Multiple Choice 1 Mark for each question)

Question 1

Brasher Company manufactures and sells a single product that has a positive contribution margin. If the selling price and variable expenses both decrease by 5% and fixed expenses do not change, then what would be the effect on the contribution margin per unit and the contribution margin ratio?

Contribution Margin per unit Contribution Margin Ratio

A Decrease Decrease

B Decrease No Change

C No Change Decrease

D No Change No Change

Highlight which of the alternatives apply.

Question 2

Curtis Company anticipates selling 10,000 units next year. The company wants to earn a net income equal to 10% of sales. If variable expenses are $12 per unit and fixed expenses total $78,000 per year, what selling price must be established to achieve the desired level of net income? A.$18.00 per unit.

B.$19.80 per unit.

C.$21.78 per unit.

D.$22.00 per unit. '

Question 3

At a break-even point of 400 units sold, variable expenses were $4,000 and fixed expenses were $2,000. What will the 401st unit sold contribute to profit?

A.$0.

B.$5.

C.$10.

D.$15.

Question 4

The following information relates to Clyde Corporation, which produced and sold 50,000 units last month.

Sales $850,000

Manufacturing costs:

Fixed 210,000

Variable 140,000

Selling and Administrative expenses:

Fixed 300,000

Variable 45,000

There were no beginning or ending inventories. Production and sales next month are expected to be 40,000 units. The company's unit contribution margin next month should be? (round your final answer to two decimal places.)

A.$3.10.

B.$7.98.

C.$13.30.

D.$16.63.

Question 5

The following monthly data are available for the Eager Company and its only product:

unit sales price $75

unit variable expenses $30

Total fixed expenses $180,000

Actual Sales for the Month of July 7,000 units

The margin of safety for the company for March was:

A.$135,000.

B.$225,000.

C.$315,000.

D.$495,000.

Question 6

A sales manager has projected that an increase in the monthly advertising budget to $25,000 will increase monthly sales from 10,000 units to 12,000 units. Each unit sells for $50 with total variable costs per unit of $40. Monthly fixed expenses, including the current advertising costs of $5,000, total $20,000. Given the above data, what will be the expected impact on net income?

A.A decrease of $5,000.

B.A decrease of $110,000.

C.An increase of $5,000.

D.No change.