1-Lone International Corporation's only product sells for $230.00 per unit and its variable expense is $80.50. The company's monthly fixed expense is $822,250 per month. The unit sales to attain the company's monthly target profit of $33,000 is closest to:

A.3,718 unitsC. 10,624 units

B.6,688 unitsD. 5,721units

2- The break-even point in units can be obtained by dividing total fixed expenses by the contribution margin ratio.

TrueFalse

3.At the break-even point: Sales - Variable expenses = Fixed expenses.

TrueFalse

4.If fixed expenses increase by $10,000 per year, then the level of sales needed to break even will also increase by $10,000.TrueFalse

28.The break-even point in unit sales is found by dividing total fixed expenses by:

A.the contribution margin ratio.C. the sales price per unit.

B.the variable expenses per unit.D. The contribution margin per unit.

29.The break-even point in unit sales increases when variable expenses:

A.increase and the selling price remains unchanged.

B.decrease and the selling price remains unchanged.

C.decrease and the selling price increases.

D.remain unchanged and the selling price increases.

30.Last year, Farrer Corporation had sales of $1,500,000, variable expenses of $900,000, and fixed expenses of $400,000. What would be the dollar sales at the break-even point?

A.$1,300,000C. $1,380,000

B.$1,000,000D. $1,200,000

31.Smith Company sells a single product at a selling price of $30 per unit. Variable expenses are $12 per unit and fixed expenses are $41,400. Smith's break-even point in units is:

A.1,380 unitsC. 3,450 units

B.2,300 unitsD. 6,900 units

33- Rave Corporation produces and sells a single product. Data concerning that product appear below:

Selling Price per unit---------- $210.00

Variable expense per unit---- $ 98.70

Fixed expense per month---- $357,273

The break-even in monthly unit sales is closest to:

A.2,844 unitsC. 3,210 units

B.3,620 unitsD. 1,701 units

34.If the fixed expenses increase in a company, and all other factors remain unchanged, then one would expect the margin of safety to decrease.TrueFalse

35.The margin of safety percentage is equal to the margin of safety in dollars divided by total sales in dollars.

TrueFalse

36.The following information pertains to Clove Co.:

Budgeted sales----------- $1,000,000

Breakeven sales---------- $ 700,000

Budgeted contribution margin--- $600,000

Clove's margin of safety is:

A.$300,000C. $500,000

B. $400,000D. $800,000

37.Olis Corporation sells a product for $130 per unit. The product's current sales are 28,900 units and its break-even sales are 25,721 units. What is the margin of safety in dollars?

A.$413,270C. $2,504,667

B.$3,343,730D. $3,757,000

38.Puchalla Corporation sells a product for $230 per unit. The product's current sales are 13,400 units and its break-even sales are 10,720 units. The margin of safety as a percentage of sales is closest to:

A.20%C. 80%

B.25%D. 75%

39.Sturrock Corporation has provided the following data concerning its only product:

Selling price-------- $130 per unit

Current Sales------ 39,400 units

Break even sales---- 35,066 units

What is the margin of safety in dollars?

A.$5,122,000C. $3,414,667

B.$4,558,580D. $563,420

40.Victorin Corporation has provided the following data concerning its only product:

Selling price------- $210 per unit

Current Sales----- 27,000 units

Break-even sales---- 21,870 units

The margin of safety as a percentage of sales is closest to:

A.19%C.23%

B. 77%D. 81%

41.If two companies produce the same product and have the same total sales and same total expenses, operating leverage will be lower in the company with a higher proportion of fixed expenses in its cost structure.

TrueFalse

42.A company with a degree of operating leverage of 4 would expect net operating income to increase by 200% if sales increased from $100,000 to $150,000.TrueFalse

43.If two companies have the same total sales and total expenses and make the same product, the volatility of net operating income with changes in sales will tend to be greater in the company with a higher proportion of fixed expenses in its cost structure.TrueFalse

44.The degree of operating leverage can be calculated as:

A.contribution margin divided by sales.

B.gross margin divided by net operating income.

C.net operating income divided by sales.

D.contribution margin divided by net operating income.