1-

Kent Co. manufactures a product that sells for $67.00 and has variable costs of $39.00 per unit. Fixed costs are $350,000. Kent can buy a new production machine that will increase fixed costs by $20,600 per year, but will decrease variable costs by $6.00 per unit. Compute the contribution margin per unit if the machine is purchased.

Multiple Choice

• $22.00.

• $28.00.

• $34.00.

• $39.50.

• $45.00.

• 2-

  Wang Co. manufactures and sells a single product that sells for $600 per unit; variable costs are $342 per unit. Annual fixed costs are $924,500. Current sales volume is $4,350,000. Management targets an annual pre-tax income of $1,275,000. Compute the unit sales to earn the target pre-tax net income.

  Multiple Choice

• 3,583.

• 6,375.

• 5,225.

• 8,525.

• 14,126.

• 3

  Carver Packing Company reports total contribution margin of $92,000 and pretax net income of $23,000 for the current month. In the next month, the company expects sales volume to increase by 5%. The degree of operating leverage and the expected percent change in income, respectively, are:

  Multiple Choice

• 2.5 and 13%

• 0.25 and 5%

• 0.25 and 3.6%

• 4.0 and 5%

• 4.0 and 20%