Acc 202
| 1 INCORRECT | |
Redford, Inc. has provided the following data:If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net income will: | | | A) | decrease by $60,000. | | | B) | increase by $60,000. | | | C) | increase by $120,000. | | | D) | increase by $420,000. | | | | | | Feedback:The correct answer is C (Learning Objective 1):
Net income will change as follows.Calculations:
$600,000 x 10% = $60,000
$300,000 x 20% = $60,000 | | 2 INCORRECT | |
Gardner Manufacturing Company produces a product that sells for $120. A selling commission of 10% of the selling price is paid on each unit sold. Variable manufacturing costs are $60 per unit. Fixed manufacturing costs are $20 per unit based on the current level of activity, and fixed selling and administrative costs are $16 per unit. The contribution margin per unit is: | | | A) | $104. | | | B) | $72. | | | C) | $60. | | | D) | $48. | | | | | | Feedback:The correct answer is D (Learning Objective 1):
The contribution margin per unit is determined as follows. | | 3 CORRECT | |
Newman Corporation produced and sold 80,000 units and reported sales of $4,000,000 during the past year. Management determined that variable expenses totaled $2,800,000 and fixed expenses totaled $720,000. What is the company's contribution margin ratio? | | | A) | 30% | | | B) | 70% | | | C) | 150% | | | D) | 250% | | | | | | Feedback:The correct answer is A (Learning Objective 3):
The company's contribution margin (CM) ratio is determined as follows.
CM ratio = CM ÷ Sales = (Sales – Variable expenses) ÷ Sales
CM ratio = ($4,000,000 - $2,800,000) ÷ $4,000,000 = 30% | | 4 INCORRECT | |
Astair, Inc. reported sales of $8,000,000 for the month and incurred variable expenses totaling $5,600,000 and fixed expenses totaling $1,440,000. The company has no beginning or ending inventories. A
Redford, Inc. has provided the following data:If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net income will: | | | A) | decrease by $60,000. | | | B) | increase by $60,000. | | | C) | increase by $120,000. | | | D) | increase by $420,000. | | | | | | Feedback:The correct answer is C (Learning Objective 1):
Net income will change as follows.Calculations:
$600,000 x 10% = $60,000
$300,000 x 20% = $60,000 | | 2 INCORRECT | |
Gardner Manufacturing Company produces a product that sells for $120. A selling commission of 10% of the selling price is paid on each unit sold. Variable manufacturing costs are $60 per unit. Fixed manufacturing costs are $20 per unit based on the current level of activity, and fixed selling and administrative costs are $16 per unit. The contribution margin per unit is: | | | A) | $104. | | | B) | $72. | | | C) | $60. | | | D) | $48. | | | | | | Feedback:The correct answer is D (Learning Objective 1):
The contribution margin per unit is determined as follows. | | 3 CORRECT | |
Newman Corporation produced and sold 80,000 units and reported sales of $4,000,000 during the past year. Management determined that variable expenses totaled $2,800,000 and fixed expenses totaled $720,000. What is the company's contribution margin ratio? | | | A) | 30% | | | B) | 70% | | | C) | 150% | | | D) | 250% | | | | | | Feedback:The correct answer is A (Learning Objective 3):
The company's contribution margin (CM) ratio is determined as follows.
CM ratio = CM ÷ Sales = (Sales – Variable expenses) ÷ Sales
CM ratio = ($4,000,000 - $2,800,000) ÷ $4,000,000 = 30% | | 4 INCORRECT | |
Astair, Inc. reported sales of $8,000,000 for the month and incurred variable expenses totaling $5,600,000 and fixed expenses totaling $1,440,000. The company has no beginning or ending inventories. A