(11)Belle Corp. has a selling price of $50 per unit, variable costs of $40 per unit, and fixed costs of $100,000. What sales revenue is needed to break-even?

(a) $500,000

(b) $125,000

(c) $5,000,000

(d) $1,000,000

(12) Knoll, Inc. currently sells 15,000 units a month for $50 each, has variable costs of $20 per unit, and fixed costs of $300,000. Knoll is considering increasing the price of its units to $60 per unit. This will not affect costs, but demand is expected to drop 20%. Should Knoll increase the price of its product?

(a) Yes; profit will increase $30,000.

(b) Yes, profit will increase $150,000.

(c) No, profit will decrease $150,000.

(d) No, profit will decrease $30,000.

(13) A company is debating whether to change its cost structure so that variable costs increase from $4 per unit to $5 per unit but fixed costs decrease from $400,000 to $300,000. If it were to implement the change at its current production level of 100,000, profit would not change. What would happen to the company's profit if the change were implemented and production increased?

(a) It will stay the same.

(b) It will increase.

(c)It will decrease.

(d)It could increase or decrease.

(14) Thunder Corp. has a selling price of $25 per unit, variable costs of $20 per unit, and fixed costs of $35,000. How many units must be sold to break even?

(a) 7,000

(b) 14,000

(c) 3,500

(d) 2,334

(15) The formula for break-even point in terms of sales dollars is:

(a) Total variable costs/Contribution margin ratio

(b) Total fixed costs/Contribution margin ratio

(c)Total fixed costs/Unit contribution margin

(d) Total variable costs/Total fixed costs

(16) A detailed plan that translates the company's objectives into financial terms, identifying the resources and expenditures that will be required over the planning horizon is a:

(a) Strategic plan

(b) Budget

(c)Tactic

(d) Long-term objective

(17) Top-down budgeting is:

(a) when the local managers impose a budget on the top management.

(b) when top management sets the budget and imposes it on lower levels of the organization.

(c) when customers impose a budget on top management of the company.

(d) when top management imposes a budget on the board of directors.

(18) Jackson Inc. produces leather handbags. The production budget for the next four months is: July 5,000 units, August 7,000, September 7,500, October 8,000. Each handbag requires 0.5 square meters of leather. Jackson Inc.'s leather inventory policy is 30% of next month's production needs. On July 1 leather inventory was expected to be 1,000 square meters. What will leather purchases be in July?

(a) 2,300 square meters

(b) 2,550 square meters

(c) 2,700 square meters

(d) 3,575 square meters

(19) Crystal, Inc. has prepared the following budgets for March. In March, budgeted production is 1,000 units, budgeted sales is 1,200 units, and raw materials inventory will stay constant.

Direct materials

$

4.00

per unit

Direct labor

$

7.20

per unit

Manufacturing overhead

$

10.00

per unit

Selling and administrative expense

$

8.00

per unit

What is budgeted cost of goods sold for March?

(a) $20,367

(b) $21,200

(c) $25,440

(d) $35,040

(20) The basic form of the cash budget is:

(a) Budgeted cash collections - Budgeted cash payments +/- Cash borrowed or repaid = Ending cash balance

(b) Beginning cash balance + Budgeted cash collections - Budgeted cash payments +/- Cash borrowed or repaid = Ending cash balance

(c) Beginning cash balance - Budgeted cash collections + Budgeted cash payments +/- Cash borrowed or repaid = Ending cash balance

(d) Beginning cash balance + Budgeted cash collections - Budgeted cash payments = Cash borrowed or repaid