1. Information about the Harmon Company's two products includes:

	Product X	Product Y
Unit selling price	$9.00	$9.00
Unit variable costs:
Manufacturing	$5.25	$6.75
Selling	0.75	0.75
Total variable costs	$6.00	$7.50
Monthly fixed costs are as follows:
Manufacturing	$ 82,500
Selling and administrative	45,000
Total fixed costs	$127,500

What is the total monthly sales volume in units required to break even when the sales mix in units is 70% Product X and 30% Product Y?

	a.	8,333 units
	b.	50,000 units
	c.	16,667 units
	d.	56,667 units

2. Product 1 has a contribution margin of $6.00 per unit, and Product 2 has a contribution margin of $7.50 per unit. Total fixed costs are $300,000. Sales mix and total volume varies from one period to another. Which of the following is true?

	a.	At a sales volume in excess of 25,000 units of 1 and 25,000 units of 2, operations will be profitable.
	b.	The ratio of net profit to total sales for 2 will be larger than the ratio of net profit to total sales for 1.
	c.	Variable costs are $1.50 more for 2 than for 1.
	d.	The ratio of contribution margin to total sales always will be larger for 1 than for 2.

3. The following data pertain to the three products produced by Alberts Corporation:

	A	B	C
Selling price per unit	$5.00	$7.00	$6.00
Variable costs per unit	4.00	5.00	3.00
Contribution margin per unit	$1.00	$2.00	$3.00

Fixed costs are $90,000 per month. 60% of all units sold are Product A, 30% are Product B, and 10% are Product C. What is the monthly break-even point for total units?

	a.	45,000 units
	b.	36,000 units
	c.	60,000 units
	d.	180,000 units

4. If actual sales equal break-even sales

	a.	the margin of safety is negative.
	b.	the margin of safety is positive.
	c.	it is impossible to say anything about the margin of safety.
	d.	the margin of safety equals zero.
	e.	the margin of safety is negative or positive.

5. The units sold or expected to be sold or sales revenue earned or expected to be earned above the break-even volume is called

	a.	variable cost ratio.
	b.	degree of operating leverage.
	c.	break-even point.
	d.	margin of safety.
	e.	contribution margin ratio.

6. Operating leverage is the relative mix of

	a.	revenues earned and manufacturing costs.
	b.	fixed and variable costs.
	c.	high-volume and low-volume products.
	d.	manufacturing costs and period costs.
	e.	revenues earned and variable costs.

Figure 4-6. Shorter Company had originally expected to earn operating income of $130,000 in the coming year. Shorter's degree of operating leverage is 2.4. Recently, Shorter revised its plans and now expects to increase sales by 20% next year.

7. Refer to Figure 4-6. What is the percent change in operating income expected by Shorter in the coming year?

	a.	8.33%
	b.	48.0%
	c.	20.0%
	d.	54.17%
	e.	30.0%

8. Refer to Figure 4-6. What is Shorter's revised expected operating income for the coming year?

	a.	$192,400
	b.	$156,000
	c.	$312,000
	d.	$130,000
	e.	$62,400

9. Dance Unlimited plans to sell 10,000 ballet shoes at $50 each in the coming year. Unit variable cost is $30 and total fixed cost equals $65,000.

Required:

A.) Calculate the break-even in ballet shoes.

B.) Calculate the break-even in sales dollars.

10. Shamrock Inc. plans to sell 3,000 Irish sweaters for $200 each in the coming year. Product costs include:

Direct materials per sweater		$ 40
Direct labor per sweater		10
Variable overhead per sweater		15
Total fixed factory overhead		20,000

Variable selling expenses are $5 per sweater and fixed selling and administrative expenses total $12,000. Required: A.) Calculate the total variable cost per unit. B.) Calculate the total fixed expenses for the year. C.) Prepare a contribution margin income statement for Shamrock Inc. for the coming year.