14) The Heartlake Corporation manufactures and sells toy gyroscopes. The following data is related to sales and production of the toy gyroscopes for last year. Selling price per unit Variable manufacturing costs per unit |Variable selling and administrative expenses per unit Fixed manufacturing overhead (in total) Fixed selling and administrative expenses (in total) Units produced during the year Units sold during year $8.00 $1.83 $4.55 $78,000 $80,000 520,000 190,000 Using variable costing, what is the operating income for last year? A) $465,800 B) $149,800 C) $684,400 D) $307,800 15) Use the information in question #14. Using absorption costing, what is the operating income for last year? A) $149,800 B) $199,300 C) $229,000 D) $250,069 16) The contribution margin ratio explains the percentage of each sales dollar that A) contributes towards fixed costs and generating a profit. B) contributes towards variable costs. C) contributes towards sales revenue. D) contributes towards period expenses. 17) Who Done It Mystery Theater sells tickets for dinner and a show for $40 each. The cost of providing dinner is $32 per ticket and the fixed cost of operating the theater is $100,000 per month. The company can accommodate 12,000 patrons each month. What is the contribution margin ratio? A) 20.00% B) 8% C) 225% D) 99.8% 18) Helga's Pretzels sells pretzels for $10. The variable costs for each pretzel are $4, while the total fixed costs are $1800. The contribution margin for 1400 pretzels is A) $18,000. B) $1800. C) $8400. D) $12,200. 19) Fancy Scarf Factory Contribution Margin Sales price per Scarf Less: Variable cost per Scarf Unit contribution margin per Scarf The managerial accountant at Fancy Scarf Factory reported the price per scarf is $21. The only variable cost is $11 per scarf. The managerial accountant also reported that the sales goals were increased to 1300 scarves during the next quarter. First, compute the unit contribution margin per scarf. If fixed expenses are $10,000, what is the forecasted operating income if 1300 scarves are sold in the next quarter? A) $10; $3000 B) $8; $2800 C) $7; $2700 D) $9; $2900 20) Which of the following is not an approach used to calculate the breakeven point? A) The shortcut approach using the contribution margin ratio B) The balance sheet approach C) The shortcut approach using the unit contribution margin D) The income statement approach 21) If the selling price per unit is $60, the variable expense per unit is $55, and total fixed expenses are $72,500 what will the breakeven sales in units be? A) 630 B) 1208 C) 14,500D ) 1318 22) If the selling price per unit is $66, variable expenses per unit are $42, target operating income is $31,000, and total fixed expenses are $24,000, how many units must be sold to reach the target operating income? (Round the final answer up to the nearest unit.) A) 2292 B) 1292 C) 470, D) 1000 23) If the variable cost per unit increases while the sale price per unit and total fixed costs remain constant, which of the following statements is true? A) Contribution margin ratio increases. B) Breakeven point in units decreases. C) Breakeven point in units increases. D) Breakeven point in units remains the same. PaldLIU LI.. IU R AO BI U rab x X A . Ar Paragraph Styles Dictate Sensitivity 24) Pittsboro Corporation produces and sells a single product. Data for that product are: Sales price per unit Variable cost per unit Fixed expenses for the month Currently selling $590 $190 $1,350,000 8500 units Management is discussing increasing the price to 5610 to cover an increase in fixed expenses of $89,000. Management believes they might lose 2% of sales per month. What should be the overall effect on the company's monthly operating income if this change is implemented? A) Decrease of $9600 B) Increase of $89,000 C) Decrease of $89,000 D) Increase of $9600 25) Mae Company sells its product for $14 per unit and has variable costs of $7 per unit. Total fixed costs are $112,000. Suppose variable costs increase by 20% due to an increase in the cost of direct materials. What will be the effect on the breakeven point in units? A) Decrease from 5333 units to 5000, units B) Decrease from 16,000 units to 2858 units C) Decrease from 16,000 units to 13,333 units D) Increase from 16,000 units to 20,000 units 26) Fixed costs divided by weighted average contribution margin per unit equals A) breakeven sales in units. B) margin of safety ratio. C) contribution margin ratio. D) breakeven sales in dollars. 27) Mayfield Company sells two products, Blue models and Plaid models. Blue models sell for $43 per unit with variable costs of $30 per unit. Plaid models sell for $52 per unit with variable costs of $45 per unit. Total fixed costs for the company are $9200. Mayfield Company typically sells four Blue models for every five Plaid models. What is the breakeven point in total units? (Round any intermediary calculations to the nearest whole number.) A) 106 units B) 920 units C) 263 units D) 1022 units 28) Use information from question 27. What is the breakeven amount of units of Blue models? (Round any intermediary calculations to the nearest whole number.) A) 409 units B) 920 units C) 708 units D) 460 units 29) All else being equal, a company with a high operating leverage will have A) relatively high variable costs. B) relatively high contribution margin ratio. C) relatively low risk. D) relatively low fixed costs. 30) Yellow Company's variable expenses are 40% of sales and have monthly fixed expenses of $15,000. The monthly target operating income is $4800. What is Yellow Company's operating leverage factor at the target level of operating income? What is the operating income if sales volume increases 10%? Round operating leverage factor to 2 places and operating income to the nearest dollar. A) 2.48, $5,990 B) 1.32, $5,434 C) 0.24, $4,915 D) 4.13, $6,780