Chapter 6 Additional Review Questions
1. Chase Company has provided the following data:
|Sales price |$200 per unit |
|Sales |6,000 units |
|Fixed cost |$300,000 |
|Variable cost |$100 per unit |
If the dollar contribution margin per unit is increased by $10, total fixed cost is decreased by 60,000, 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 $140,000
2. Curtin Company sells a single product. The product has a selling price of $50 per unit and variable expenses of 80% of sales. If the company's fixed expenses total $150,000 per year, then it will have a break-even of:
3. The following is Aykroyd Corporation's contribution format income statement for last month: |Sales |$4,000,000 |
|Less variable expenses | 2,800,000 |
|Contribution margin |1,200,000 |
|Less fixed expenses | 720,000 |
|Net income |$ 480,000 |
The company has no beginning or ending inventories. A total of 80,000 units were produced and sold last month. What is the company's margin of safety in dollars?
4. Using the same information above for Aykroyd Corporation, how many units would the company have to sell to attain target profits of $600,000?
5. Using the same information in number 3 above for Aykroyd Corporation, if sales increase by 400 units, how much should net income increase?
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