Quiz – Chapter 17 – Solution 1. Rider Company sells a single product. The product has a selling price of $40 per unit and variable expenses of $15 per unit. The company's fixed expenses total $30,000 per year. The company's break-even point in terms of total dollar sales is: A) $100,000. B) $80,000. C) $60,000. D) $48,000. The answer is d. CMR = (P-V)/P = ($40 - $15)/$40 = 62.5% Px = F/ (CMR) Px = $30,000/.625 = $48,000 Use the following to answer questions 2-3: Weiss Corporation produces two models of wood chairs, Colonial and Early American. The Colonial sells for $60 per chair and the Early American sells for $80 per chair. Variable expenses for each model are as follows: Colonial $35 9 Early American $48 8

Variable production cost per unit ....... Variable selling expense per unit .......

Total fixed expenses are $39,600 per month. Expected monthly sales are: Colonial, 1,800 units; Early American, 600 units. 2. The contribution margin per chair for the Colonial model is: A) $51. B) $16. C) $35. D) $25. The answer is b. CM = P-V = $60 - $35 - $9 = $16.

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3. If the sales mix and sales units are as expected, the break-even in sales dollars is closest to: A) $132,000. B) $148,500. C) $143,000. D) $139,764. Price: Variable Costs: Contribution Margin: Contribution Margin Ratio: The answer is c. Colonial to Early American Sales Mix: 3:1 Weighted Average Contribution Margin Ratio: .75(.2667) +.25(.30)= .20 +.075=.275 PX = F/CMR = $39,600/.275 = $144,000 Weighted Average Contribution Margin: .75(16) + .25(24) = 12+6 = $18 X = F/CMU = $39,600/$18 = 2,200 units Colonial Sales Revenue: Early American Revenue: .75(2,200) = 1,650 x $60 = .25(2,200) = 550 x $80 = $99,000 44,000 $143,000 Colonial $60 -44 $16 26.67% Early American $80 -56 $24 30%

Use the following to answer questions 4-5: Southwest Industries produces a sports glove that sells for $15 per pair. Variable expenses are $8 per pair and fixed expenses are $35,000 annually. 4. The break-even...

...CHAPTER 1 – COST VOLUME PROFIT-
MULTIPLE CHOICE QUESTIONS
1. CVP analysis can be used to study the effect of:
A. changes in selling prices on a company's profitability.
B. changes in variablecosts on a company's profitability.
C. changes in fixed costs on a company's profitability.
D. changes in product sales mix on a company's profitability.
E. All of these.
2. The break-even point is that level of activity where:
A. total revenue...

...term manufacturing overhead? |
A) | Factory overhead |
B) | Pervasive costs |
C) | Burden |
D) | Indirect manufacturing costs |
2. | Which one of the following is an example of a period cost? |
A) | A change in benefits for the union workers who work in the New York plant of a Fortune 1000 manufacturer. |
B) | Workers' compensation insurance on factory workers' wages allocated to the factory. |
C) | A box cost...

...estimates that variablecosts will be 60% of sales and fixed costs will total $2,160,000. The selling price of the product is $10, and 600,000 units will be sold.
Instructions
Using the mathematical equation,
(a) Compute the break-even point in units and dollars.
(b) Compute the margin of safety in dollars and as a ratio.
(c) Compute net income.
2. Taveras Industries developed the following information for the product it...

...Operating Activities P153,850
COST VOLUME PROFIT
1. Melanie Company produces a merchandise that has the following data:
Unit Sales price P80 per unit
Unit vairiable costs P48 per unit
Total fixes costs P640,000 per annum
Units sold during the current year P25,000 units
A. Unit contributionmargin, contributionmargin ratio and variablecost...

...$18,000 at the end of an accounting period. The job cost sheets of the two uncompleted jobs show charges of $6,000 and $3,000 for materials, and charges of $4,000 and $2,000 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of:
A. 50%
B. 200%
C. 300%
D. 20%
2. Job 607 was recently completed. The following data have been recorded on its job cost...

...CHAPTER 12
PRICING DECISIONS AND COST MANAGEMENT
12-1 The three major influences on pricing decisions are
1. Customers
2. Competitors
3. Costs
12-2 Not necessarily. For a one-time-only special order, the relevant costs are only those costs that will change as a result of accepting the order. In this case, full product costs will rarely be relevant. It is more likely that full product costs will be...

... 1. Cost of goods manufactured will usually include:
A. only direct labor and direct materials costs.
B. some costs incurred during the prior period as well as costs incurred during the current period.
C. only costs incurred during the current period.
D. some period costs as well as some product costs.
2. During the month of August, direct labor cost totaled $13,000 and...

...completed for Danshui Plant No. 2 to break even?
2. Using budget data, what was the total expected cost per unit if all manufacturing and shipping overhead (both variable and fixed) were allocated to planned production? What was the actual cost per unit of production and shipping.
3. Prepare a flexible budget for 180,000 iPhone 4’s and calculate flexible budget variances using actual costs for August.
4. Estimate material price...

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