1. ABC Company must sell 1,000 units to break even with its current contribution margin of $.50 per unit. How will breakeven change if the contribution margin increases?
A. The number of units needed to break even will decrease.
B. The number of units needed to break even will increase.
C. The number of units needed to break even will remain the same.
D. There is not enough information to know how break even units will change.
2. Segment margin is sales minus:
A.variable expenses.
B.traceable fixed expenses.
C. variable expenses and common fixed expenses.
D. variable expenses and traceable fixed expense
3. DC Construction has two divisions: Remodeling and New Home Construction. Each division has an on-site supervisor who is paid a salary of $82,000 annually and a salaried estimator who is paid $46,000 annually. The corporate office has two office administrative assistants who are paid salaries of $50,000 and $37,000 annually. The president's salary is $153,000. How much of these salaries are common fixed expenses?
A. $153,000
B. $87,000
C. $308,000
D. $240,000
4. ABC Company, which has only one product, has provided the following data concerning its most recent month of operations. It produced 6,200 units and sold 6,000 units. There was no beginning inventory.
Variable (per unit)
Fixed (total)
Direct Materials
$15
Direct Labor
$5
Manufacturing Overhead
$8
$148,800
Selling & Administrative
$7
$81,840
What is the unit product cost under absorption costing?
A. $52.00
B. $52.80
C. $59.00
D. $28.00
5. Under variable costing, fixed manufacturing overhead costs
A. are deferred in inventory when production exceeds sales
B. are always treated as period costs
C. are released from inventory when production exceeds sales
D. are ignored
1. ABC Company must sell 1,000 units to break even with its current contribution margin of $.50 per unit. How will breakeven change if the contribution margin increases?
A. The number of units needed to break even will decrease.
B. The number of units needed to break even will increase.
C. The number of units needed to break even will remain the same.
D. There is not enough information to know how break even units will change.
2. Segment margin is sales minus:
A.variable expenses.
B.traceable fixed expenses.
C. variable expenses and common fixed expenses.
D. variable expenses and traceable fixed expense
3. DC Construction has two divisions: Remodeling and New Home Construction. Each division has an on-site supervisor who is paid a salary of $82,000 annually and a salaried estimator who is paid $46,000 annually. The corporate office has two office administrative assistants who are paid salaries of $50,000 and $37,000 annually. The president's salary is $153,000. How much of these salaries are common fixed expenses?
A. $153,000
B. $87,000
C. $308,000
D. $240,000
4. ABC Company, which has only one product, has provided the following data concerning its most recent month of operations. It produced 6,200 units and sold 6,000 units. There was no beginning inventory.
| Variable (per unit) | Fixed (total) | |
| Direct Materials | $15 | |
| Direct Labor | $5 | |
| Manufacturing Overhead | $8 | $148,800 |
| Selling & Administrative | $7 | $81,840 |
What is the unit product cost under absorption costing?
A. $52.00
B. $52.80
C. $59.00
D. $28.00
5. Under variable costing, fixed manufacturing overhead costs
A. are deferred in inventory when production exceeds sales
B. are always treated as period costs
C. are released from inventory when production exceeds sales
D. are ignored
Related questions
Break-Even Units and Sales Revenue: Margin of Safety
Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 2,800,000 pages at a price of $0.08 each in the coming year. Product costs include:
| Direct materials | $0.015 |
| Direct labor | $0.004 |
| Variable overhead | $0.001 |
| Total fixed overhead | $80,000 |
There is no variable selling expense; fixed selling and administrative expenses total $46,000.
Required:
Note: In your computations that involve the contribution margin ratio, round the ratio to two decimal places.
1. Calculate the break-even point in units.
units
2. Calculate the break-even point in sales revenue.
$
3. Calculate the margin of safety in units for the coming year.
units
4. Calculate the margin of safety in sales revenue for the coming year.
$
5. What if the total selling and administrative expenses are reduced to $38,800? Recalculate the following:
| a. Break-even point in units | units | |
| b. Break-even point in sales revenue | $ | |
| c. Margin of safety in units for the coming year | units | |
| d. Margin of safety in sales revenue for the coming year | $ |
