ADM 2304 Lecture Notes - Lecture 6: Contribution Margin, Espresso
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9. The followingare from the accounting records of Y ltd.:
Sale price per unit | 80 $ |
DM used | 120 000 $ |
DL | 180 000 $ |
MO variable | 112 000 $ |
MO fixed | 168 000 $ |
S&A variable | 48 000 $ |
S&A fixed | 32 000 $ |
Production and sales (units) | 10 000 |
An order has been received from anoverseas customer for 2,000 units at a price of $64 per unit to bedelivered this month.
By how much would this special order increase (decrease) thecompany's operating income for the month?
a) ($32 000)
b) $46,600
c) $12,000
d) $36,000
e) None of the above
10. ZZ co. produces a singleproduct. The cost of producing and selling a single unit of thisproduct at the company's normal activity level of 20,000 units permonth (80% of capacity) is as follows:
Sale price per unit | $300 |
| Total variable cost per unit Manufacturing S&A | $110 $50 |
| Total fixed cost Manufacturing S&A | $1,280,000 $560 000 |
A special order has been received from a local customer for 5,000units at a price of $200 per unit to be delivered this month. Byhow much would this special order increase (decrease) the company'soperating income for the month?
a) $200,000 $
b) $136,000
c) ($500,000)
d) ($260,000)
e) None of the above
11. AA Company produces andsells three products:
A | B | C | |
Sales | $20,000 | $30,000 | $8,000 |
TVC | 12,000 | $16,000 | $5,000 |
Contribution margin | 8,000 | $14,000 | $3,000 |
Traceable fixed cost | 3,000 | $6,000 | $2,000 |
Common fixed cost | 2,000 | $3,000 | $1,800 |
Operating income | $3,000 | $5,000 | ($800) |
A decision by AA Co. to discontinueProduct C would result in what monthly increase (decrease) in AACo.'s
operating income?
a) $800
b) $1,000
c) ($1,000)
d) ($1,800)
e) None of the above
12. The following data are for Division B of Ovechkin Inc.:
Sales $4,000,000
Totalasset 1,250,000
ROI 10 %
The asset turnover ratio is:
a) 3.20
b) 0.10
c) 0.3125
d) None of the above
13. Refer to question 12.The operating income of Division B is:
a) $2,750,000
b) 1,250,000
c) 125,000
d) 400,000
