Q 21 26 (multiple choice)

Nongshin Company expects to produce 120,000 instant noodles and sell 125,000 instant noodles in 2022. The budgeted sales price is $1 and the budgeted unit variable costs are $0.52 ($0.45 manufacturing and $0.07 selling and administrative). Budgeted total fixed costs are $26,400 ($21,600 manufacturing overhead and $4,800 selling and administrative).

On January 1, 2022, there were 10,000 units (produced in 2021) in beginning inventories. For these 10,000 units, the unit variable costs are $0.45 ($0.40 manufacturing and $0.05 selling and administrative). Total fixed costs in 2021 are $20,330 ($17,120 manufacturing overhead and $3,210 selling and administrative). Nongshin produced 107,000 units in 2021.

Nongshin uses FIFO method for its inventories.

Q21. Compute the breakeven point in units for 2022 under the budget.

		51,000
		53,000
		55,000
		57,000

Q22. Compute required sales in units if Nongshins 2022 target profit is $24,000.

		105,000
		106,000
		107,000
		108,000

Q23. Compute the margin of safety in units for 2022 budget.

		61,000
		64,000
		67,000
		70,000

Q24. Compute Nongshins operating income under absorption costing for 2022.

		$30,400
		$31,400
		$32,400
		$33,400

Q25. Compute Nongshins operating income under variable costing for 2022.

		$33,700
		$33,900
		$34,100
		$34,300

Q26. Compute Nongshins degree of operating leverage using the operating income under variable costing. Round to two decimal places.

		1.77
		1.80
		1.83
		1.86