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102.      Executive Ambience Company sells desks at $480 per desk. The costs associated with each desk are as follows:

               Direct materials      $195
               Direct labor      126
               Variable factory overhead      51

     Total fixed costs for the period are $456,840.      The contribution-margin ratio is:

     a.     22.5%
     b.     29.0%
     c.     40.6%
     d.     77.5%


103.      Desks R’ Us Corporation sells desks at $480 per desk. The costs associated with each desk are as follows:

               Direct materials      $195
               Direct labor      126
               Variable factory overhead      51

     Total fixed costs for the period are $456,840.      The break-even point in desks is:

     a.     952 desks
     b.     1,228 desks
     c.     4,230 desks
     d.     5,458 desks


104.      Knothole Company sells desks at $480 per desk. The costs associated with each      desk are as follows:

               Direct materials      $195
               Direct labor      126
               Variable factory overhead      51

     Total fixed costs for the period are $456,840.      The break-even volume in dollars is:

     a.     $456,840
     b.     $1,573,560
     c.     $2,030,400
     d.     None of these answers is correct.


105.      Squeeze Me Company produces Beanie Babies. Each doll sells for $20.00. Variable costs per unit total $14.00, of which $6.25 is for direct materials and $5.25 is for direct labor. If total fixed costs are $435,000, then the break even point is:

     a.     21,750 dolls
     b.     31,071 dolls
     c.     51,176 dolls
     d.     72,500 dolls


106.      Like-U Company produces dolls. Each doll sells for $20.00. Variable costs per unit total $14.00, of which $6.25 is for direct materials and $5.25 is for direct labor.      If total fixed costs are $435,000, then the break even volume in dollars is:

     a.     $1,450,000
     b.     $1,023,529
     c.     $621,429
d.     $435,000


107.      Hug Me Company produces dolls. Each doll sells for $20.00. Variable costs per unit total $14.00, of which $6.25 is for direct materials and $5.25 is for direct labor.      If the break-even volume in dollars is $1,446,000, then the total fixed costs for the period must be:

     a.     $433,800
     b.     $361,500
     c.     $516,425
     d.     $1,446,000


108.     Meredith Company wishes to earn after-tax net income of $18,000. Total fixed costs are $84,000, and the contribution margin per unit is $6.00. Meredith’s tax rate is 40%. The number of units that must be sold to breakeven is:

     a.     14,000 units     
     b.     17,000 units
     c.     19,000 units
     d.     21,500 units


109.     Ankeny Company wishes to earn after-tax net income of $18,000. Total fixed costs are $84,000, and the contribution margin per unit is $6.00. Ankeny’s tax rate is 40%. The number of units that must be sold to earn the targeted net income is:

     a.     14,000 units     
     b.     17,000 units
     c.     19,000 units
     d.     21,500 units

     
110.     Clare Company currently sells 19,000 units. Total fixed costs are $84,000, and the contribution margin per unit is $6.00. Clare’s tax rate is 40%.      The margin of safety in units is:

     a.     3,000 units     
     b.     5,000 units
     c.     7,500 units
     d.     14,000 units



111.      On Fire Company, a producer of salsa, has the following information:

               Income tax rate      30%     
               Selling price per unit      $5.00      
               Variable cost per unit      $3.00
               Total fixed costs      $90,000.00

     The contribution margin per unit is:

     a.     $2.00
     b.     $3.00
     c.     $5.00
     d.     $8.00


112.      Four Alarm Company, a producer of salsa, has the following information:
     
               Income tax rate      30%     
               Selling price per unit      $5.00      
               Variable cost per unit      $3.00
               Total fixed costs      $90,000.00
     
     The contribution-margin ratio is:

     a.     30%
     b.     40%
     c.     60%
     d.     100%


113.      Burning Company, a producer of salsa, has the following information:
               
               Income tax rate      30%     
               Selling price per unit      $5.00      
               Variable cost per unit      $3.00
               Total fixed costs      $90,000.00

     The break-even point in dollars is:

     a.     $150,000
     b.     $180,000
     c.     $225,000
d.     $270,000

LEARNING OBJECTIVE 4

114.      The horizontal axis on the cost volume profit graph is the:

     a.     dollars of cost
     b.     sales volume in units
     c.     dollars of revenue     
     d.     net income

115.      


 

     a.     The break even point
     b.     The profit or loss at any rate of activity
     c.     The fixed cost per unit
     d.     Sales volume in units

116.      


 

     a.     Expenses are categorized into variable and fixed costs
     b.     Sales mix will be constant
     c.     Revenues and expenses are nonlinear over the relevant range
     d.     Efficiency and productivity will be unchanged

117.      


 

     a.     Reducing its total fixed costs
     b.     Increasing contribution margin per unit
     c.     Increasing variable cost per unit
d.     Decreasing the selling price per unit

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