Question
61.Assume the following (1) Total sales = $135,000 (2) the contribution margin ratio = 40%, and (3) total fixed expenses = $45,000. Given these three
61.Assume the following (1) Total sales = $135,000 (2) the contribution margin ratio = 40%, and (3) total fixed expenses = $45,000. Given these three assumptions, the margin of safety is:
Multiple Choice
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$22,500.
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$27,000.
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$63,000.
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$105,000.
62.
Assume that each year a company normally produces and sells 80,000 units of its only product for $40 per unit. The companys average unit costs at this level of activity are given below:
Direct materials | $ | 9.50 |
Direct labor | 10.00 | |
Variable manufacturing overhead | 2.80 | |
Fixed manufacturing overhead | 5.00 | |
Variable selling expenses | 1.70 | |
Fixed selling expenses | 4.50 | |
Total cost per unit | $ | 33.50 |
The companys relevant range of production is 70,000 - 100,000 units. It believes that spending an additional $170,000 on advertising would increase unit sales by 25%. What is the financial advantage (disadvantage) of spending the additional money on advertising?
Multiple Choice
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$84,000
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$150,000
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$90,000
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$10,000
63.
Assume the following information:
Amount | Per Unit | |||||||||
Sales | $ | 300,000 | $ | 40 | ||||||
Variable expenses | 120,000 | 16 | ||||||||
Contribution margin | 180,000 | $ | 24 | |||||||
Fixed expenses | 105,000 | |||||||||
Net operating income | $ | 75,000 | ||||||||
If the variable expenses increase by $1 per unit, the advertising expenditures increase by $15,000, and unit sales increase by 5%, then the best of estimate of the new net operating income is:
Multiple Choice
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$48,000.
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$75,375.
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$55,125.
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$61,125.
64.
Assume a retailing company has two departmentsDepartment A and Department B. The companys most recent contribution format income statement follows:
Total | Department A | Department B | |||||||||||
Sales | $ | 800,000 | $ | 350,000 | $ | 450,000 | |||||||
Variable expenses | 320,000 | 120,000 | 200,000 | ||||||||||
Contribution margin | 480,000 | 230,000 | 250,000 | ||||||||||
Fixed expenses | 400,000 | 140,000 | 260,000 | ||||||||||
Net operating income (loss) | $ | 80,000 | $ | 90,000 | $ | (10,000 | ) | ||||||
The company says that $140,000 of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the sales in Department A will drop by 5%. What is the financial advantage (disadvantage) of discontinuing Department B?
Multiple Choice
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$(120,000)
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$(141,500)
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$(161,500)
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$(124,000)
65.
Assume the sales budget for April and May is 40,000 units and 42,000 units, respectively. The production budget for the same two months is 37,000 units and 38,000 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 20% of the following month's production needs. How many pounds of raw material need to be purchased in April?
Multiple Choice
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150,800
-
152,700
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148,800
-
148,400
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