Dakota Company provides the following information about its single product:

Targeted operating income........................$40,000

Selling price per unit......................................$3.50

Variable cost per unit.....................................$1.05

Total fixed costs.........................................$90,000

What is the contribution margin ratio?

A) 0.70

B) 0.44

C) 0.56

D) 0.30

America First Company provided the following manufacturing costs for the month of June.

Direct materials cost..................................................................$40,000

Janitor's salary.............................................................................$2,500

Property taxes.............................................................................$8,000

Direct labor cost........................................................................$68,000

Packaging costs..........................................................................$9,400

Equipment depreciation (straight-line)......................................$12,000

Factory insurance.......................................................................$9,500

Factory manager's salary...........................................................$6,400

How much of the above would normally be considered fixed costs?

A) $47,800

B) $26,400

C) $35,800

D) $38,400

Direct materials cost......................................................$40,000

Janitor's salary.................................................................$2,500

Property taxes.................................................................$8,000

Direct labor cost............................................................$68,000

Packaging costs..............................................................$9,400

Equipment depreciation (straight-line)..........................$12,000

Factory insurance...........................................................$9,500

Factory manager's salary................................................$6,400

How much of the above would normally be considered variable costs?

A) $108,000

B) $125,400

C) $117,400

D) $38,400

Jurassic Manufacturers produces flooring material. Fixed costs are $5,000 per month. Sales price for one unit of product is $50, and the variable cost per unit is $30. If Jurassic wishes to earn an operating income of $2,000, how many units need to be sold?

A) 270

B) 300

C) 320

D) 350

Jurassic Manufacturers produces flooring material. Fixed costs are $5,000 per month. Sales price for one unit of product is $50, and the variable cost per unit is $30. If Jurassic wishes to earn an operating income of $5,000, how many units need to be sold?

A) 500

B) 300

C) 450

D) 350

Bell Products manufactures packs of pesticides which are sold to farmers. Cost, volume and price data are as follows:

Price per unit………………………………$25.00

Variable cost per unit……………………...$20.00

Fixed cost per month……………………...$8,000

Current sales volume (units)………………..3,000

If Bell wishes to increase their current operating income by 10%, what volume of sales is needed?

A) 3,140

B) 3,200

C) 3,500

D) 3,625

Bell Products manufactures packs of pesticides which are sold to farmers. Cost, volume and price data are as follows:

Price per unit…………………………………..$25.00

Variable cost per unit………………………….$20.00

Fixed cost per month………………………….$8,000

Current sales volume (units)……………………3,000

If Bell wishes to double their current operating income, what volume of sales is needed?

A) 3,140

B) 4,400

C) 3,500

D) 3,625

Juan Martinez played classical guitar professionally until his motorcycle accident left him disabled. After long months of therapy, he hired an experienced luthier (maker of stringed instruments) and opened a small shop that makes and sells Spanish guitars. The guitars sell for $600, and the fixed monthly operating costs are as follows:

Rent and utilities....................................................$960

Wages and benefits of luthier.............................$1,500

Other.....................................................................$900

Juan got confused when his accountant told him about contribution margin ratios, but he understood clearly that for every dollar of sales, $0.70 went to cover his fixed costs, and that anything past that point was pure profit.

How many guitars does Juan have to sell each month to break even?

A) 6

B) 5

C) 12

D) 8

Juan Martinez played classical guitar professionally until his motorcycle accident left him disabled. After long months of therapy, he hired an experienced luthier (maker of stringed instruments) and opened a small shop that makes and sells Spanish guitars. The guitars sell for $600, and the fixed monthly operating costs are as follows:

Juan Martinez played classical guitar professionally until his motorcycle accident left him disabled. After long months of therapy, he hired an experienced luthier (maker of stringed instruments) and opened a small shop that makes and sells Spanish guitars. The guitars sell for $600, and the fixed monthly operating costs are as follows:

Rent and utilities……………………….$960

Wages and benefits of luthier………..$1,500

Other…………………………………...$900

Juan got confused when his accountant told him about contribution margin ratios, but he understood clearly that for every dollar of sales, $0.70 went to cover his fixed costs, and that anything past that point was pure profit.

How many dollars of revenue does Juan have to make each month to break even?

A) $3,950

B) $4,800

C) $3,360

D) $5,200