Accounting 3 - 3k Exam Page 1 of6 1mary 2e autematéoaiiy...

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Unformatted text preview: 3k: Exam Page 1 of6 1mary 2e autematéoaiiy sornputed _ . ur exam. Crades for essay - Date and Time Started: no continents front year Time Spent: 'e in the ”Detaiis” seetien Points Received: #- {Dorreetz Dice 7 15 1 1 s — Ali Questions 1 : If a company is operating at the break—even point: Aflfi‘ivgn gig {9:} its contribution margin will be equai to its variable expenses. ‘1? if? its margin of safety will be equal to zero. {:3 its fixed expenses will be equal to its variable expenses. {:3 its selling price will be equal to its variable expense per unit. ' Exeianetien: Margin of Safety is Actuai Sales — Break Even Sales so if both are the same number, the margin of safety will be $0. seamed; ' ' "0 of2 ents: : At the break—even point: xnswer: Q sales wouid be equal to contribution margin. 4?” {5:} contribution margin would be equal to fixed expenses. (3 contribution margin would be equal to net operating income. W CE} sales would be equai to fixed expenses. Exeéenatéen; Break even point is when we have $0 in net income so since the contribution margin — fixed expenses = net income, when those two are equal, we wilt have $0. eécésvedfi "' Oofr'zflfl ants: Break-even analysis aesumes that: Total revenue is constant. Unit variabie expense is constant. /*‘ My in» Unit fixed expense is constant. (3’ Selling prices must fall in order to generate more revenue. Exaéanatéen: We assume that the variable cost per unit always stays the same in the break even calcuiations. Qeceived: 2 of 2 nts: ck Exam 3%“: save r? I fixeianetéon: Received: lents: “answer: V gxpéanation: Received: ants: E“; Sk‘effifi 3“. :xgbéenatéon: eceivecfl: “its; Page 2 of 6 Target profit enaiysis is used to answer which of the foiiowing questions? (3} What sales volume is needed to cover all expenses? {:3 What sales volume is needed to cover fixed expenses? «4% {i} What sales voiurne is needed to earn a specific amount of net operating income? <1.) What sates volume is needed to avoid a loss? Calculating the target profit will tell us how much more we need to self above break even point to hit a certain profit. 20:2 Which of the following is an assumption underlying standard CVP analysis? {'3' ln multiproduct companies, the sales mix is constant. C3 in manufacturing companies, inventories always change. C} The price of a product or service is expected to change as volume changes. 1E1? {:2 Fixed expenses will change as volume increases. We assume that the sales mix doesn't change when there is more than one product. '2 of2 Sorin lnc., a company that produces and sells a single product, has provided its contribution format income statement for January. fiaies (4-2(36 units)--....-.-....-‘, . -......,. $3 .5 fiséflfl' Risa-35:21:13: expenses ...H..¢..-.,.....“n...“ 3 {It} 890 (fontributicn margin - , 44:55:33 Fixed expenses"m.....u..........,..-.-...... ‘ :12, «400, Net operating iii-came ......... .. ......... ' " - if the company sells 4,600 units, its total contribution margin should be closest to: {:3 $54,600 v” {1-}? $59,800 if} $69,400 2:") $13,362 Current contribution margin 1' current sales in units = Contribution margin per unit $54,600 1‘ 4,200 = $13 contribution margin per unit if 4,600 units are sotd, the contribution margin will be 4,600 X $1 3 or $59,800 ZOfZ >k Exa n1 Xi“: $Vx§€ r? Received-z I ants: fifiVVEEFZ \ ET: >5 {.3 i :«3 W \ h Q-sooived: xii 2:2 3": i Page 3 of6 Rovineky Corporation, a company that produces and sells a singie product, has provided its contribution format income statement for N ovember. 38: i es ('5 070$”; on its; :3 ................. $3 3 9‘, 300 \«5 ariahle expvi: rises ............... I 8 3 3 {it} Contribution zvznargi n ........... ' .3 I ., E m.) E°”*.»z'ed expenses .................... 1 (36 $00 Pioi operating in-oouzc _ H _ . _ . . :5 ‘”’ {30$} if the company sells 5,300 units, its net operating income shouid be closest to: if) $24,600 C”) $2,200 ‘73} $22,874 a? {3!}- $15,400 Current sales dollars 1 current sales in units = saies price per unit $319,200 / 5,700 = $56 sales price per unit Current variable expenses I current sales in units = Variable expense per unit $188,100 / 5,700 = $33 variable expense per unit Sales (5,300 units x $55) $296,800 Variable expenses (5,300 units x $33) $1 74,900 Contribution margin $1 21,900 Fixed expenses $106,500 Net operating income $1 5,400 20f2 The Bronco Birdfeed Company reported the foilowing information: Sale-.53; (40f): oases} ........................ 3]. 095.3054} "Jariabio expenses .‘00 $0.0m; (Triontri‘buiion margin ........ ...... siflfifififl Irir‘iod oxpfli‘lsos ._-.,u.‘.,.“..,.u.i_;H....i.. 5"“ Gm WWW... Sfifliifli} 33301 opera-ting $110021“:- How much wii! the sale of one additions: case add to Bronco's net operating income? CD $250.00 w is} $100.00 <13 $150.00 {"33 $12.50 Current contribution margin I current sales in cases = contribution margin per case $40,000 i 400 = $100 contribution margin per oase- If one additionai case is soicfi, net operating inoorne wiii increase by $100 Zof2 3k Exan1 “3111232 Knew-e! , r Essieneticm: Received: ents: =fi$3fif§§5§ {Expieg-tetécm: Received: ants: Page 4 of 6 Cresweii Corporation's fixed monthly expenses are $29,900 and its contribution margin ratio is 56%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating incorfie in a month when sales are $95,000”? #‘R 3': $12,800 A: $24,200 $53,200 {:72 $66,000 \ f'x I“. E»; O y Sales $95,000 Variable expenses ($95,000 x 44°26) $41 ,800 Contribution margin ($95,000 x 56%;) $53,200 Fixed expenses $29,000 Net operating income $24,200 ' "2'61? 2 Borich Corporation produces and sells a single product Data concerning that product appear below: fieliihg price per unit ._,.__--_--.u..r_ "Variebte expense per txnéi.m,...w..,.. Fixed expense pier- nit-oath ..,.,_. Us); 1-... $1 Seth} 533?} .. 5:} $358- ”’95 The breakneven in monthly unit sales is closest to: I if} 2,055 $5545 {”3”} 4,030 {if} 4,194 {‘3 3.426 Sales = Variable expenses + Fixed expenses + Profit $150,000 fl $73.50Q + $308,295 + $0 $78.50Q = $308,295 Q a $308.295 / $76.50 = 4,030 units “2-on Date concerning Follick Corporation's single product appear below: Sailing; price per unit ,,,,,,,,,,,,,,,,,, Eiet'fiiahte exl‘ieame per Utii'i.,,_..--‘.-i-n.l E-‘ixed exgmraee per rue-nth ................ g 1 1 {'3 iii”: $39, gm $32 I ,5: 5’2 The break~even in monthly doiier sales is closest to: "11> $1,148,400 " $838,851 2 $321,552 k Exarn ' fixpiefiaaerm Received: ants: if? EW‘Z“ {I iéxpéaraetéem: Received: ants: 5?"! SE‘J‘E F: {Expéemetieer Received: ants: ,fiSm’QT‘, fixeéeriaiiem: Qeceived: éfitS‘ 555 55 Page 5 of 6 *5" (ii $446,600 Sales 1': Variable expenses + fixed expenses ‘5 profit $1 10.00Q .5: $30.8OQ + $321,552 + $0 $79,200 = $321,552 Q=$321,552 / $79.20 per unit =7: 4,060 units 4,060 units x $1 10500 selling price 2 $446,600 2052 The contribution margin ratio of Meuntain Corporation‘s only product is 52965 The company's monthly fixed expense is $296,400 and the company‘s monthly target profit is $7,000. The dollar sales to attain that target profit is Closest to: it") $570,000 :1") $157,768 '5" $3 $583,462 {:3 $154,128 (Fixed expenses + Target profit) / CM ratio ($298,400 + $7,000) I .52 = $583,462 (rounded) Which of the following costs at a manufacturing company would be treated as a product cost under the variable costing method? 555"“ 5:} direct material cost (:3 property taxes on the factory building (:5 sales manager's salary 5235 5:9") all of these Direct materials are variable and a product cost. (37on The principal difference between variable costing and absorption costing centers on: 1:} whether variable manufacturing costs should be included as product costs. .3}, C} whether fixed manufacturing costs should be included as product costs. {I} whether fixed n1anufacturing costs and fixed selling and administrative costs should be inciuded as product costs. 3'2 53} none of these. Under variable costing, fixed expenses are treated as period costs. 55 or 2' .k Exam Page 6 of‘é "i : A manufacturing company that produces a single product has provided the following data concerning its most recent manth of operations: Selling prizes: .,-... {Errata i11- i’acgi-nni‘flg invefitfl-ry..m.-m.-_-A-,......... [Suit-3 rare-(insets: -----,, Efrain; fidfiédi ......................... , ....................... . ...... Finite in ending isflvani'mrjg ............................ ‘5? ariebia aegis; per Ufiit.‘ Ebircai .mahzriz-xls “H.“ , W W, , Biwet taker ,, V” ariabim 2113;111:2153: uriiag 0 V'erlrieaci ..... . ...... “variable: eefling and 2:de mi fixative .. . , , " Fix-wt} coats; : ri'xud Ina-am ufuciuriflg ovarfic; ad .- l l . ‘ , i l . . , , , Fixed 25 £3?! Eng and, admii n5 stratiik-“t: ............ $75.? (‘1 fixfiflfl 6,310!) Sufi $3 -3 $3 a $4. 33: $443,200 $88,200 What ie the total period cost for the month under the variable costing approach? xrzewer: {:3 $1 38,600 <23 3; 1 34.400 <3 $46,200 w {6;} $184,800 Exgiag‘aaiéanz Total selling and admin cost = $8 x 6,300 m“- $50,400 Period cost = Total variable selling and admin + Fixed manufacturing overhead + Fixed selling and admin cost $50,400 + $46,200 4* $88,200 = $184,800 Received: 2 of 2 ants: Spiayecé in {GfifiT»Q7:OQ} Mnsisntain Time {Us $5 Canaea}...
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