Multiple Choice Question 91 Sales are $400000 and variable costs are $300000. What is the contribution margin ratio? Cannot be determined because amounts are not expressed per unit. 33% 75% 25% Multiple Choice Question 96 A division sold 300000 calculators during 2017: Sales $3000000 Variable costs: Materials $570000 Order processing 225000 Billing labor 165000 Selling expenses 90000 Total variable costs 1050000 Fixed costs 1000000 How much is the unit contribution margin? $1 $3.5 $6.8 $6.5 Multiple Choice Question 103 A company has total fixed costs of $140000 and a contribution margin ratio of 10%. The total sales necessary to break even are $1400000. $350000. $154000. $1260000. Multiple Choice Question 104 A company sells a product which has a unit sales price of $7, unit variable cost of $5 and total fixed costs of $217000. The number of units the company must sell to break even is 43400 units. 108500 units. 31000 units. 310000 units. Exercise 176 In the month of September, Matlock Industries sold 800 units of product. The average sales price was $30. During the month, fixed costs were $6,300 and variable costs were 70% of sales. Determine the contribution margin in dollars, per unit, and as a ratio. Contribution margin (in dollars) $ Unit contribution margin $ Contribution margin ratio % Using the contribution margin technique, compute the break-even point in dollars and in units. Break-even sales (in dollars) $ Break-even sales (in units) units Exercise 185 Gordon Manufacturing earned net income of $100,000 during 2015. The company wants to earn net income of $40,000 more during 2016. The company's fixed costs are expected to be $147,000, and variable costs are expected to be 30% of sales. Determine the required sales to meet the target net income during 2016. Required sales $ Fill in the dollar amounts for the summary income statement for 2016 below, based on your answer to part (a). Sales revenue $ Variable costs Contribution margin Fixed costs Net income / (Loss) $ Multiple Choice Question 53 It costs Vaughn Manufacturing $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 2600 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Vaughn has sufficient unused capacity to produce the 2600 scales. If the special order is accepted, what will be the effect on net income? $5200 increase $5200 decrease $7800 decrease $39000 increase Multiple Choice Question 84 Which statement is true concerning the decision rule on whether to make or buy? The company should buy as long as total revenue exceeds present revenues. The company should buy if the cost of buying is less than the cost of producing. The company should buy assuming no additional fixed costs are incurred. The company should buy if the incremental revenue exceeds the incremental costs. Multiple Choice Question 91 Crane Company currently manufactures a wicket as its main product. The costs per unit are as follows: Direct materials and direct labor $9 Variable overhead 5 Fixed overhead 8 Total $22 Saran Company has contacted Crane with an offer to sell it 5100 of the wickets for $16 each. If Crane makes the wickets, variable costs are $14 per unit. Fixed costs are $8 per unit; however, $5 per unit is unavoidable. Should Crane make or buy the wickets? Buy; savings = $15300 Make; savings = $5100 Make; savings = $10200 Buy; savings = $5100 Multiple Choice Question 94 An opportunity cost should be initially recorded as an asset. is classified as manufacturing overhead. is the cost of a new product proposal. is the potential benefit that may be obtained by following an alternative course of action. Multiple Choice Question 100 Marigolds Manufacturing Company can make 100 units of a necessary component part with the following costs: Direct Materials $130000 Direct Labor 35000 Variable Overhead 50000 Fixed Overhead 30000 If Marigolds Manufacturing Company can purchase the component externally for $210000 and only $3000 of the fixed costs can be avoided, what is the correct make-or-buy decision? Make and save $8000 Make and save $15000 Buy and save $15000 Buy and save $8000 Multiple Choice Question 109 Sheffield Corp. is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $24 and Sheffield would sell it for $57. The cost to assemble the product is estimated at $20 per unit and the company believes the market would support a price of $71 on the assembled unit. What decision should Sheffield make? Sell before assembly, the company will be better off by $6 per unit. Sell before assembly, the company will be better off by $14 per unit. Process further, the company will be better off by $18 per unit. Process further, the company will be better off by $13 per unit. Multiple Choice Question 111 Sunland Company has old inventory on hand that cost $20250. Its scrap value is $27000. The inventory could be sold for $67500 if manufactured further at an additional cost of $20250. What should Sunland do? Dispose of the inventory to avoid any further decline in value Sell the inventory for $27000 scrap value Hold the inventory at its $20250 cost Manufacture further and sell it for $67500 Brief Exercise 176 Keith Inc. has 4 product lines: sour cream, ice cream, yogurt, and butter. Demand of individual products is not affected by changes in other product lines. 30% of the fixed costs are direct, and the other 70% are allocated. Results of June follow: Sour Cream Ice Cream Yogurt Butter Total Units sold 2,000 500 400 200 3,100 Revenue $ 10,000 $ 20,000 $ 10,000 $ 20,000 $ 60,000 Variable departmental costs 6,000 13,000 4,200 4,800 28,000 Fixed costs 5,000 2,000 3,000 7,000 17,000 Net income (loss) $ (1,000 ) $ 5,000 $ 2,800 $ 8,200 $ 15,000 Prepare an incremental analysis of the effect of dropping the sour cream product line. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) $ $ Exercise 181 (Part Level Submission) Felter Company produced and sold 50,000 units of product and is operating at 70% of plant capacity. Unit information about its product is as follows: Sales price $70 Variable manufacturing cost $45 Fixed manufacturing cost ($500,000 50,000) 10 55 Profit per unit $15 The company received a proposal from a foreign company to buy 10,000 units of Felter Company's product for $50 per unit. This is a one-time only order and acceptance of this proposal will not affect the company's regular sales. The president of Felter Company is reluctant to accept the proposal because he is concerned that the company will lose money on the special order. Collapse question part (a1) Prepare a schedule reflecting an incremental analysis of this proposal. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter 0 for the amounts.) FELTER COMPANY Incremental Analysis Proposal to sell 10,000 units at $50 Reject Order Accept Order Net Income Increase (Decrease) $ $ $ $ $ $