ROGERS 7:06 PM Done tb03.docx CPA: Management Accounting 127. Salmon Co. is deciding between two compensation plans. In Plan A, salaries are $100,000 and the commission is $2 per unit. In Plan B, salaries are $40,000 and the commission is $4 per unit. At what level of sales, in units, is Salmon indifferent between the two compensation plans? a) 30,000 b) 20,000 c) 10,000 d) Cannot be determined Answer: a Difficulty: Medium Learning Objective: Explain the concept of cost-volume-profit (CVP) analysis in decision making CPA: Management Accounting 128. Salmon Co. is deciding between two compensation plans. In Plan A, salaries are $100,000 and the commission is $2 per unit. In Plan B, salaries are $40,000 and the commission is $4 per unit. Which of the following statements is true? a) If expected sales are lower than the indifference point, Blackmon would prefer Plan B b) Plan A has a lower breakeven point than Plan B c) If Plan B is adopted, the degree of operating leverage will increase d) The margin of safety will be larger if Plan A is adopted Answer: a Difficulty: Medium Learning Objective: Explain the concept of cost-volume-profit (CVP) analysis in decision making. Bloomcode: Analysis ROGERS 7:05 PM Done tb03.docx a) Variable costs b) Sales revenues c) Selling and administrative costs d) Fixed costs Answer: d Difficulty: Easy Learning Objective: Apply CVP calculations for a single product. 146. Del Co. has fixed costs of $100,000 and breakeven sales of $800,000. What is its projected profit at $1,200,000 in sales? a) $50,000 b) $150,000 c) $200,000 d) $400,000 Answer: a Difficulty: Medium Learning Objective: Apply CVP calculations for a single product. 147. Dynamite Co. has fixed costs of $50,000 (with 60% attributable to manufacturing overhead) and breakeven sales of $500,000. What is its projected gross margin at $1,000,000 n sales? a) $50,000 b) $60,000 c) $70,000 d) $80,000 Answer:c Difficulty: Medium Learning Objective: Analyze the difference between contribution margin and gross margin. CPA: Management Accounting