Chapter 6 Quiz

# Chapter 6 Quiz - Sport Leisure Unit selling price \$20.0...

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Accounting 2102 Spring 2008 Farmer quiz 3 . . .chapter 6 Name UGA MyID Signature and Date Please circle your FINAL answer in the spaces provided. Question 1 Stop Biting, Inc. Stop Biting, Inc. manufactures nail polish. Given the following information, calculate net income: Variable Costs \$11,000 Fixed Costs \$25,000 Break Even Sales Revenue \$31,250 BESR = FC/CM% \$31,250 = \$25,000/CM% CM% = 80% . . . so VC% = 20% VC% = VC/SR 20% = \$11,000/SR SR = \$55,000 SR – VC – FC = Net Income \$55,000 - \$11,000 - \$25,000 = \$19,000 Question 2 Golden Rays, LLC Golden Rays, LLC, manufactures and sells two types of sunglasses, Sport and Leisure. Data concerning these products are as follows:

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Unformatted text preview: Sport Leisure Unit selling price \$20.0 \$35.00 Variable cost per unit \$12.0 \$24.50 Sixty percent of the unit sales are Sport, and annual fixed expenses are \$45,000. Assuming that the sales mix remains constant, the number of units of Sport that the company must sell to break even is: BE units = FC/WACM BE units = \$45,000/(\$8 x 60% + \$10.50 x 40%) BE units = 5,000 5,000 x 60% = 3,000 Page 1 of 2 5158897.doc Accounting 2102 Spring 2008 Farmer quiz 3 . . .chapter 6 So . . . 3,000 of the 5,000 units we need to sell to breakeven will be from our sport line Page 2 of 2 5158897.doc...
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Chapter 6 Quiz - Sport Leisure Unit selling price \$20.0...

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