QUESTION 19

1. The following income statement is provided for Awesomeness Company for the current year:

   Sales revenue (3,000 units $42 per unit)	$	126,000
   Cost of goods sold (variable; 3,000 units $15 per unit)		(45,000	)
   Cost of goods sold (fixed)		(9,000	)
   Gross margin		72,000
   Administrative salaries		(11,000	)
   Depreciation		(9,000	)
   Supplies (3,000 units $5 per unit)		(15,000	)
   Net income	$	37,000

   What amount was the company's contribution margin?

   	A.	$48,000
   	B.	$81,000
   	C.	$66,000
   	D.	$37,000

8.72 points

QUESTION 20

1. In the first year of business, Friendly Company paid $32,000 for direct materials and $42,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $25,000 while general, selling, and administrative expenses totaled $10,000. The company produced 4,000 units and sold 3,000 units at a selling price of $35.00 a unit.

   What is Friendly's cost of goods sold for the year?

   	A.	$74,250
   	B.	$109,000
   	C.	$81,750
   	D.	$55,500

8.72 points

QUESTION 21

1. Assume Phony Company has variable costs per unit of $23, fixed costs of $600,000, and a break-even point in units of 60,000 units. If the sales price per unit decreases by $4 and the variable cost per unit decreases by $4, what would happen to the break-even point?

   	A.	Break-even point increases.
   	B.	Break-even point in dollars decreases.
   	C.	Break-even point stays the same.
   	D.	Break-even point in dollars decreases and break-even point in units stays the same.