___ 1. Lester Company has a single product. The

selling price is $50 and the variable cost is $30 per

unit. The companys fixed expenses are $200,000 per

month. What is the companys unit contribution mar-

gin? a) $50; b) $30; c) $20; d) $80.

___ 2. Refer to the data for Lester Company in

question 1 above. What is the companys contribution

margin ratio? a) 0.60; b) 0.40; c) 1.67; d) 20.00.

___ 3. Refer to the data for Lester Company in

question 1 above. What is the companys break-even

in sales dollars? a) $500,000; b) $33,333; c) $200,000;

d) $400,000.

___ 4. Refer to the data for Lester Company in

question 1 above. How many units would the company

have to sell to attain target profits of $50,000? a)

10,000; b) 12,500; c) 15,000; d) 13,333.

___ 5. The following figures are taken from Park-

er Companys income statement: Net income, $30,000;

Fixed costs, $90,000; Sales, $200,000; and CM ratio,

60%. The companys margin of safety in dollars is: a)

$150,000; b) $30,000; c) $50,000; d) $80,000.

___ 6. Refer to the data in question for Parker

Company in 5 above. The margin of safety in percen-

tage form is: a) 60%; b) 75%; c) 40%; d) 25%.

___ 7. Refer to the data for Parker Company in

question 5 above. What is the companys total contri-

bution margin? a) $110,000; b) $120,000; c) $170,000;

d) $200,000.

___ 8. Refer to the data for Parker Company in

question 5 above. What is the companys degree of

operating leverage? a) 0.25; b) 0.60; c) 1.25; d) 4.00.

___ 9. If sales increase from $400,000 to

$450,000, and if the degree of operating leverage is 6,

net income should increase by: a) 12.5%; b) 75%; c)

67%; d) 50%.

___ 10. In multiple product firms, a shift in the

sales mix from less profitable products to more profit-

able products will cause the companys break-even

point to: a) increase; b) decrease; c) there will be no

change in the break-even point; d) none of these.