, and its selling price per unit is $12.If the company sell 10 more units, its net income will be $4,000.

A company sells a product which has a unit sales price of $9, unit variable cost of $6 and total fixed costs of $60,000.How many units must the company sell to break-even?

Where is the break-even point located in a CVP graph?

Which one of the following is true of the CVP income statement?

Which one of the following is the format of a CVP income statement?

Hardage Company has a contribution margin per unit of $15 and a contribution margin ratio of 60%.How much is the selling price of each unit?

Target net income is the income objective for a individual product line.

Needles, Inc.was evaluating its margin of safety.Which one of the following is true?

Sutton Company produces flash drives for computers, which it sells for $20 each.Each flash drive costs $6 of variable costs to make.During April, 1,000 drives were sold.Fixed costs for April were $4.20 per unit for a total of $4,200 for the month.If variable costs decrease by 10%, what happens to the break-even level of units per month for Sutton Company?

Company A and Company B sell their products for exactly the same sales price.Both have the same annual fixed costs.Company A's variable and fixed costs at break-even total $60,000 and $30,000 respectively.Company B's variable and fixed costs at break-even total $30,000 and $60,000 respectively.Both companies have the same net income.If both companies experience an increase in sales, which company will have the higher net income?

Sarks Company has a contribution margin of $150,000 and a contribution margin ratio of 30%.How much are total variable costs?

Organizer Company has fixed costs of $200,000 and variable costs are 60% of sales.How much will Organizer Company report as sales when its net income equals $20,000?