chapter 20.docx - Chapter 20 Cost-Volume-Profit Analysis...

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Chapter 20 - Cost-Volume-Profit Analysis: Additional Issues 45. For Sanborn Co., sales is \$1,000,000, fixed expenses are \$300,000, and the contribution margin per unit is \$48. What is the break-even point? BEP in Units = (FC / CM per Unit) : 300000 / \$48 = 6250 units a. \$2,083,334 sales dollars b. \$625,000 sales dollars c. 20,834 units d. 6,250 units 55. Margin of safety in dollars is a. expected sales divided by break-even sales. b. expected sales less break-even sales. c. actual sales less expected sales. d. expected sales less actual sales. 63. Capitol Manufacturing sells 3,000 units of Product A annually, and 7,000 units of Product B annually. The sales mix for Product A is Total products = (3,000 + 7,000) = 10,000 sale mix for Product A = 3,000 / 10,000 = .30 = 30% a. 30%. b. 43%. c. 70%. d. Cannot determine from information given. 78. What is the key factor in determining sales mix if a company has limited resources? a. Contribution margin per unit of limited resource b. The amount of fixed costs per unit c. Total contribution margin d. The cost of limited resources 92. The degree of operating leverage a. does not provide a reliable measure of a company’s earnings volatility. b. cannot be used to compare companies. c. is computed by dividing total contribution margin by net income.

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