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ACCT 2300_Practice Exam Chap 5

ACCT 2300_Practice Exam Chap 5 - NOREEN MANAGERIAL...

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NOREEN MANAGERIAL ACCOUNTING FOR MANAGERS 1E Practice Exam – Chapter 5 Print these pages. Answer each of the following questions, explaining your answers or showing your work, as appropriate, and then compare your solutions to those provided at the end of the practice exam. 1.The following is Shearer Corporation's contribution format income statement for last month: Sales $4,000,000 Less variable expenses 2,800,000 Contribution margin 1,200,000 Less fixed expenses 720,000 Net income $ 480,000 A total of 80,000 units were produced and sold last month. The company has no beginning or ending inventories. Part (a) What is the company’s breakeven in sales dollars? Part (b) How many units would the company have to sell to attain target profits of $600,000? Part (c) What is the company’s margin of safety? Part (d) What is the company's degree of operating leverage?
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2.Morris Company sells a single product. The product has a selling price of $100 per unit and variable expenses of 80% of sales. If the company's fixed expenses total $150,000 per year, what is its break-even point? (Give answer in dollars and in units.)
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