Sanderson sells a single product for $50 that has a variable cost of $30. Fixed costs

amount to $5 per unit when anticipated sales targets are met. If the company sells one

unit in excess of its break-even volume, profit will be:

A. $15.

B. $20.

C. $50.

D. an amount that cannot be derived based on the information presented.

E. an amount other than those in choices “A,” “B,” and “C”, but one that can be derived

based on the information presented.

19. At a volume of 20,000 units, Dries reported sales revenues of $1,000,000, variable

costs of $300,000, and fixed costs of $260,000. The company’s contribution margin per

unit is:

A. $22.

B. $28.

C. $35.

D. $37.

E. an amount other than those above.

20. At a volume of 20,000 units, Dries reported sales revenues of $1,000,000, variable

costs of $300,000, and fixed costs of $260,000. The company’s break-even point in units

is:

A. 7,027 (rounded).

B. 8,667 (rounded).

C. 9,286 (rounded).

D. 7,429 (rounded).

E. an amount other than those above.

21. A recent income statement of Black Corporation reported the following data:

If these data are based on the sale of 20,000 units, the contribution margin per unit would

be:

A. $40.

B. $150.

C. $290.

D. $360.

E. an amount other than those above.

22. A recent income statement of Black Corporation reported the following data:

If these data are based on the sale of 20,000 units, the break-even point would be:

A. 9,565 units (rounded).

B. 11,000 units (rounded).

C. 7,586 units (rounded).

D. 14,667 units (rounded).

E. an amount other than those above.

23. A recent income statement of Suni Corporation reported the following data:

If these data are based on the sale of 20,000 units, the break-even point would be:

A. 7,500 units.

B. 11,628 units.

C. 12,500 units.

D. 33,333 units.

E. an amount other than those above.

24. A recent income statement of Yang Corporation reported the following data:

If these data are based on the sale of 5,000 units, the break-even sales would be:

A. $2,000,000.

B. $2,206,000.

C. $2,500,000.

D. $10,000,000.

E. an amount other than those above.

25. Lawson, Inc. sells a single product for $12. Variable costs are $8 per unit and fixed

costs total $360,000 at a volume level of 60,000 units. Assuming that fixed costs do not

change, Lawson’s break-even point would be:

A. 30,000 units.

B. 45,000 units.

C. 90,000 units.

D. negative because the company loses $2 on every unit sold.

E. a positive amount other than those given above.

26. Grey, Inc. sells a single product for $20. Variable costs are $8 per unit and fixed costs

total $120,000 at a volume level of 5,000 units. Assuming that fixed costs do not change,

Green’s break-even sales would be:

A. $160,000.

B. $200,000.

C. $300,000.

D. $480,000.

E. an amount other than those above.

27. Orion recently reported sales revenues of $800,000, a total contribution margin of

$300,000, and fixed costs of $180,000. If sales volume amounted to 10,000 units, the

company’s variable cost per unit must have been:

A. $12.

B. $32.

C. $50.

D. $92.

E. an amount other than those above.

28. Strayer has a break-even point of 120,000 units. If the firm’s sole product sells for $40

and fixed costs total $480,000, the variable cost per unit must be:

A. $4.

B. $36.

C. $44.

D. an amount that cannot be derived based on the information presented.

E. an amount other than those in choices “A,” “B,” and “C”, but one that can be derived

based on the information presented.

29. Ribco Co. makes and sells only one product. The unit contribution margin is $6 and

the break-even point in unit sales is 24,000. The company’s fixed costs are:

A. $4,000.

B. $14,400.

C. $40,000.

D. $144,000.

E. an amount other than those above.

31. At a volume level of 500,000 units, Sullivan reported the following information:

The company’s contribution-margin ratio is closest to:

A. 0.33.

B. 0.40.

C. 0.60.

D. 0.67.

E. an amount other than those above.

44. A recent income statement of Dragonwood Corporation reported the following data:

If the company desired to earn a target profit of $1,270,000, it would have to sell:

A. 5,778 units.

B. 8,600 units.

C. 10,160 units.

D. 11,908 units.

E. an amount other than those above.

45. Yellow Dot, Inc. sells a single product for $10. Variable costs are $4 per unit and

fixed costs total $120,000 at a volume level of 10,000 units. What dollar sales level

would Yellow Dot have to achieve to earn a target profit of $240,000?

A. $400,000.

B. $500,000.

C. $600,000.

D. $750,000.

E. $900,000.

Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the

company has fixed costs that amount to $400,000. Current sales total 16,000 units.

46. Narchie:

A. will break-even by selling 8,000 units.

B. will break-even by selling 13,333 units.

C. will break-even by selling 20,000 units.

D. will break-even by selling 1,000,000 units.

E. cannot break-even because it loses money on every unit sold.

47. Each unit that Narchie sells will:

A. increase profit by $20.

B. increase profit by $30.

C. increase profit by $50.

D. increase profit by some other amount.

E. decrease profit by $5.

48. In order to produce a target profit of $22,000, Narchie’s dollar sales must total:

A. $8,440.

B. $21,100.

C. $1,000,000.

D. $1,055,000.

E. an amount other than those above.

49. If Narchie sells 24,000 units, its safety margin will be:

A. $200,000.

B. $400,000.

C. $1,000,000.

D. $1,200,000.

E. an amount other than those above.

50. The difference between budgeted sales revenue and break-even sales revenue is the:

A. contribution margin.

B. contribution-margin ratio.

C. safety margin.

D. target net profit.

E. operating leverage.

51. Maxine’s budget for the upcoming year revealed the following figures:

If the company’s break-even sales total $750,000, Maxine’s safety margin would be:

A. $(90,000).

B. $90,000.

C. $246,000.

D. $336,000.

E. $696,000.

52. Brooklyn sells a single product to wholesalers. The company’s budget for the

upcoming year revealed anticipated unit sales of 31,600, a selling price of $20, variable

cost per unit of $8, and total fixed costs of $360,000. Brooklyn’s safety margin in units

is:

A. (13,400).

B. 0.

C. 1,600.

D. 13,600.

E. an amount other than those above.

53. Brooklyn sells a single product to wholesalers. The company’s budget for the

upcoming year revealed anticipated unit sales of 31,600, a selling price of $20, variable

cost per unit of $8, and total fixed costs of $360,000. If Brooklyn’s unit sales are 200

units less than anticipated, its breakeven point will:

A. increase by $12 per unit sold.

B. decrease by $12 per unit sold.

C. increase by $8 per unit sold.

D. decrease by $8 per unit sold.

E. not change.

54. Brooklyn sells a single product to wholesalers. The company’s budget for the

upcoming year revealed anticipated unit sales of 31,600, a selling price of $20, variable

cost per unit of $8, and total fixed costs of $360,000. If Brooklyn’s unit sales are 300

units more than anticipated, its break-even point will:

A. increase by $12 per unit sold.

B. decrease by $12 per unit sold.

C. increase by $8 per unit sold.

D. decrease by $8 per unit sold.

E. not change.

56. Danielle sells a single product at $20 per unit. The firm’s most recent income

statement revealed unit sales of 100,000, variable costs of $800,000, and fixed costs of

$400,000. If a $4 drop in selling price will boost unit sales volume by 20%, the company

will experience:

A. no change in profit because a 20% drop in sales price is balanced by a 20% increase in

volume.

B. an $80,000 drop in profit.

C. a $240,000 drop in profit.

D. a $400,000 drop in profit.

E. a change in profit other than those above.

60. O’Dale sells three products: R, S, and T. Budgeted information for the upcoming

accounting period follows.

The company’s weighted-average unit contribution margin is:

A. $3.00.

B. $3.55.

C. $4.00.

D. $19.35.

E. an amount other than those above.

Jamal & Co. makes and sells two types of shoes, Plain and Fancy. Data concerning these

products are as follows:

Sixty percent of the unit sales are Plain, and annual fixed expenses are $45,000.

62. The weighted-average unit contribution margin is:

A. $4.80.

B. $9.00.

C. $9.25.

D. $17.00.

E. an amount other than those above.

63. Assuming that the sales mix remains constant, the total number of units that Jamal

must sell to break even is:

A. 2,432.

B. 2,647.

C. 4,737.

D. 5,000.

E. an amount other than those above.

64. Assuming that the sales mix remains constant, the number of units of Plain that Jamal

must sell to break even is:

A. 2,000.

B. 3,000.

C. 3,375.

D. 5,000.

E. 5,625.

65. Assuming that the sales mix remains constant, the number of units of Fancy that

Jamal must sell to break even is:

A. 2,000.

B. 3,000.

C. 3,375.

D. 5,000.

E. 5,625.

77. The following information relates to Dazie Company:

Dazie’s operating leverage factor is closest to:

A. 0.067.

B. 0.167.

C. 0.400.

D. 2.500.

E. 6.000.

78. The following information relates to Paternus Company:

If a manager at Paternus desired to determine the percentage impact on income of a given

percentage change in sales, the manager would multiply the percentage increase/decrease

in sales revenue by:

A. 0.25.

B. 0.40.

C. 2.50.

D. 4.00.

E. 10.00.

Edmonco Company produced and sold 45,000 units of a single product last year, with the

following results:

79. Edmonco’s operating leverage factor was:

A. 4.

B. 5.

C. 6.

D. 7.

E. 8.

80. If Edmonco’s sales revenues increase 15%, what will be the percentage increase in

income before income taxes?

A. 15%.

B. 45%.

C. 60%.

D. 75%.

E. An amount other than those above.

83. A company, subject to a 40% tax rate, desires to earn $500,000 of after-tax income.

How much should the firm add to fixed costs when figuring the sales revenues necessary

to produce this income level?

A. $200,000.

B. $300,000.

C. $500,000.

D. $833,333.

E. $1,250,000.

84. Barrey, Inc. is subject to a 40% income tax rate. The following data pertain to the

period just ended when the company produced and sold 45,000 units:

How many units must Barrey sell to earn an after-tax profit of $180,000?

A. 42,000.

B. 45,000.

C. 51,000.

D. 61,000.

E. An amount other than those above.

85. Barrey, Inc. is subject to a 40% income tax rate. The following data pertain to the

period just ended when the company produced and sold 45,000 units:

How many units must Barrey sell to earn an after-tax profit of $225,000?

A. 67,250.

B. 62,250.

C. 61,000.

D. 51,000.

E. An amount other than those above