Fall 2007
Exam I
Accounting 285
Use the following information for the next five questions
Cinnamon Candy Company makes Redhots as its only product and has the following
information available:
Selling Price
$2.00 per bag
Variable cost
$1.20 per bag
Annual fixed cost
$720,000
1.
How many bags must be sold each year to break even?
a.
360,000
b.
600,000
c.
900,000
d.
1,440,000
2.
What will profit be if 2,000,000 bags are sold?
a.
$4,000,000
b.
$1,600,000
c.
$880,000
d.
$3,280,000
3.
What
dollar sales
are necessary to earn a profit of $170,000?
a.
$1,125,000
b.
$445,000
c.
$890,000
d.
$2,225,000
4.
How much would profit increase if another 100,000 bags were sold?
a.